U.S. bid for battery metals has Africa blind spot

Lepidico

09/12/2022 05:00

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      U.S.-Africa trade on agenda at Dec. 13-15 summit in DC
    

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      Inflation Reduction Act could impact Africa metal
producers
    

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      Congo fears Act could reduce demand for its cobalt
    

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      Act encourages U.S. mining and processing
    

  
    By Helen Reid and Nelson Banya
       JOHANNESBURG, Dec 9 (Reuters) - Mining companies and
governments in Africa are calling for stronger trade ties with
the United States after a new climate law set out incentives for
U.S. carmakers sourcing battery materials from trade partners. 
    The $430 billion Inflation Reduction Act (IRA) has been
criticised by the European Union and South Korea, who say it
could hurt their car industries.   
    It could also negatively impact African nations that produce
battery materials. 
    The United States has a Free Trade Agreement in place with
only one African country, Morocco. Yet the continent is a key
copper producer and Democratic Republic of Congo produces most
of the world's cobalt.
    Battery materials and trade are set to be a focus at next
week's U.S.-Africa Leaders' Summit in Washington where President
Joe Biden will meet presidents of African countries including
Congo.
    "The IRA was intended to push out China, and what it's ended
up doing is pushing out the DRC, and the EU, and South Korea,"
said Indigo Ellis, managing director at consultancy Africa
Matters Limited, who will attend the Dec. 13-15 summit.
    Under IRA, U.S. carmakers will get tax credits if they
source at least 40% of battery materials domestically or from
American free-trade partners. This risks carmakers replacing
Congolese cobalt with Australian, Canadian, Moroccan, or U.S.
cobalt.
    Congo produced 74% of the world's mined cobalt last year
while the next-biggest single producer, Australia, was
responsible for just 3%, according to a Cobalt Institute report.
    An adviser to Congo's President Felix Tshisekedi said a
USA-DRC Free Trade Agreement "is an option for the medium to
long-term, but in the short term other avenues will be
explored".
    A spokesperson for the U.S. Trade Representative (USTR) said
"we look forward to discussing ways to strengthen and deepen our
trade and investment ties with our partners throughout Africa"
during the summit.
    The IRA aims to boost U.S. mining and processing, which some
companies fear could come at the expense of value-added
processing in Africa.
    "The West needs to work with us to build some value-add,"
said George Roach, CEO of Premier African Minerals  PREM.L ,
which has a lithium project in Zimbabwe. 
    His is one of many projects across sub-Saharan Africa aiming
to produce battery materials like lithium, nickel and graphite.
    Joe Walsh, managing director at Australia-listed Lepidico
 LPD.AX , which is building a lithium mine in Namibia and
chemical plant in Abu Dhabi, said the IRA makes the United
States a more attractive location for a planned second plant.
    "The U.S. is not going to be able to incentivise the
development of a significant battery raw material production
base of its own without ruffling a few feathers along the way." 
 (Reporting by Helen Reid and Nelson Banya, Additional Reporting
by Sonia Rolley in Paris, Nuzulack Dausen in Dar es Salaam,
Ernest Scheyder in Houston, Daphne Psaledakis in Washington DC,
Chris Mfula in Lusaka, Manuel Mucari in Maputo, Nyasha Nyaungwa
in Windhoek, Editing by Pratima Desai and David Evans)
 ((Helen.Reid@thomsonreuters.com; +27 66 156 5214;))