An electric car being charged. Lithium is used in the batteries. Picture: REUTERS
An electric car being charged. Lithium is used in the batteries. Picture: REUTERS

Is lithium the new oil? What’s for certain is that lithium-ion batteries are on an exponential rise, propelled by the sales of electric vehicles and the rollout of energy storage. And SA could become a key player in the value chain, as highlighted in a new study conducted by Trade & Industrial Policy Strategies (Tips), in collaboration with the UN Industrial Development Organisation and the department of trade, industry & competition.

Sure, SA does not have lithium, but a wide array of minerals is actually used in the production of lithium-ion batteries. This includes manganese, cobalt, iron ore, nickel and titanium, which are found in abundance in the country. In the case of manganese, SA even benefits from a quasi-monopolistic position in global deposits. Beyond SA, the continent also has incomparable reserves and mining capacity in key minerals supporting the lithium-ion battery value chain (including lithium).

All right, so, we have got minerals. What’s more? Maximising and sustaining the value of finite mineral resources requires developing beneficiation and manufacturing. What role could SA then play in the lithium-ion battery value chain beyond mining?

Could we manufacture cells? Not that easily. We have the industrial capacity and know-how, but it remains to be proven whether an SA-based company could be competitive in this market segment. China leads, followed by Japan, South Korea, the US, Europe and even India. Setting up a gigafactory in SA would require a solid business case, both on the supply side (that is, finding investors and partners) and the demand side (finding markets).

So what about recycling? Same problem. While the country has expertise in mineral processing and recovery, the economic viability of a possible recycling plant is unknown. China overwhelmingly dominates the market. Actually, the research undertaken by Tips points to opportunities for SA that lie in other, less trendy but not less exciting, places.

Fostering the growth of battery-pack manufacturing is the most viable pathway in the short to medium term. Battery manufacturing based on imported cells (from East Asia) is already a vibrant industry in the country. Numerous firms, in collaboration with academics, have developed intellectual property and expertise in the manufacturing of specific components, parts and systems (most notably battery management systems) as well as the assembly of battery packs. In some cases, companies have further leveraged this expertise to develop additional offerings, such as specialised vehicles. A number of companies are also involved in marketing second-life batteries on the local and regional market.

Then, a second avenue is to refine local minerals to battery grade, so they can be used to make cells and other critical battery components. SA has long-standing experience and expertise in mineral beneficiation that can be leveraged. However, to date there is little domestic refining of minerals for battery production. Only manganese and aluminium are refined to battery grade at the moment, while nickel and lithium are in the pipeline.

Looking ahead, not all activities in the value chain are likely viable domestically, but SA displays key pockets of excellence. In fact, the importance of developing the lithium-ion battery value chain should not be underestimated. An established lithium-ion battery industry is essential to the local development of both the (renewable) energy and (electric) transport industries.

A few key interventions would go a long way in positively positioning the country in the value chain. Required industrial policy measures include improving the economic environment for entrepreneurs and small businesses in the value chain, by investing in commercialisation, research & development and skills development, but also developing local testing and certification. This involves strengthening the country’s existing Energy Storage Consortium.

Since most domestic firms operate in niche markets, partnerships with automotive manufacturers and energy project developers would also be required to break down barriers to entry. Then, a mineral beneficiation policy, backed by investment facilitation initiatives and infrastructure upgrades (energy, water and transport), could position SA as a pivotal supplier of beneficiated products into the value chain. Such interventions could furthermore be reinforced by a regional integration strategy, particularly around the Southern African Development Community.

The emphasis should be on the country’s evidenced strengths, rather than unsubstantiated aspirations. Then, an electrifying opportunity lies ahead for SA.


• Montmasson-Clair is a senior economist at Trade & Industrial Policy Strategies in Pretoria. The full report can be found on


Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.