AEB2023|VOLUME14|ISSUE7|STRENGTHENINGAFRICA’SROLEINTHEBATTERYANDELECTRICVEHICLEVALUECHAIN

N

EELOP

AFRICANDEVELOPMENTBANKGROUP

NDEDE

2023|VOLUME14|ISSUE7

VICEPRESIDENCYFORECONOMIC

GOVERNANCEANDKNOWLEDGEMANAGEMENT

AFRICAECONOMICBRIEF

StrengtheningAfrica’sRoleintheBatteryandElectricVehicleValueChain

JerryAhadjie(ChiefMineralsOfficer,ECNR);FredKabanda(Manager,Extractives,ECNR);

CharlesNyirahuku(ChiefgasRegulatoryOfficer,ECNR)andFredaOpoku[EnergySpecialist(knowledge),PESR]

KEYMESSAGES

?Africaisendowedwithsignificantreservesofgreenmineralsrequiredfortheenergytransitionbutcurrentlyoperatesattheprimarylevelofthebatteryandelectricvehiclevaluechain

?StrengtheningthevaluechainrequiresAfricatodevelopaGreenMineralsStrategytofast-trackdevelopmentofthecontinent’sgreenmineralresourcestowardscreatingmorevalueonthecontinentandexpandingexportsandintra-AfricantradeleveragingtheAfricanContinentalFreeTradeArea(AfCFTA)

?TheDRC,inpartnershipwithothercountries,canleverageitsabundantcobaltresourcesanditshydroelectricpowertobecomealow-costandlow-emissionsproduceroflithium-ionbatteryprecursormaterialsandcells.

?AfricanChampionsmustbeinvitedtothetableandgivenincentivestoencourageinvestmentonthecontinent.

1|INTRODUCTION

AstheworldrebootsitseconomiesfromtheimpactofCovid-19pandemic,itisimportanttoadoptaneconomicdevelopmentmodelthatlessensenvironmental,climateanddisasterrisksandonewheresocialandeconomicbenefitsareinclusive.AtthecoreoftherecoveryandinlinewithcommitmentsundertheParisAgreement,isthecleanenergytransitiontodriveeconomies.Thisinvolvesuptakeoftechnologiesthatreduceemissionssuchaswindandsolarenergyandlessoffossilfuel-basedtech-nologies.Whilstcleanenergyanddecarbonizinginterna-tionalinvestmentandfinanceseemtobedominatingthedevelopmentdiscourse,whatislesstalkedaboutistheminerals,includingrareearthminerals,metalsandcon-structionmaterialsneededforthistohappen.

AccordingtotheUnitedStatesGeologicalSurvey(USGS)dataonglobalmineralreserves,Africahosts:Cobalt(52.4%),Bauxiteforaluminiumproduction(24.7%);Graphite(21.2%),Manganese(46%)andVanadium(16%).ThisisjustthetipoftheicebergbecausecurrentexplorationactivitiesinAfricaaredelineatinghugestra-tegicmineraldeposits.Specificallyforcobalt,theDemo-craticRepublicofCongo(DRC)iswellpositionedtotakealeadershippositionintheenergytransitionindustryaswellasderivesignificanteconomicbenefitsbecauseitac-countsfor70%oftheworld’scobaltproductionandover51%ofglobalreserves.ThesemineralsareneededfortheenergytransitionastheyserveascriticalfeedstockforbatteryandElectricVehiclemanufacturingvalechain.

1

AEB2023|VOLUME14|ISSUE7|STRENGTHENINGAFRICA’SROLEINTHEBATTERYANDELECTRICVEHICLEVALUECHAIN

However,despiteAfrica’shugebatterymineralresourc-esthecontinentremainsapricetakerandacommodi-tyexporterlargelylockedattheminingstage,whichisatthebottomoftheglobalbatteryandelectricvehiclevaluechainestimatedtoreachUS$8.8trillionby2025(BloombergNewEnergyFinance,2021).Topartakeinthisvaluechain,itisimportantforAfricancountriestobreaktheexcessivedependenceontheexportofnat-uralresourcesbycreatingmorevalueonthecontinentthroughresource-drivenindustrialization,strengtheningproductivecapabilitiesandexpandingexportsandin-tra-AfricantradeleveragingtheAfricanContinentalFreeTradeArea(AfCFTA).BetterintegrationintoglobalvaluechainswillnotonlycontributetotheachievementoftheSustainableDevelopmentGoals(especiallygoals8and9)andenlargetheshareofwealthretainedlocallybutalsostrengthenthecompetitivenessoflocalSMEsandenablecreationofdecentjobsfortheyouth.

