Introduction: Mineral Resources Are Only the Starting Point
If the global new energy supply chain is viewed as an ever-expanding river, Africa has long stood at its source.
Critical minerals such as cobalt, lithium, copper, manganese, graphite and phosphate are extracted from African mines and shipped into global markets. They then flow to refineries, materials plants and battery factories in Asia before ultimately being incorporated into electric vehicles and energy storage systems sold in Europe, China and North America. Africa supplies the resources, yet often captures only a limited share of the value created at the beginning of the chain. The higher-margin, more technology-intensive and more employment-generating activities — refining, materials manufacturing and battery production — have historically remained concentrated outside the continent.
As the global energy transition accelerates, this model is being challenged. Critical minerals are no longer merely industrial raw materials. They have become central to supply-chain security, industrial policy and trade strategy. African resource-producing countries are therefore reassessing their position: if the global new energy industry is highly dependent on African minerals, should Africa continue to be satisfied with exporting ores and basic concentrates? If it moves further into midstream processing, can resource advantages be converted into manufacturing capabilities?
The answer is not straightforward.
Developing local processing capacity is not simply a matter of building another plant next to a mine. It requires a country to simultaneously possess reliable energy supply, logistics infrastructure, chemical-industry capabilities, engineering expertise, customer qualification systems, access to financing, policy continuity and transparent pricing mechanisms. Resources can attract investment, but they cannot guarantee project success. What ultimately determines whether Africa can upgrade its battery metals value chain is not how much ore lies underground, but whether a stable and competitive industrial system can be built above ground.
1. The Global Supply Chain Is Being Reconfigured: Lowest Cost Is No Longer the Only Answer
Over the past decade, the battery supply chain has largely been organized around cost efficiency. Resources have flowed from around the world into Asia, while lithium chemicals, precursors, cathode active materials and battery cell manufacturing have become concentrated in regions with mature supply chains, large-scale production capacity and deep engineering expertise. Finished products are then sold into global markets. This model created a highly specialized international division of labour, but it also increased the dependence of some countries on external supply chains.
In recent years, however, the criteria used to evaluate supply chains have changed.
Companies still care about cost, but cost is no longer the only consideration. Security of supply, geopolitical risk, trade barriers, carbon footprints, material origin and traceability are becoming increasingly important in investment decisions. Europe wants to reduce its dependence on external supply chains. African resource producers want to retain more value locally. Chinese companies are seeking new locations for global expansion.
The emerging supply chain is neither a simple return to European localization nor a complete departure from Asia. Instead, it reflects a new balance between security, cost and compliance. Europe continues to hold advantages in end-market demand, regulatory rule-setting and capital. Nearshore countries such as Morocco are beginning to absorb battery materials and manufacturing capacity aimed at European customers. Resource-rich countries in sub-Saharan Africa are attempting to move from raw ore exports toward concentrates, intermediate products and selected refining activities. Chinese companies continue to play a major role through capital investment, technology, engineering and supply-chain integration.
2. Europe’s Challenge: Policy Ambition Does Not Equal Industrial Competitiveness
Europe has been one of the main drivers of the restructuring of the global EV and battery supply chain. Through policies such as the Critical Raw Materials Act, the European Union aims to strengthen the security of strategic raw-material supply while increasing domestic mining, processing and recycling capacity. Specifically, the EU has set targets for 2030 under which at least 10% of its annual consumption of strategic raw materials should be extracted domestically, 40% processed domestically and 25% supplied through recycling. Europe’s direction is clear: critical industries should not depend excessively on a single external source, and battery supply chains must become more resilient.
Yet the experience of recent years has also shown that localization is far more complex than policy design.
Northvolt, once regarded as the flagship of Europe’s independent battery manufacturing ambitions, filed for bankruptcy in March 2025. ACC, Cellforce, Volvo Group and several other companies subsequently scaled back battery manufacturing plans in Europe. In the autumn of 2024 alone, at least 100 GWh of planned European battery capacity was cancelled or postponed. The issue was not only the financing environment. European battery manufacturing also faces a set of structural challenges that are difficult to avoid: high energy costs, insufficient supply-chain support, difficulties in production ramp-up, rapid technology evolution and uncertainty around future EV demand.
