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Opinion Piece: Localise lithium and cobalt battery manufacturing to move Southern Africa up the value chain

By Viren Sookhun, MD at Oxyon

Lithium, nickel, and cobalt are three of the key minerals used in the manufacture of electronic vehicle (EV) batteries, and all of these minerals are mined in Southern Africa. However, the raw materials are exported, and batteries are then manufactured in other countries, with the finished product being shipped back. This is a significant opportunity missed, to not only move countries like South Africa and Namibia up the value chain, but also to create greater economic stability while improving the cost effectiveness and carbon footprint of EVs in the region.

Mineral wealth

As the global focus is shifting toward creating more sustainable solutions and away from the widespread use of fossil fuels, EVs are an increasingly popular transportation option. EVs run off batteries, and the manufacture of these batteries is poised to become a massive industry in the near future. There are several types of batteries currently in use, each with various pros and cons, and each with different compositions, requiring different minerals. Not only are the main three minerals (lithium, nickel, and cobalt) all mined in Southern Africa, but the various other minerals commonly used are too, including manganese, iron, graphite, aluminium, and copper.

Mining these minerals locally, then exporting them for manufacture, before re-importing them as a finished product, reduces the cost effectiveness of EV batteries in the country. It also represents the loss of an opportunity to move up the value chain and increase the profits and economic gain that can be generated through these minerals. If EV battery manufacturing could be localised, the Southern African region could capitalise on this growing market, stimulate economies, and boost job creation, while at the same time making EVs more affordable for local users and reducing their carbon footprint further.

Leveraging the opportunity

Manufacturing EV batteries in South Africa has many benefits, however for this to become a feasible option, there need to be off-takers for the mines – if they have no local manufacturers to sell to, then they have few options other than to export their goods. This will require collaboration and cooperation between government and the private sector. Government needs to incentivise the investment required into manufacturing as well as processing and the supply chain in general, and private sector must leverage these opportunities. It will also be necessary at the outset to bring in the skills required to set up the processes, advise and consult, and from there ensure that the necessary skills transfer, and development takes place.

We need to create opportunities locally, driven by government incentives and grants, to take the long-term view of economic prosperity we need to drive this industry forward. There is immense potential in the EV battery manufacturing space, which could also then feed into other areas of EV manufacturing and assembly as well as other areas of the economy, helping to drive foreign investment and economic growth as well as job creation and sustainability in terms of economy and the environment.

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