ThispolicybriefseekstoidentifychallengesandsuccessfactorsforAfricatomoveuptheladderandoptimisebenefitsfromtheopportunitiesprovidedbytheenergytransition,especiallyfromthebatteryandEVvaluechain.Thisisadesk-basedresearchwithinputfrompreviousstudiesconductedbytheAfricanNaturalResourcesManagementandInvestmentCentreoftheAfDBonlithium-cobalt(AfricanDevelopmentBank,2021),rareearths(AfricanDevelopmentBank.,2021)andprecursorproductionintheDRC1(BloombergNewEnergyFinance,2021)aswellascontributionsfromtheEnergyPolicy,RegulationandStatisticsunit(PESR1)oftheAfricanDe-velopmentBank.

ImportanceofBatteryandTechnologyMineralsintheEnergyTransition

A2020WorldBankreporthasestimatedtheproductionofmineralssuchasgraphite,lithium,nickelandcobalt,couldincreasebynearly500%by2050tomeetthegrow-ingdemandforcleanenergytechnologies(WorldBank,2020).Thereportestimatesthatover3billiontonsofmin-eralsandmetalswillbeneededtodeploywind,solarandgeothermalpower,aswellasenergystorage,requiredforachievingabelow2°Cfuture.Themineralintensityissuchthateveniftherecyclingrateforcopperandaluminiumis100%,recyclingandreusewillstillnotmeettheexpect-edsteepdemand.Asidethedemand,supplyconstraintsanddisruptionsarelikelytobeexacerbatedbyeconomicsanctionsinthewakeoftheRussia’sinvasionofUkraineandRussia’sroleinthemetalsandminingsupplychain.However,itisnotedthatminingandprocessingofmineralresourcesgivesrisetoavarietyofenvironmentalandsocialissuesthat,ifpoorlymanaged,canharmlocalcommuni-tiesanddisruptsupply.Emissionsfrommineraldevelop-

mentcanbesignificantlyreducedbyashiftinfuelsourc-esandbyusinglow-carbonelectricity.Asimulationofanindicativerefinedcopperproductionprojectunderdiffer-entenergyconsumptionprofilesrevealsawidevariationinemissionsintensitydependingonthetypeoffuelusedandtheintensityofelectricitysuppliedbythegrid.Shift-ingallfuelstonaturalgaswouldbringemissionsdownby10%,whileusingrenewable-basedelectricityreducesCO2intensitybyabouttwo-thirds.Furtherreductionscouldbeachievedthroughtheelectrificationoffueluse.Whencom-bined,electrificationandrenewable-basedelectricityhavethepotentialtoreduceemissionsintensitybyalmost80%.Similartrendsarealsovisibleinnickelproduction2(Interna-tionalEnergyAgency,2022).Fuelswitching,low-carbonelectricityandinvestmentinenergyefficiencycansignifi-cantlyreducetheemissionsfootprintofmineralproductioninthenearterm.

Accordingtoastudy(InternationalCouncilonCleanTransportation.,2022)bytheInternationalCouncilofCleanTransportation(ICCT)basedoncurrentlyadopt-edpolicies3(Baselinescenario),CO2emissionsfromICEvehicles(excluding2&3-wheelers)inAfricawillreach909milliontonnesin2050,2.3timesthe2020level.However,anacceleratedtransitiontoelectricvehicles(InternationalEnergyAgency,2019)inAfricacouldin-steadreduceCO2emissionsto53%belowthe2020levelby2050.TheCO2mitigationpotentialisamplifiedbythefactthatmanyAfricancountriesalreadyhavegreenpowergridswithhighsharesoflow-carbonelec-tricitygeneratedfromhydropower,geothermal,solar,andwindenergy.ClearlymovingfromICEvehiclestoEVsisbeneficialtotheenvironment.