A deeper issue lies in the limitations of policy instruments themselves. Measures such as the Net-Zero Industry Act and the Critical Raw Materials Act provide policy direction, but they do not necessarily include sufficiently strong local-content incentives or binding mechanisms to drive genuine value-chain localization. Subsidies can reduce initial capital pressure, but they cannot permanently offset structural operating-cost disadvantages. Industrial electricity prices in Europe are often three to four times higher than in China, and electricity accounts for a significant share of the cost structure in midstream activities such as lithium refining and cathode-material calcination.
Battery manufacturing is not simply a matter of installing capacity. Risks exist at every stage, from project design and construction to commissioning and ramp-up. Even after a plant is completed, production may fail to reach target levels because of technology selection, impurity treatment, yield control or product-consistency issues. More importantly, end-use demand remains the ultimate anchor for industrial investment. Gigafactories are highly capital-intensive assets, and companies need confidence in future orders, vehicle programs and end-market sales. If demand growth falls short of expectations, or if technology pathways change quickly, expansion decisions will become more conservative.
Europe’s experience does not mean localization is unnecessary. It shows that policy can create opportunities, but it cannot substitute for competitiveness. This lesson is particularly important for Africa.
3. Why Africa Must Move Downstream
Despite the complexity of the path, there is a clear strategic rationale for Africa to upgrade its value chain. That rationale is increasingly supported by concrete market signals.
Africa has long played a critical but relatively narrow role in the global new energy supply chain: supplying resources. The Democratic Republic of the Congo is the core source of global mined cobalt, accounting for approximately 75% of global output. Zimbabwe has become an important African exporter of spodumene concentrate. Copper resources in Zambia and the DRC are central to global electrification. Mozambique, Tanzania and Madagascar also possess meaningful graphite potential.
But resource exports do not equal industrial control. Periods of falling commodity prices make this contradiction especially visible.
In early 2025, the DRC imposed a cobalt export ban before shifting to a quota-based management system. The trigger was a collapse in cobalt prices to below US$10 per pound in early 2025. Prices had fallen because supply continued to expand while processing and pricing power remained concentrated overseas. After the export restrictions were introduced, global cobalt prices rebounded by approximately 170%, demonstrating that African resource-producing countries can influence market pricing from the supply side.
Yet the policy also exposed another contradiction. Following the restrictions, inventories accumulated within the DRC and some companies faced growing cash-flow pressure because local processing capacity was insufficient to absorb the available material. The real need for resource-producing countries is therefore not merely an export barrier, but an industrial system capable of converting resources into higher-value products.
Zimbabwe’s lithium industry provides another perspective. With continued investment from Chinese companies such as Zhejiang Huayou Cobalt, Zimbabwe is moving beyond concentrate exports and developing lithium sulphate projects, enabling its product mix to shift toward intermediate materials.
This change is significant for several reasons. Intermediate products reduce the cross-border transportation of low-value material, increase the value density of exports and allow resource-producing countries to capture a share of midstream processing margins. Lithium sulphate is not the final destination of the value chain, but it represents a practical and replicable path for industrial upgrading. Compared with direct exports of spodumene concentrate, lithium sulphate reduces the transportation of lower-value material and improves the unit value of exports. More importantly, it occupies a position between concentrate and battery-grade lithium chemicals. Its technical requirements, energy consumption and project complexity are relatively manageable.
For countries still developing their electricity supply, chemical-industry infrastructure and industrial base, lithium sulphate offers a more realistic route than immediately building battery-grade lithium carbonate or lithium hydroxide facilities.
However, the Zimbabwe case is not only about industrial upgrading. It also reveals the tension between resource nationalism and industrial competitiveness. Governments hope to accelerate downstream development through export restrictions, quota management and local-processing requirements. Such measures can encourage companies to reassess their processing strategies and may strengthen the bargaining power of resource-producing countries in the short term.
