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Challenges and Opportunities in South Africa’s Battery Sector: IDC Insights

Explore the challenges and opportunities in South Africa's battery sector, with expert insights from IDC on energy solutions, industry growth, and innovations.

Maria Guerra, Senior Editor-Battery Technology

October 8, 2024

4 Min Read
South Africa Battery Value Chain
Kgashane Mohale, Senior Industry Specialist at IDC.Maria Guerra

South Africa’s battery sector is evolving rapidly, offering challenges and opportunities. During a presentation at The Battery Show North America, Kgashane Mohale, Senior Industry Specialist at the Industrial Development Corporation of South Africa (IDC), recently outlined the nation's strategy for developing its battery value chain. His presentation highlighted the country's strengths in mineral resources, renewable energy, and the automotive sector while addressing the hurdles ahead.

South Africa's strategic resources

“South Africa is uniquely positioned in terms of battery-critical minerals like manganese, nickel, and cobalt,” Mohale emphasized. These minerals are integral to battery production and are crucial for the global transition to renewable energy. While South Africa has abundant resources, Mohale noted that there is still work to be done to ensure that these resources are fully leveraged within the country. “We have a very strong electricity market, which has yielded a lot of opportunities,” he explained, particularly in the context of renewable energy and the development of local Battery Energy Storage Systems (BESS).

One of the key opportunities in South Africa’s battery sector is the integration of local mining activities into the global supply chain. According to Mohale, “the World Bank estimates that the potential of South Africa’s battery value chain could become a $3 billion industry, creating 40,000-50,000 jobs.”

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South Africa Battery Value Chain

Building a battery manufacturing industry

Mohale outlined the country's ambitions to not only mine the raw materials but also to develop local manufacturing capabilities. However, he acknowledged this endeavor's skepticism, stating, “Even my colleagues at home start sweating a little bit when we talk about cell manufacturing. Is it really possible in South Africa? Not in the next year or two, but we are preparing for a future where local manufacturing becomes a reality.”
The IDC has already committed significant capital to develop the necessary infrastructure and research to support local manufacturing projects. “We are prepared to throw quite a bit of money at this, some just-in-case money, but in a very structured and directed manner,” Mohale remarked.

Automotive sector transformation

South Africa’s well-established automotive industry is also seen as a key player in the battery value chain. Mohale pointed out that the nation has agreements with major Original Equipment Manufacturers (OEMs) like Ford, BMW, and Toyota, making it one of the world’s automotive hubs. “Last year, we collectively produced 633,000 vehicles, of which more than half were exported,” he stated, adding that most of these exports were directed toward Europe. As Europe transitions to electric vehicles (EVs), South Africa is preparing to pivot its automotive sector toward EV production as well. “We have a very good chance that those plants will also be converted to produce EVs,” Mohale said.

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Policy and global partnerships

Mohale stressed the importance of policy frameworks that enable industrialization. South Africa’s trade agreements with the European Union provide significant export opportunities for the automotive and battery industries. “We have a legally binding Free Trade Agreement with the European Union, allowing value-added manufactured goods to be exported duty-free,” Mohale explained. These agreements are vital as South Africa works to integrate its battery sector into global markets.

Addressing workforce and infrastructure challenges

Workforce development remains a critical challenge that the IDC is actively addressing. Mohale acknowledged the difficulty of developing the entire battery value chain within a single country but highlighted ongoing efforts to upskill workers in preparation for the shift toward EVs and renewable energy.

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While there may be a need to import senior skills initially, the existing workforce from related industries (like chemicals and automotive) can be retrained and “recapacitated” over time. South Africa has a strong base in the automotive sector, with seven well-established OEMs producing over 600,000 vehicles annually, which provides a foundation for transitioning to EV production. The IDC is committed to supporting the development of the battery sector and is investing in projects and feasibility studies to promote local manufacturing and technology development.

South Africa’s aging energy infrastructure is another significant hurdle. While the country is making strides in renewable energy, the grid still faces challenges. Despite these issues, Mohale expressed optimism: “The private sector can now generate its own power, which opens up new avenues for growth and development.”

A vision for the future

Mohale emphasized that South Africa’s battery sector is poised for growth, with a clear focus on integrating its mineral wealth into a robust, locally developed battery manufacturing industry. He invited global investors and technology partners to collaborate in building this future.

About the Author

Maria Guerra

Senior Editor-Battery Technology, Informa Markets Engineering

Battery Technology Senior Editor Maria L. Guerra is an electrical engineer with a background in Oil & Gas consulting and experience as a Power/Analog Editor for Electronic Design.  Maria graduated from NYU Tandon School of Engineering with a Master of Science in Electrical Engineering (MSEE). She combines her technical expertise with her knack for writing. 

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