China Takes the Lead in Securing Lithium from Africa

China: The Lithium market will continue to remain tight this year and in 2024, however, it is expected to ease in 2025 as new projects are commissioned, particularly in Africa and Canada. China's proactive approach to tapping new sources of Lithium supply across Africa is proving beneficial, enabling the country to navigate the current tight market for this crucial metal and maintain its position as the leading producer of electric-vehicle batteries.

African mines are set to experience a significant boost in Lithium production due to a surge in investment by Chinese companies. Predictions indicate that Lithium raw material production will rise over 30 times the volume produced last year, by 2027. In the same year, Africa is expected to contribute 12% of global supply, compared to its current contribution of just 1% in 2022. This diversification of supply sources will aid China in maintaining its dominance in the processing of EV metals such as Nickel, Lithium, and Cobalt, used to manufacture battery components. Meanwhile, the US is increasing efforts to create its own supply networks by teaming up with free-trade partners and allies such as Canada and Australia.

China views Africa as a crucial player in providing alternative sources of raw materials, largely due to concerns over Australia's future supply constraints as domestic refineries come online. Africa will play an essential role for China. Countries like Mali, the Democratic Republic of Congo, and Zimbabwe are expected to become top producers of mined Lithium by the end of the decade.

Zhejiang Huayou Cobalt Co. announced the arrival of the first shipment of Lithium concentrate from a Zimbabwe project, while Chengxin Lithium Group Co. reported that its Sabi Star Lithium mine had commenced production in the same country. Ganfeng Lithium Group Co. has invested in the Goulamina mine located in Mali. Furthermore, Sichuan Yahua Industrial Group Co. has invested in a project located in Ethiopia, while Contemporary Amperex Technology Co. has provided support for a project situated in the Democratic Republic of Congo. Chinese investment in Africa is the largest source of capital for battery material supply in recent years. He believes that China's supply chain needs investments in new regions to keep up with demand from its manufacturers.

China's battery producers, led by CATL and BYD Co., exceeded 1 terawatt-hour of production capacity in 2022 and are still expanding. While the US is exploring options for raw material supply from Africa, it has only a few preliminary plans, including cooperation agreements with the DRC and Zambia. She also added that greater scrutiny is necessary for Africa to be considered a trade deal-friendly supplier.

This, the global supply of raw Lithium materials is predicted to increase by 35%, with almost half of this growth attributed to newly established operations. The market for Lithium resources will remain tight in 2023 and 2024, but it is anticipated to loosen up from 2025 as more projects are launched, including in Canada and throughout Africa.

Following in the footsteps of other countries, African nations are expected to retain more revenue from their Lithium supplies by establishing processing or refining plants that can boost the value of exports. Recently, Zimbabwe and Namibia have taken measures to limit or prevent the export of raw Lithium ore. Morocco, which has a free trade agreement with the US, is already gearing up to become a hub for EV battery production. It has several advantages, including its proximity to Europe and an abundance of phosphate that is essential for Lithium iron phosphate (LFP) cells.

Earlier this year, the government of the nation announced that Gotion High-Tech Co., a Chinese battery manufacturer, had signed an initial agreement to construct the first major EV battery factory in Africa. The factory is expected to have an annual capacity of 100 gigawatts and will require an investment of €6 billion ($6.5 billion).