But if policy adjustments move faster than the development of infrastructure and processing capacity, export restrictions can lead to inventory accumulation, cash-flow pressure and supply-chain disruption. They can also increase project-financing costs and weaken investor confidence in future capital expenditure.
Morocco offers a reference point closer to the downstream end of the value chain — but it is also a reference point with clear limits.
Leveraging its proximity to Europe, abundant phosphate resources, relatively mature industrial base and stable investment environment, Morocco has successfully attracted companies including Gotion High-Tech, BTR New Material Group and Zhejiang Huayou Cobalt to invest in cathode materials and battery manufacturing. It is gradually emerging as a nearshore manufacturing hub for the European market. The Sino-Moroccan joint venture COBCO completed its first lithium-ion battery materials facility in Jorf Lasfar in 2025. Gotion High-Tech is planning a battery gigafactory in Kenitra with an initial capacity of 20 GWh and a long-term target of 100 GWh. Renault Group has also signed a seven-year agreement with Managem for an annual supply of 5,000 tonnes of low-carbon cobalt sulphate, sufficient to support approximately 15 GWh of annual battery production.
But Morocco’s success depends on a set of conditions that cannot be replicated quickly: proximity to European consumers, mature port infrastructure, an established automotive manufacturing cluster, a relatively stable investment and regulatory environment, and the ability to attract both Chinese capital and European customers.
For resource-producing countries in sub-Saharan Africa, Morocco is a valuable benchmark, but not a template that can simply be copied. Morocco has reached its current position because it has accumulated infrastructure, policy stability and industrial capabilities over many years — not because it suddenly discovered a particular mineral resource.
This is precisely the gap that most African resource-producing countries must now confront.
4. Five Barriers to Localizing Africa’s Battery Metals Value Chain
Africa does not lack resources, but resources are only the entry ticket. To move from ore exports to materials manufacturing, countries must overcome at least five barriers.
4.1 Power and Infrastructure Determine the Industrial Ceiling
Mining and midstream processing operate under different industrial logics.
A mine can establish a relatively self-contained operating system around resource extraction. But lithium chemicals, sulphates, precursors and cathode-material plants require continuous, reliable and competitively priced electricity. They also require industrial water, chemical supplies, roads, railways, ports and environmental-treatment facilities.
If power supply is unstable, plants will struggle to operate continuously. Product quality, equipment life and customer deliveries will all be affected. The slow progress of battery-grade lithium projects in Zimbabwe has repeatedly highlighted unstable electricity supply as one of the core obstacles.
Whether a country possesses mineral resources and whether it is suitable for midstream processing are therefore two different questions.
Low-cost ore does not automatically translate into low-cost materials. Resource advantages can only be transmitted into processing competitiveness when energy, logistics and industrial support systems are also competitive.
4.2 Engineering Capability Determines Whether Projects Can Be Delivered on Time
The global battery materials industry has repeatedly demonstrated that midstream processing projects are not simple equipment-replication exercises.
Every stage carries risks, from project design and construction to commissioning and ramp-up. Even after a facility is built, production may fail to reach expectations because of technology selection, impurity treatment, feedstock variability, yield control or product-consistency issues.
For African resource-producing countries, the greatest risk is not that projects are too small, but that high-capital-expenditure projects are advanced too quickly before their business models have been validated.
Mining companies understand mining. That does not mean they automatically possess the capability to operate chemical-processing facilities. Moving downstream requires new technology partners, new management systems and new customer relationships. Industrial upgrading is not simply an additional step in an existing business. It is entry into a different capability system.
4.3 Customer Qualification Determines Whether Products Have Real Market Value
Africa’s local EV and ESS markets remain relatively limited. As a result, most battery materials projects must be designed for international markets from the outset.
