Sparking the growth of the battery sector in Zambia

THE electric battery sector is among the fastest growing manufacturing subsectors around the world. Nota bly, it has been gaining attention from various players in the world economy, with several automotive manufac turing companies such as Tesla and Chevrolet seemingly favoring sustain able production in the sector in an en deavor to support their efforts to grow the electric vehicles subsector.

Consequently, increased demand in electric batteries has resulted in increased demand for battery metals such as lithium, manganese, copper and cobalt. For example, global de mand for cobalt has tripled since 2011 in the battery sector alone and is ex pected to reach 190,000 metric tonnes by 2026.

The increased demand for electric batteries provides an opportunity for increased productivity and value addi tion of the battery metals for countries such as Zambia and the Democratic Republic of Congo which are richly endowed with the natural resources.

However, the battery manufactur ing sector is underdeveloped in these countries, and failure to harness bat tery metals could be another missed opportunity as it has always been in the past.

Despite having run a battery man ufacturing company in Mansa before its privatisation, Zambia just like most African countries does not have sig nificant technical know-how neces sary for development of the electrical battery sector. On this account, Zam bia has to take a determined path to utilise the clear potential for Zambia’s battery metals to make an important economic contribution, in the context of a wider supply chain that the sector can churn.

Notably, the Government of the Republic of Zambia has placed great emphasis necessary for gaining value from the battery sector. In April 2022, Zambia and the Democratic Republic of Congo signed a Memorandum of Understanding establishing a common governance framework for the electric battery and clean energy sector.

The agreement also took into consideration the creation of a harmo nized legislative and regulatory frame work for a business environment fa voring the development of the value chain industries and the development of industrial zones in both countries to support the initiative. With political will taking the center stage in driving the battery sector development agen da, there is hope for growth.

Given the good policy framework, realization should be had that Zambia currently has very little capacity for lithium mineral processing or manu facturing of battery components. In ability to process these raw materials leads to an increased risk of continued exportation of raw materials and may maintain the status quo of exporting natural resources as it has been the case with copper.

Very little value addition has been achieved with Zambia’s Copper which results into importation of finished products to be used in the local man ufacture of transformers. The missing value chain has long denied the na tionals the much-needed employment opportunities and government revenue.

The Government needs to be aggres sively deliberate to ensure that a value chain around batteries includes, lith ium, manganese, cobalt and copper processing is established locally to be used in production. For instance, the Government has not put in place sig nificant incentives necessary to attract investment into the battery production sector, which in turn may deny manu facturing companies the much-need ed cash flow to invest in technology, training and other important require ments to be competitive. Additionally, capacity constraints in the battery val ue chain may be enhanced by limited financing opportunities necessary to successfully develop the sector.

Further, the Government should also support exploration of battery metals in attempt to ensure the availability of raw materials necessary for sustain able production. Sadly, expenditure on mineral exploration in Zambia has dropped to around $20 million from around $100 million ten years ago. Considering that mineral exploration is among the most important aspects in the mineral resources cycle, it is im portant that the Government should support or at least provide a conducive environment necessary for explora tion. For instance, mining exploration has been constrained by additional charges on payment of import duties on imported exploration equipment and duties. Considering the huge costs and high risks incurred at exploration, additional costs tend to demotivate exploration.

Majorly, Government policy should be skewed towards facilitating a con ducive environment for undertaking business and for the development of partnerships. For instance, the incen tives structure should favor partner ships with local companies. The part nerships will provide joint resources as well as provide diverse skills necessary to be learnt by local labour and provide skills transfer to local companies.

Finally, the Governments of the Re public of Zambia and the Democratic Republic of Congo should set a fund, aimed at financing necessities in the sector such as trainings, and provision of resources necessary for investment. Most companies have failed to take off due to lack of cheap financing op portunities. Henceforth, constraining expansion and investment in quality which is necessary for competition.