BloombergNEF presents compelling case for DRC to become battery value chain champion

24th November 2021 By: Marleny Arnoldi - Creamer Media Online Writer

The Democratic Republic of the Congo (DRC) can leverage its abundant cobalt resources and hydroelectric power to become a low-cost and low-emissions producer of lithium-ion battery cathode precursor materials, says strategic research provider BloombergNEF (BNEF).

It estimates that it would cost $39-million to build a 10 000 t cathode precursor plant in the DRC. This is three times cheaper than what a similar plant in the US would cost.

A similar plant in China and Poland would cost an estimated $112-million and $65-million, respectively.

BNEF explains in its ‘The Cost of Producing Battery Precursors in the DRC’ report that precursor material produced at plants in the DRC could be cost-competitive with material produced in China and Poland but with a lower environmental footprint.

Emissions associated with battery production could be cut by 30% compared with the existing supply chain that runs through China, if cathode precursor materials – the intermediate material between raw and finished cathode material – were produced in the DRC, with Poland handling the production of cathode materials and cells and Germany the final pack assembly.

This is owing to the DRC’s proximity to cathode raw materials and heavy reliance on hydroelectric power plants.

“The DRC’s cost competitiveness comes from its relatively cheap access to land and low engineering, procurement and construction, or EPC, cost compared with the US, Poland and China,” says BNEF metals and mining head Kwasi Ampofo.

“European cell manufacturers currently rely heavily on China for battery precursors. However, the raw materials for batteries are, in most cases, imported into China from Africa and refined before being exported to Europe.

Automakers in Europe can lower their emissions by shortening the transport distance and capitalising on the DRC’s hydroelectric-powered grid and proximity to raw materials.

Electric vehicles (EVs) represent a $7-trillion market opportunity between today and 2030, and $46-trillion between today and 2050, says BNEF.

While there are notable leading EV and cell manufacturers today, the sheer scale of growth expected in the coming decades means that there is inherent uncertainty over which companies and countries may come to dominate this new value chain, it states.

“African countries could play a major role in the lithium-ion battery supply chain by taking advantage of their abundant natural resources and onshoring more of the value chain,” says BNEF energy storage head James Frith.

He adds that, for regions to successfully attract battery component or cell manufacturing, they need to have either a supply of key raw materials or local demand for batteries.

If they have access to raw materials, they can use this supply to attract downstream manufacturers. If they have local demand for batteries, cell manufacturers will move to the region to be close to their customers, particularly in the automotive industry.

“Africa has a wealth of critical battery raw materials and is in a position to use these to attract more value-add in downstream processing and manufacturing,” Frith says.

In this regard, the African Continental Free Trade Area agreement has the potential to create the largest free trade area in the world. If approached correctly, African countries can capitalise on their abundant natural resources, growing demand for vehicles and rapid urbanisation to build a global hub to produce EVs.

“We are only at the beginning of the path to achieving net-zero emissions globally. Emerging economies in Africa can gain significant long-term economic value by quickly setting up projects that support the low-carbon transition with transparent governance frameworks,” notes BNEF commodities head Ashish Sethia.

Now is the time for DRC to leverage its abundant mineral and clean energy resources to become a growth pole of the global clean energy transition and inclusive resilient development that leaves no one behind, especially since the world only has nine years left to deliver on the United Nations’ (UN's) Sustainable Development Goals, says UN Economic Commission for Africa executive secretary and UN under-secretary general Vera Songwe.

The DRC produces about 70% of global cobalt but captures just 3% of the battery and EV value chain.

With a functioning free trade agreement, the DRC can receive other upstream mineral inputs needed for lithium-ion batteries, such as manganese from South Africa and Madagascar, copper from Zambia, graphite from Mozambique and Tanzania, phosphate from Morocco and lithium from Zimbabwe.