Products must not only be produced; they must be sold. They must not only meet chemical specifications; they must also satisfy customer requirements for stability, batch consistency, delivery capability, carbon footprints and traceability.
For battery-grade lithium chemicals, cobalt sulphate, precursors and cathode materials, customer qualification cycles are often long. Without clear offtake agreements, projects may face sales difficulties even after capacity is built. Yet before a project is completed and product quality is verified, it is often difficult to secure high-quality long-term customers.
This creates one of the most common financing dilemmas for midstream projects: without orders, financing is difficult; without financing, stable capacity cannot be established; without stable capacity, customer qualification becomes difficult.
4.4 Policy Stability Determines the Cost of Capital
Some resource-producing countries aim to encourage local processing by restricting raw-material exports, raising export taxes or introducing quotas. These policies have a rational basis, but their timing matters.
If electricity, logistics and technical capabilities have not yet been established, overly rapid export restrictions may cause inventory accumulation, deteriorating cash flows and delayed investment. The DRC’s 2025 export restrictions created precisely this situation: the policy logic was understandable, but implementation resulted in inventory build-up, rising financial pressure on companies and a reassessment by some investors of the feasibility of processing investments in the country.
The more frequently policies change, the higher the risk premium investors will require and the higher the cost of financing.
Companies do not necessarily oppose stricter localization requirements. But they need policy pathways that are clear, continuous and predictable. Rather than adjusting rules abruptly, governments should set phased targets while improving infrastructure, approval efficiency and the investment environment.
4.5 Transparent Pricing Mechanisms Determine Whether the Market Can Mature
As the value chain shifts from ore to concentrates, intermediate products and refined chemicals, pricing becomes more complex.
Differences in grade, impurities, moisture, particle size, trading terms and logistics routes all affect product value. Clear price relationships are also needed between spodumene concentrate, lithium sulphate and battery-grade lithium chemicals.
Without transparent price benchmarks, mining companies cannot evaluate how much value local processing actually creates. Traders cannot establish reliable premiums and discounts. Processors cannot manage margins effectively. Banks and investors cannot properly assess project cash flows.
Pricing systems may appear to be transaction tools, but they are in fact industrial infrastructure. Without a common pricing language, resources, trade, financing and manufacturing cannot be fully connected.
5. Africa Does Not Need a Single Answer: It Needs a Tiered Localization Strategy
African countries differ significantly in resource endowments, energy availability, infrastructure and market conditions. A single development model will not work.
A more realistic approach is to pursue localization in stages according to country-specific conditions.
For most resource-producing countries, the first step should be to improve beneficiation and concentrate quality. This means establishing stable product specifications, impurity controls and reliable delivery systems. Standardized concentrates may not offer the highest possible value added, but they are the foundation for entering global supply chains. If grades fluctuate, impurity levels are unclear and shipments are inconsistent, companies will struggle to secure long-term customers or establish credible pricing.
The second step is to develop intermediate processing capacity. For lithium, this could mean lithium sulphate. For cobalt, it could include cobalt hydroxide and selected sulphates. For graphite, it could involve initial processing and purification. Intermediate products serve as an essential bridge between raw-material exports and advanced materials manufacturing. They improve value retention without requiring resource-producing countries to immediately enter the most technically demanding parts of the chain.
The third step is selective development of refined chemicals in countries with a stronger industrial base. Products such as battery-grade lithium carbonate, lithium hydroxide, cobalt sulphate and high-purity manganese sulphate require reliable power, mature chemical-industry support, environmental-treatment capacity, technology partners and downstream customers. Not every country is suited to this stage.
The fourth step is the development of cathode materials, battery cells and packs in a very limited number of regional hubs. Morocco is closer to this category. Battery manufacturing should not be the starting point of Africa’s industrial upgrading. It should be the result of a gradually maturing industrial ecosystem.
6. A Practical Model: Resource Corridors, Processing Hubs and Global Customers
Africa’s battery metals value-chain development should not depend on individual countries trying to independently build every stage of the chain.
A more realistic model is regional specialization built around resource corridors, processing hubs and export gateways.
