China's strategic move to tap into new sources of lithium supply in Africa is paying off, as it seeks to navigate the tight market for this critical metal. With significant investments from Chinese companies, mines across the continent are projected to increase their production of lithium raw materials more than 30 times by 2027, according to S&P Global Commodity Insights. Africa's share of global supply is expected to reach 12% by then, compared to just 1% in 2022.
By diversifying its sources of supply, China aims to secure its position as the leading processor of EV metals, including lithium, nickel, and cobalt, as it faces increasing competition from the US. While the US is also seeking to establish its own supply networks with countries like Canada and Australia, Africa offers China an alternative source of raw materials, especially as supplies from Australia may be constrained due to domestic refinery developments.
According to data countries such as Mali, the Democratic Republic of Congo, and Zimbabwe could become top lithium producers by the end of the decade. Chinese companies, including Ganfeng Lithium Group, Contemporary Amperex Technology Co., and Sichuan Yahua Industrial Group, have already made significant investments in mines in these regions. In fact, a Zimbabwean lithium project recently delivered its first shipment of lithium concentrate to Zhejiang Huayou Cobalt Co., while Chengxin Lithium Group announced the start of production at its Sabi Star lithium mine in Zimbabwe.
Chinese investment in Africa has become the primary source of capital for battery material supply in recent years, with the expansion into these new regions crucial for China's supply chain to meet the demand from its manufacturers, according to Martin Jackson, head of battery raw materials at CRU Group.
Meanwhile, the US is also exploring options for raw materials supply from Africa, but has only made tentative plans, including preliminary cooperation agreements with the Democratic Republic of Congo and Zambia. However, including Africa as a trade-friendly supplier would require further scrutiny.
With global supply forecasted to increase by 35% this year, with 50% of that coming from new operations, the lithium market is expected to remain tight in the coming years. However, the situation is likely to ease as more projects, particularly in Africa and Canada, come online.
It is anticipated that countries in Africa will follow the trend set by other nations and aim to maximize the value of their lithium exports by adding processing or refining plants. Zimbabwe and Namibia have recently implemented measures to discourage or prohibit the export of raw lithium ore. In this context, Morocco, which has a free trade agreement with the US, is emerging as a potential hub for EV battery production, thanks to its proximity to Europe and its abundance of phosphate required for lithium iron phosphate (LFP) cells.
Earlier this year, the Moroccan government announced that Chinese battery manufacturer Gotion High-Tech Co. had reached a preliminary agreement to build Africa's first major EV battery factory. The factory would have an annual capacity of 100 gigawatts and would require an investment of €6 billion ($6.5 billion).