Theglobaltransitiontowardsgreenenergyandrapidde-carbonizationholdssignificantopportunitiesforAfrica.Ithasspurredthedemandforelectricvehiclesandinvest-mentinbattery-poweredstoragesystems.TheDemo-craticRepublicoftheCongo(DRC)isattheheartofthedynamicbatteryvaluechainasitisendowedwithstra-tegicmineralsthatarecomponentsoflithium-ionbatter-ies,usedforenergystorageandelectricmobility.Whilstthestrategicmineralsaremany,therearesomewhoseimportanceismosthighbasedoncurrentbatterychem-istries.Thesearelithium,cobalt,nickel,manganese,graphite,ironandphosphate.Thesemineralsaremaincomponentsintheproductionoflithium-ionBatteries(LIB)usedinElectricVehicles(EV)andelectricitystorage.Multiplecathodechemistriesremainincommonuse,eachwithdifferentcharacteristics.Thecathodechemis-triesarenamedbasedonthespecificmaterialsusedineachtype.Lithiumiron-phosphatebatteries,forexample,aretypicallyknownasLFP.Anickel-manganese-cobaltoxide(NMC)batteryisfurtheridentifiedbytheproportionofthosematerialstoeachother.AnNMC(811)battery

1

https://assets.bbhub.io/professional/sites/24/BNEF-The-Cost-of-Producing-Battery-Precursors-in-the-DRC_FINAL.pdf

2

/assets/ffd2a83b-8c30-4e9d-980a-52b6d9a86fdc/TheRoleofCriticalMineralsinCleanEnergyTransitions.pdf

3developingcharginginfrastructure;providingincentivesthatmakeEVscost-competitivewithICEvehicles;establishingEVandbatteryman-

ufacturingcapacity;electrifyingpublictransportation,especiallyelectric2&3-wheelers;andmakinguseofinternationalsupport.

2

AEB2023|VOLUME14|ISSUE7|STRENGTHENINGAFRICA’SROLEINTHEBATTERYANDELECTRICVEHICLEVALUECHAIN

has8partsnickelto1partofmanganeseand1partco-balt.Likewise,anNMC(622)batteryhas6partsnickelto2partsofmanganeseand2partscobalt.

Anothergroupofmineralsistherareearthelementswhichareusefulinproducingstrongmagnetsandcom-ponentsforwindturbinesandsolarequipment.WiththeglobalcommitmentstoreduceGreenHouseGases(GHG)emissionsandcreatealowcarbonfuture,theLIBhasemergedasoneofthebestsolutionstotheGHGemissionchallenge.Itpowerselectricvehiclesexpectedtoreplacefossilfuel-poweredvehicles,andstoreselec-tricityfromwind,solarandtidalpowerplants.In2020,batterytechnologyaccountedfor71%oftheshareoflithiumconsumptioninthemanufacturingsector.

Fuelledbyanincreasinglyrenewableelectricalgrid,elec-tricvehicles(EVs)offerpotentialtosignificantlyreducecarbonemissionscomparedtointernalcombustionen-ginevehicles.ElectricVehiclesaccountfor61%ofbat-teriesproducedfrom2016to2021,whilst34%relatestoconsumerelectronicsand5%forstationarystorage.Currentlylithium-ionbatterieshavelifespanbetween15to20yearsbutthisisexpectedtoincreaseastechnologyimproves.Growthinelectricvehiclesaleshasbeenpar-ticularlyimpressiveoverthelastthreeyears.Electriccarsalesincreasedfrom2.2millionin2019to6.6millionin2021,representingcloseto9%oftheglobalcarmarketandmorethantriplingtheirmarketsharefrom2019.Cur-rentlytheIEAestimatesthereareabout16millionelectriccarsontheroadworldwide,consumingroughly30tera-watt-hours(TWh)ofelectricityperyear4.ThisisexpectedtogrowrapidlyduetothebuoyantChinese,EuropeanandtheUSAcarmarkets.InChinathisisdrivenbyna-tionalsubsidiesandnewaffordablesmallerEVmodels.Insomewesterncountries,thesurgeinEVsalesispartiallydrivenbynewcarbondioxide(CO2)emissionstandardsandsubsidies,whilstconsumersbenefitfromgeneroustaxcredits.Addedtotheseinterventionsisthemajorpol-icyannouncementsbyGovernmentsandindustryplay-erstophaseoutabout50%ofICEsby20355.TheEVuptakeinAfricaisyettogainmomentumduetoseveralfactorsincludinginadequatepolicyandregulatoryland-scapetocreatetheneededdemand.Otherchallengesarediscussedundersection3.

