African nations are rich in critical metals for batteries and electric vehicles (EV) but they should avoid only exporting their raw minerals, according to a new report by the United Nations Conference on Trade and Development (UNCTAD).
"While the need for Africa to integrate global supply chains is not new, we urge African countries to avoid being locked into the provision of 'just' raw materials, which results in very low-value integration into global supply chains," said UNCTAD secretary general Rebeca Grynspan in the new Economic Development in Africa Report 2023 released on 16 August.
The report comes as lawmakers in African nations increasingly see value in regulating their mineral resources and vowed to advance nationalistic industrialisation amid an accelerated global transition to EVs. Namibia and Zimbabwe introduced measures to ban unprocessed mineral ore exports. Ghana's minister of land and natural resources Samuel Jinapor tweeted in June that "under no circumstances will Ghana export its lithium and other green minerals in their raw state", as he reiterates Ghanaian president Akufo-Addo's commitment to ensure they capture added value.
African nations have the potential to be key suppliers of automotive parts and components, according to the UNCTAD report. The continent also contains 48pc of global cobalt reserves, 47.6pc of manganese reserves, and over 80pc of phosphate rock reserves as well as platinum group metals.
"[But] this new opportunity for African countries to participate in high-value global supply chains cannot be realized without equal terms of mining contracts and policies that can catalyse lateral linkages between large-scale mining and local productive industrial development," Grynspan added.
Competitive advantages
The report suggested that African countries make deals with automotive and battery producers to acquire technology and knowledge, while engaging in domestic processing.
National incentives and regional cooperation can help domestic companies to gain a competitive advantage if they were provided preferential access to local resources, such as specific percentages of mining products that must be used or transformed locally, the report added, which strongly echoes the US' Inflation Reduction Act.
Morocco in June signed a $6.4bn agreement with China-based battery maker Gotion High Tech to build a battery gigafactory that can have up to 100 GWh/yr of production capacity, according to the nation's investment agency.
The report suggested the development of new vehicle-financing mechanisms to boost domestic automotive demand and to cluster automotive production through special economic zones (SEZ) and industrial parks. A new battery SEZ dedicated to producing battery precursors, batteries, and EVs was established between Congo and Zambia in April. It will be facilitated by the African Export-Import Bank and the United Nations Economic Commission for Africa, according to the UN.
The report lastly called for support for African nations in negotiations of mining contracts to ensure fair value from extractive industries.
