SA has capacity to generate R16bn a year with manufacture of lithium-ion batteries, study finds

South Africa has the critical mineral resources and the know-how to assemble lithium-ion batteries for electric vehicles and stationary storage that could create additional revenue of R16-billion a year in the electrical machinery industry.

This is one of the conclusions of a study of the potential of developing SA’s critical minerals which was recently carried out by the Council for Mineral Technology (Mintek).

Over the long term, SA has the capacity to establish a lithium-ion manufacturing facility with a production capacity of 5,000Mwh, Mintek CEO Molefi Motuku told the African Mining Indaba in Cape Town on Tuesday.

This could potentially generate about R6.75-billion in revenue a year.

In addition, he said, the following could also potentially be produced every year as part of battery value chains:

• 80,000 tonnes of nickel sulphate to the value of R5.83-billion as an input into lithium-ion precursors;
• Six million litres of vanadium electrolyte;
• 5,000 tonnes of aluminium foil;
• 100,000 tonnes of manganese sulphate; and
• 20,000 tonnes of spherical graphite.

Overall, these additional manufacturing opportunities were valued at about R9.77-billion a year, he said.

Motuku was addressing a panel discussion on how to ensure an integrated approach to the development of South Africa’s critical minerals.

Minister of Mineral and Petroleum Resources Gwede Mantashe strongly punted coal in this discussion as he has done elsewhere at the mining indaba. His essential message was that the definition of critical minerals should not be limited to their use in green technologies.

“If we limit ourselves in that way, we use standards set by others.”

Mantashe said coal was a critical mineral for South Africa because it reduced unemployment, while uranium was also a critical mineral for the country, as the future of nuclear energy was great and growing.

Read more: Fossil fuel future? Mantashe’s optimism for coal faces unyielding climate challenges ahead

The Mintek report includes coal and uranium in a list of 18 critical minerals which South Africa possesses, along with, among others, iron ore, platinum, chrome ore, manganese, nickel, zinc, cobalt and vanadium.

Motuku said coal’s importance as a critical mineral did not need defending, as it was essential according to the model which Mintek had developed in its report. It was the biggest employer in the SA mining industry.

Motuku noted that there was no universal definition of a critical mineral and it varied according to the needs of different countries. In drawing up its list, South Africa had taken into account supply risks, comparison with the critical lists of trading partners, export potential, employment potential, domestic sales potential, export sales potential and substitutability.

Bernard Swanepoel, the executive chairperson of the Manganese Metal Company, said that more important than producing a long list of all the critical minerals which SA possessed was focusing on the two or three which had the most potential.

One was manganese, he said, noting that his company was one of very few outside China which produced refined manganese and manganese sulphate for use in lithium-ion battery production.

The value chain

The strong emphasis in this discussion, as it has been in all discussions about critical minerals and mining in general at the indaba, has been on how to beneficiate or add value to minerals in SA and Africa more broadly, to boost local manufacturing and economies and create jobs rather than just exporting relatively low-value raw commodities.

Swanepoel noted that his company was doing that by processing manganese. He said mining companies should not be bullied into beneficiating the minerals they mine.

“Beneficiation and mining are different businesses,” he said.

In a side event at the indaba on Monday on facilitating investments to accelerate South Africa’s ambition to develop a critical mineral value chain, Zuko Godlimpi, the deputy minister of trade, industry and competition, was, unlike Mantashe, clear that critical minerals were mainly about green energy.

“As the green transition accelerates, critical minerals are becoming central to global development strategies,” he told a webinar that was organised by his department and the European Union (EU).

“Mining continues to play a significant role in South Africa’s economy and it remains a catalyst for change towards a decarbonised, net-zero economic model,” he said.

“A priority of the South African government is to move to a more sustainable and responsible system that adds value locally and contributes to South Africa’s transition to move up the value chain.”

Godlimpi said SA had a clear value proposition to offer potential foreign investors. This included:

• An abundance of critical/transition minerals in South Africa and the SADC region;
• A strong automotive sector;
• Large local demand for stationary energy storage;
• Market access; and
• Investor support.

He said SA had the world’s largest resources of platinum group metals (87.7% of the world total) manganese (80%) and chromium (72.4%) and was a significant producer of several other minerals required for the green and digital transition.

SA’s mining and processing sectors were established but required equity and technology partners for re-industrialisation and capacity expansion.

“We cannot afford to be locked into the lower end of the value chain as mere suppliers of primary products.”

EV manufacturing

Godlimpi also noted that SA’s automotive sector was well developed with high levels of foreign direct investment.

“Seven automotive original equipment manufacturers have complete knockdown manufacturing facilities, producing 633,000 vehicles in 2023, of which 399,000 were exported.

“There is therefore a strong base to enable the transition to the hybrids and [electric vehicles].”

He said SA had a thriving, sizable and dynamic stationary energy storage market. In 2023, battery and cell imports into South Africa totalled about 6.5GWh (largely for the private sector), of which about 3GWh were further assembled into batteries by local businesses and integrators with their own battery management systems and other intellectual property.

Many of these batteries were exported into the rest of Africa, and the African Continental Free Trade Area provided good potential for foreign investors to use SA as a gateway to the rest of Africa

Henrik Hololei, a senior adviser in the EU Commission’s Directorate-General for International Partnership, said the EU recognised SA’s significant industrial potential and wanted to see the country reaping value addition as it developed its critical mineral industry.

“Together we can shape a mutually advantageous agenda,” he said, noting that the EU countries needed reliable partners to secure access to critical minerals for their green goals, particularly in developing green hydrogen and batteries.

He said the EU’s aim was not to shift commodities to Europe but to support local jobs and industry in beneficiating minerals. The EU stood ready to make grants to leverage support from EU financial institutions to develop critical minerals in SA.

Hololei said this cooperation would be discussed at the EU-SA summit to be held in SA on 13 March. DM

This article by Peter Fabricius first appeared on Daily Maverick.

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