As electric mobility and energy storage increases its share of the transport and energy sectors, the demand for batteries is rising, with lithium-ion batteries (LIB) dominating the market.
While research by Trade & Industrial Policy Strategies (TIPS) indicates that South Africa’s vibrant venture capital sector sees opportunities for growth in the battery markets, TIPS senior economist Gaylor Montmasson-Clair says not all stages of the market are at the same level of development.
South Africa will “need to identify where its industries are, or could be, competitive” in the battery market.
He suggests two pathways for South Africa, with the first being the development of a battery manufacturing sector and enhancing South Africa’s mineral refining capabilities, as these are ready for scale-up.
Alternatively, Montmasson-Clair suggests the exploration of the cell manufacturing and recycling sectors, as these could also prove to be economically sustainable.
“Provided the emphasis is put on the country’s evidenced strengths rather than unsubstantiated aspirations, an electrifying opportunity lies ahead for South Africa,” he comments.
Batteries, he explains, are at the core of a modern energy system, a more sustainable economy and society as it underpins the implementation of a smart grid or mini-grids and provides a more stable, resilient, affordable and clean energy supply.
Simultaneously, Montmasson-Clair adds that batteries also foster the rollout of renewable energy technologies and electric mobility, and support industrial development and employment creation through manufacturing, installation and maintenance, while also providing a platform to reduce inequality regarding access to energy.
Given South Africa’s existing position in the value chain, he suggests that boosting battery manufacturing is “the most viable option” in the short- to medium-term, “as South Africa has the domestic capacity to test and certify battery packs”, though he notes that this will need to be materially enhanced.
South Africa will also need to increase its focus on research and development, and skills development, as this will improve the ease of doing business for small, medium-sized and microenterprises, thereby further enhancing development and growth opportunities.
In the same vein, Montmasson-Clair highlights South Africa’s longstanding experience and expertise in mineral beneficiation, though he notes that there is little beneficiation of minerals to battery grade in the country, as only manganese and aluminium are refined to battery grade at present, while nickel and lithium remain in the pipeline.
Another option the country could consider is building a recycling facility for LIBs, though Montmasson-Clair warns that the economic viability of a possible plant is unknown at this stage as it hinges on sufficient volumes, as well as the price of key recovered minerals (such as cobalt, copper, nickel and lithium hydroxide) and transportation costs.
“A pilot facility is 12 to 24 months away at best,” he says.
In this regard, a number of companies are involved in marketing second-life batteries at the local and regional scale, though South Africa is currently reliant on imported batteries from the likes of China.
Meanwhile, green energy supplier Revov Batteries MD Lance Dickerson says a second life battery is a cost-effective lithium-iron-phosphate battery suitable for charging off the grid, supplying back-up power or reducing costs.
An LIB generally has a service lifespan of between 15 and 25 years, depending on how it is used, and spends its “first life” powering 1 800 cycles in electric vehicles (EVs).
He notes that it is as part of stationary energy storage solutions that they serve most of their lives, and characterises the battery’s “second life” as spent powering homes and businesses.
However, while the opportunity is available for South Africa, Montmasson-Clair warns that a lack of demand is a critical factor hindering current development and suggests that increasing local and regional demand will support the business case for local manufacturing.
Therefore, he avers that South Africa will require a dual strategy as it needs to grow its local demand and local manufacturing, primarily on the back of global demand, as high levels of local content in energy and automotive industries are conditioned on high levels of local content at the battery manufacturing level.
However, beyond direct support and investment, sending clear, positive signals would contribute to attracting further investments into the sector, he urges.