CreatingthedemandforbatteryandEVsinAfricawillalsorequiretherequisiteskillsandcompetenciesfortheburgeoningindustry.Africa’softenciteddemographicdividend,theaspirationsofitsyouthandtheskillrequire-mentsoftheeconomy-allhingeonwell-functioningskillsdevelopmentprogrammes,whichshouldbeakeyconti-nentalpriority.Asideskills,fundingwillbeneededfortheentireEVvaluechain(exploration,mining,beneficiation,

cathodeandanodemanufacturing,separatormanufac-turing,cellproduction,batteryassemblyandfinally,theassemblyofelectricvehicles).Andthisisfarbeyondwhatpublicresourcescouldprovide.Privatesector,particular-lyAfricanprivatesector,investmentswillbeessentialtoclimbuptheladderintheseimportantvaluechains.

2|AFRICA’SPLACE

INTHEGLOBALBATTERY

ANDELECTRICVEHICLE

VALUECHAIN

TheDRChasthelargestcobaltmineralreservesof3.6millionmetrictonnes(USGS,2021),equivalentto51%oftheglobalcobaltreserves.CountriesproducingcobaltinAfricaincludetheDRC,Madagascar,SouthAfrica,andMorocco,withtheDRCproducing120,000metrictonnesin2021,equivalentto70%ofglobalproduction.Itisalsonoteworthythat15%oftheDRC’sannualproductioncomesfromlocalartisanalandsmall-scaleminers.TheArtisanalandSmall-ScaleMiningsectorhasbeenhigh-lightedasachallengesincechildlabourandsafetyissuesarenotwelladdressedandsomebuyersarelookingforalternativecobaltmarketsand/orcobaltchemistryalter-nativesinthebatterymanufacturing.WhilstAfricahasrichLithiumandCobaltresources,littletonovalueadditiontakesplace.Zimbabweonlyminesandexportsrawlith-iumorefromitsBikitamineandtheDRCextractsandexportsraworeorconcentrateofcobalt.

Table1belowpresentssummaryestimatesoftheper-centagesofworldreservesofcriticalmineralsfoundinAfricancountries,alongwiththe2050projectedannualdemandofthosemineralsforenergytechnol-ogiesasapercentageoftheirproductionin2018.Fromtheestimates,thedemandforcriticalminer-alsforthegloballow-carbonenergytransitioninthecomingdecadestendstoboostminingactivitiesinresource-richAfricancountries.TheAfricanminingsectorcananchordemandforenergyinfrastructuredevelopmentand,atthesametime,providethemin-eralinputsneededfortheestablishmentoftheend-to-endEVvaluechaininAfrica,therebystrengthen-ingAfricancountries’industrialbase,reducingtheirdependenceoncommoditiesandimprovingtheirbal-anceofpayments.

Fromaregionalgeologicalperspective,thecurrentconfirmedmineralresourcesinAfricacouldbeatipoftheiceberg.Thisisbecausesimilargeologicalformationsonthecontinentwhichhavethepotential

4IEA,2022.Electriccarsfendoffsupplychallengestomorethandoubleglobalsales

5TheUSgovernmentannouncedinNovember2021anambitious50%electrificationtargetfornewcarsby2030,supportedbythean-

nouncementoftheinstallationof500000chargingpointstohelpincreaseconsumerconfidence.Atthesametime,severalautomakers

announcedelectrificationtargets.Forexample,VWandFordindicatedhalfoftheirsaleswouldbeelectricby2030,whilstToyota,thelargestcarmanufacturerintheworld,announcingnewinvestmentsaimedatachievingelectriccarsalesof3.5millionayearby2030.

