Unlocking Opportunities for Developing Countries in the Electric Vehicle Revolution
A recent report by the United Nations Conference on Trade and Development (UNCTAD) has illuminated the potential for mineral-rich developing countries, such as Nigeria, to capitalize on the burgeoning market for electric vehicle (EV) batteries. The report underscores the necessity for these resource-rich nations to elevate their value addition in order to reap the benefits of the increasing demand for critical minerals.
In the midst of the ongoing COP28 summit, the UNCTAD report has drawn attention to the trade flows of essential minerals, such as lithium, cobalt, and graphite, in global value chains for EV batteries. It delineates both the opportunities and challenges that mineral-rich developing countries encounter in this burgeoning industry.
Speaking at The Guardian 40th Anniversary Public Lecture, Dr Akinwumi Adesina, President of the African Development Bank (AfDB), urged African nations to concentrate on heightening the value addition of critical minerals. He stressed that the continent has an exceptional opportunity to assume a leading role in the evolving EV market, rather than merely being consumers.
According to the report, the demand for crucial minerals is anticipated to skyrocket in a net-zero emissions scenario, with a projected 454 per cent increase for lithium and a 115 per cent increase for cobalt by 2030. This presents a significant opportunity for developing countries, particularly in Africa, which holds 19 per cent of global mineral reserves for EVs, to take advantage of the green energy boom through local processing of these minerals.
Rebeca Grynspan, Secretary-General of UNCTAD, underscored the energy transition as a pivotal opportunity for mineral-rich countries to strengthen their industries and enhance their position in global value chains. The report’s analysis highlights the substantial value added at each stage of mineral processing, showcasing the success of the Democratic Republic of Congo in adding value to its cobalt reserves.
By locally processing and refining cobalt, the Democratic Republic of Congo was able to significantly raise its unit price from $5.8 per kilogram at extraction to $16.2 per kilogram after processing. This shift up the value chain led to a substantial increase in the country’s exports of processed cobalt, demonstrating the economic resilience achievable through local value addition.
Grynspan emphasized the importance of reducing commodity dependence among developing nations, as such reliance leaves countries vulnerable to market fluctuations and global crises. The report also highlights the risks of supply disruptions, price volatility, and geopolitical tensions associated with market concentration at various stages in EV battery value chains.
To address these challenges, the UNCTAD report advocates for more sustainable and transparent mining contracts in developing countries. It also emphasizes the need for global support in providing investment and access to technologies necessary for value addition in critical mineral exports.
In conclusion, the UNCTAD report provides valuable insights into the opportunities and challenges that developing countries face in the evolving market for electric vehicle batteries. It underscores the importance of increasing value addition to drive economic growth and strengthen resilience in the face of global market dynamics. As the world looks towards a greener future, the potential for mineral-rich nations, including Nigeria, to play a significant role in the electric vehicle revolution is both promising and imperative.