Resource-rich countries can focus on mine development, beneficiation and primary processing. Areas with stronger electricity supply and industrial foundations can develop centralized processing parks. Cities with ports, financial institutions and trading capabilities can provide export logistics, warehousing, financing and price discovery. Cross-border railways, ports, power grids and customs facilitation will become essential foundations for industrial upgrading.
Regional coordination can reduce the cost of repeatedly building infrastructure for individual projects while improving supply-chain resilience. A complete supply chain does not need to exist within a single African country. It can exist within a connected regional network.
Companies must also take a more pragmatic approach. African mining companies should not blindly pursue full value-chain integration in a single step. Instead, they should adopt modular investment and staged expansion. First improve concentrate quality and delivery reliability. Then test the economics of intermediate processing. Secure technology partners and offtake agreements before entering battery-grade chemicals. Build stable cash flows before considering further downstream expansion.
The most bankable project is not the one with the largest planned capacity. It is the one with the clearest commercial logic.
Investors typically focus on six questions: Is feedstock supply stable? Is energy competitive? Are technology partners reliable? Are customer orders clear? Is policy predictable? Is pricing transparent?
Only when these six conditions form a coherent system can a project withstand market cycles.
7. Pricing Benchmarks: The Hidden Infrastructure Behind Industrialization
As African resource products move toward intermediate and refined products, the importance of pricing systems will continue to rise.
Taking lithium as an example, the market needs more than a single spodumene concentrate price. It must distinguish premiums and discounts across grades, identify logistics costs between FOB and CIF terms, assess the value of intermediate products such as lithium sulphate, and establish conversion relationships between ore, lithium chemicals and battery materials.
A transparent pricing system should cover at least four layers.
The first is benchmark pricing, which reflects prevailing market transaction levels.
The second is quality differentials, which account for differences in grade, impurities, moisture and particle size.
The third is logistics differentials, which connect mines, ports and end markets.
The fourth is conversion economics, which assess margins from ore to intermediate products and from intermediate products to refined chemicals.
These indicators do not only serve trade. They also support investment.
For mining companies, pricing benchmarks help determine whether local processing genuinely creates value. For processors, they support procurement and margin management. For financial institutions, they provide an essential foundation for project valuation, financing models and risk management.
Africa’s value-chain upgrading requires not only more factories, but also more mature market mechanisms.
Conclusion: Resources Determine the Starting Point, but Execution Determines Who Can Survive the Cycle
The restructuring of global supply chains has created new demand for Africa’s industrial development. Europe needs more resilient supply chains. Chinese companies need new locations for global expansion. Resource-producing countries want to move beyond a model based solely on raw-material exports.
Morocco’s rise demonstrates that Africa can play a manufacturing role in the new energy supply chain. Europe’s setbacks serve as a reminder that capital and policy are necessary, but not sufficient. The long-term survival of midstream projects depends on the systematic accumulation of cost competitiveness, technology, energy supply, customer qualification and operational discipline.
Africa does not need to replicate a complete battery supply chain in every country. Nor should it assume that deeper processing is always better.
A more realistic path is to improve concentrate quality and intermediate-processing capabilities in resource-producing countries, develop refining and materials manufacturing in selected regional hubs, build resource corridors through cross-border infrastructure, and improve project bankability through long-term customer relationships and transparent pricing systems.
What Africa truly needs is not more grand plans that remain on paper, but a portfolio of midstream projects that can operate reliably, compete globally and survive commodity cycles.
Resources determine the starting point of industrial development.
Energy and infrastructure determine the industrial ceiling.
Engineering and operational capabilities determine whether projects can be profitable.
Customer demand determines whether capacity can be absorbed.
Policy stability determines whether capital is willing to stay for the long term.
Transparent pricing systems determine whether the market can mature.
And the ability to deliver all six conditions at the same time will determine which projects can truly move from ambition to execution — and survive the cycle.
Lesley Yang Senior New Energy Analyst
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