3

AEB2023|VOLUME14|ISSUE7|STRENGTHENINGAFRICA’SROLEINTHEBATTERYANDELECTRICVEHICLEVALUECHAIN

TABLE1PERCENTAGEOFWORLDPROVENRESERVESOFCRITICALMINERALSINAFRICAANDTHEIRPROJECTEDGLOBALDEMANDINCREASE

Percentageofsomeselectedworldprovenreserves

Projections

Mineral/

Country

DRCongo

Gabon

Ghana

Guinea

Madagascar

Morocco

Mozambique

SouthAfrica

Tanzania

Zambia

Zimbabwe

2050projectedglobal

annualdemandfromenergytechnologiesas%of2018globalannualproduction

Bauxite

25

9%

Cobalt

51

1.4

0.2

0.5

460%

Copper

2.2

2.4

7%

Graphite

8.1

7.8

5.3

494%

Ironore

0.1

1%

Lithium

1

488%

Manganese

4.7

1

40

4%

Vanadium

16

189%

日回凹回回目WorldBankdataon2050projectedannualdemandfor17criticalminerals,andUSGSdataonglobalreserves.7

forfurtherdiscoveries,areyettobeexplored,andcurrentexplorationeffortscontinuetomakediscoveries(AfricanDevelopmentBank,2021).

CurrentlyAfricaoperatesattheprimarystageofthebatterymineralsandelectricvehiclevaluechainwhichisestimat-

edatUS$8.8trillionby20256(seefigurebelow).Thepri-marystage(miningandmetalsrefining(labelledascurrentfocus)ofthevaluechainisalsoestimatedatUS$55billionby2025.However,Africa’sfocusinthemediumtermistoatleaststartproducingbatteryprecursors(chemicalsforcellproduction)andcellsinthemediumtolongterm.

6BloombergNewEnergyFinanceandAustralianGovernmentBatteryFutureBatteriesIndustries,CRC

4

AEB2023|VOLUME14|ISSUE7|STRENGTHENINGAFRICA’SROLEINTHEBATTERYANDELECTRICVEHICLEVALUECHAIN

Inabidtoavoidrisksresultingfromindividualtradepol-icies,majorbatterymineralsconsumerslikeChina,theUSA,theEU,Canada,Australia,JapanandKoreacouldbeimportantalliesinthedevelopingvaluechains.Identify-ingsynergieswithmajorbatterymanufacturersanduserssuchasLG,Samsung,andTeslashouldbeacceleratedinabidtocreateaclearmarketforthecontinent.Itisbecomingcommonpracticeforminersinthedevelopedworldtoengageinjointventuresorproposeagreementsthatfacilitatethedevelopmentofthefullvaluechain.

3|CHALLENGESINASCENDINGTHEVALUECHAINLADDER

ForAfrica,movingupthevaluechainremainstheprior-ity.However,thisiswithoutchallenges.Keychallengestosurmountincludetheabsenceofarobuststrategytotakeadvantageoftheopportunitiespresentedbytheen-ergytransition.Asidethis,otherchallengesincludediffi-cultyinattractingfundsforexploration,lackofdetailedfeasibilitystudiestowardsdevelopmentofdiscoveredresources,inadequateinfrastructureintermsofrailandroadtransportsystemsandportfacilitiesandinadequateaccesstoreliableandaffordableenergy.Furtherchal-lengescomprisemarketcontrolandlackofskills.Thefactthatallhigh-techconsumergoodsusingbatterymin-erals(lithiumandcobalt)asmainrawmaterials,areman-ufacturedoutsideAfricamakesitachallengebutalsoanopportunitytolocalisethesemanufacturingsegments.In2019,72%oftherefineryproductiontookplaceinChi-nawiththerestsharedbyFinland(9%),Japan(4%)andCanada(3%)withtherestoftheworldrepresenting12%.ThemarketlieswithChinaandtheWesternworld,eventhoughover52%oftheworld’scobaltreserveisinAfri-ca.BreakingthismarketstrongholdiswhatAfricamustfigureout.AfricaisalsoyettodevelopregulationsandpoliciespertainingtoEV-relatedmanufacturing,technicalstandardsandcharginginfrastructure.

ManyotherchallengesrelatetoinadequatedemandontheAfricancontinenttojustifythebusinesscaseforlocalizingcomponentsofbatterymanufacturingvaluechainsinAf-ricancountrieswherebatterymineralsaremined.AddedtothisistheinadequateelectricitysupplyandcharginginfrastructureforEVs.Thecontinent’sshifttoelectricmo-bilityislaggingfarbehindtherestoftheworld.InSouthAfrica,whichisthoughttobethelargestEVmarketonthecontinent,only1,000outofmorethan12millionvehiclesonitsroadsareEVs(InternationalEnergyAgency,2022).Specifically,SouthAfricasoldonly92batteryelectricve-hicles(BEVs)in2020,downfrom154in2019,represent-ing0.02%ofdomesticvehiclesales(TanderayiMukeredzi,2022).ThelowpercentageofEVsonAfrica’sroadscanbeattributedtothecostofEVsandthelow-incomelevelsofmostAfricanfamilies.Creatingthisdemandwillrequireanumberoffactorsincludingcoherentautomotivepolicies

7SouthAfrica&Gabon(forManganese),Madagascar(Nickel)

tofacilitateestablishmentofindustriestomanufactureLIBsandEVs(especially2&3wheelersandE-buses)whichareseenasAfrica’slowhangingfruits.ThiswillalsofacilitateJointVenturearrangementswithexperiencedglobalcom-paniestoinvestinEVinfrastructureandcreatingconsumerawarenessoftheneedtodecarbonize,especiallysettingachievabletargetsformajorcompaniestograduallyreplacetheirICEfleetwithBEVs.

Asidetheopportunitiesprovidedbytheenergytransitiontocriticalmineralrichnations,extractionofthemineralscanexacerbateenvironmentalandotherrisksincountrieswithgovernancechallenges.Attheminingstage,thiscallsforpoliciestoguidegradualtransformationofminingICEfleettoEVs.Onthemidstreampartofthevaluechain,themaindangerassociatedwiththeLIBvaluechainisthedisposalofwastematerial.Recyclingisexpectedtoallevi-atesomeoftheseenvironmentalissuesbutbecausethebatteryindustryisstillatthedevelopmentstage,recyclingisyettobeestablishedinearnestprimarilybecauseoftheeconomicsofundertakingtherecyclingprocess.CurrentlyonlyfewbatteryrecyclingplantsexistgloballybringingintoquestionhowEndofLife(EOL)batterieswillbedisposedincountrieswithoutrecyclingfacilities

InAfrica,sustainabilityisamajorissueforartisanalandsmall-scaleminers–theminingmethodsarearisktoboththeenvironmentandsociety,andtheuseofchildla-bourisendangeringchildrenandthreatingtheexistenceofthedevelopmentoftheminingindustry.Thus,itisim-portanttodevelopappropriatepoliciesandstrategiestoimprovesustainabilityacrosstheEVbatterysupplychain.Thiswillfacilitatebuildingregionalinfrastructureforbat-teryrecycling,transportationandcreatingregulatorycer-taintyforrecycling.

4|IMPROVINGAFRICA’S

VALUEPROPOSITION:

COMPETITIVENESS

ANDSUCCESSFACTORS

ThissectiondiscussescompetitivenessandsomekeysuccessfactorsaimedatimprovingAfrica’svalueproposition.

4.1Competitiveness:DownstreamValueAdditionandFreeTradeArea

A2021reportbyBloombergNEFsponsoredbytheAfri-canDevelopmentBankanditsPartners(UNECA,ALSF,AFC,AFREXIMBANK,BADEA)foundthattheDRC,inpartnershipwithothercountries7,canleverageitsabun-dantcobaltresourcesanditshydroelectricpowertobecomealow-costandlow-emissionsproduceroflithi-

5

AEB2023|VOLUME14|ISSUE7|STRENGTHENINGAFRICA’SROLEINTHEBATTERYANDELECTRICVEHICLEVALUECHAIN

um-ionbatterycathodeprecursormaterials.Itestimatesthatitisthreetimes(3x)cheapertobuildacathodepre-cursorplantintheDRCthanintheUSA;andsimilarly,muchcheaperandlesspollutingthaninChinaandPo-land.Africa’swealthofbatterymineralscanbeusedtoattractmorevalue-addindownstreamprocessingandmanufacturingonthecontinent.

TheAfricanContinentalFreeTradeArea(AfCFTA)agree-mentisasignificantpolicyinstrumentthatcanbelev-eragedtohelpAfricaachieveitstradeobjectives.TheAfCFTAhaspotentialtocreatethelargestfreetradeareaintheworldbyparticipatingcountries.Itcovers1.39billionpeoplewithacombinedgrossdomesticproductvaluedatUS$3.4trillion.TheAfCFTAcouldfacilitategrowthofintracontinentaltradefrom$294billionin2014(baseyear)to$532billionafterimplementationofAfCF-TAin2035.TheglobalelectricvehiclesindustrywillbeaUS$46trillionmarketbetween2021and2050,accord-ingtoBloombergNEF’sLongTermElectricVehicleOut-look.ThismarketcouldplayaroletowardstheAfricanUnion’sAgenda2063,whichisanAfricanblueprintandmasterplantotransformthecontinent.TheAfCFTAcanalsosupportAfrica’sautosectorbyimprovingcross-bor-dermanufacturingandsales.

In2020,originalequipmentmanufacturers(OEMs)sold856,792vehiclesassembledinAfrica,accordingtodatafromtheAfricaAutomotiveDataNetwork.Ofthevehiclesassembledonthecontinent,OEMsinSouthAfricasold44%ofthevehicles,followedbyEgyptandMoroccowith26%and16%,respectively.Africacanthereforeleverageonitsexistinginternalcombustionengineexpertise,theAfCFTA,rawmaterialsandgeographicalproximitytokeyautomarketstobecomeamajorelectricvehiclesupplychainplayer.

4.2StrengtheningExistingInitiatives

andSuccessfactors

ForAfricatogouptheladderinthebatteryandEVvaluechain,thefollowingsuccessfactorsneedstobestrengthened.

TheAfricaMiningVision(AMV)andtheInternationalStudyGroup(ISG)reportonMineralsforAfrica’sDevel-opmenthavesetpathwaystoanenhancedcontributionoftheextractivesectortoAfrica’ssustainabledevelop-menthingedontheaspirationalobjectivesoftransparent,optimalandequitableexploitationofmineralresources.However,theseframeworksdidnottakeintoaccountemergingissuesrelatingtoclimatechangeandtheen-ergytransition.Atthesectorallevel,thecurrentAfricanCommoditiesStrategybroadlycoversagriculture,energyandminerals.However,thisstrategydidnotgivepromi-nencetothenewglobaltrendsrelatingtoclimatechangeandthegloballowcarbonfuture.Ineffect,thechallengesandopportunitiesprovidedbytheseglobaltrendswouldnotbeefficientlyaddressedusingtheexistingstrategic

frameworks.Themissinggapthereforeistheabsenceofacoherentandsmartstrategytoguidedevelopmentofthecriticalmineralvaluechains.AcoherentandrobustAfricanGreenMineralsStrategyisthusneededforimplementationtoguideAfrica’svisionofleveragingitscriticalmineralresourcesforgreenenergyandoptimiza-tionofbenefitsforsocio-economicdevelopment.

AsidedevelopmentofanAfricanGreenMineralsStrate-gy,thefollowinginitiativesneedstobestrengthened.

a)Electrificationof2&3-Wheelers:Electrificationoftwo-andthree-wheelerscouldbeabigopportunityforAfrica.Annualimportsof2&3-wheelersintoAfricaareestimatedtobeabout4millionunitsvaluedatUS$2.7billion,withacurrentfleetofaround15to20millionvehicles.Africaissettobecomethesecondlargestmarketformotorcycles(inunitterms)afterAsiaandwillgrowrapidlyoverthenextdecade.Currently,UgandaandRwandaareman-ufacturingnewelectricmotorcycles,retrofittingexistingICEmotorcycles,andassemblingelectricmotorcyclesandbatterypacks.OthercountriesmanufacturingandassemblingtwoandthreewheelersincludeSouthAfrica,GhanaandKenya.Additionally,anumberofcompaniesarecurrentlyinvestingincharginginfrastruct