rich resources

Morocco: China’s new Eldorado for electric batteries?

By Bilal Mousjid

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Posted on July 13, 2023 08:58

An electric car is plugged at a Green Spot’s recharging station of Enersoft company, the first service station for electric cars on a Carrefour hypermarket’s parking in Bordeaux © Rare earths are needed for electric cars and other renewable technologies. REUTERS/Regis Duvignau
Rare earths are needed for electric cars and other renewable technologies. REUTERS/Regis Duvignau

Several Chinese groups have announced intentions to make electric batteries in Morocco in the last three months – but experts call for caution.

In August 2022, the Moroccan minister for industry, Ryad Mezzour, told The Africa Report that he was in negotiations with “five operators on three continents – America, Europe and Asia – to set up an electric battery factory”. Less than a year later, several of these projects are beginning to take shape – including the €6bn gigafactory planned by Chinese-European group Gotion High-Tech.

According to the Moroccan Investment and Export Development Agency (AMDIE), which signed a memo of understanding with the company at the end of May, the investment is aimed at “setting up an industrial ecosystem for the production of batteries for electric vehicles and energy storage systems”.

Founded in 2015 and listed in Shenzhen and Zurich, Gotion High-Tech, which since 2020 has included Volkswagen in its shareholding, is a rising star in the manufacture of energy storage batteries, with sales in 2022 climbing 122% to €3.2bn.

“This is a new generation of Chinese companies, which are investing heavily in research and development in this sector. The company is now opening up to other countries in North America, Asia, and now Morocco, according to the AMDIE announcement. Through Morocco, Gotion High-Tech can serve the European market more easily,” said China expert Nasser Bouchiba, president and founder of the Africa-China Development Cooperation Association (ACCAD).

‘Rich resources’

Serving the European market is also the aim of Tinci Materials Technology, a Chinese company specialising in the manufacture of materials for lithium-ion batteries. On 28 June, the $3bn company announced a $280m investment in Morocco, which has “rich phosphate rock resources, a good geographical location, a stable political and economic environment and favourable foreign trade policies,” says a company document seen by The Africa Report.

According to this document, filed with the Shenzhen Stock Exchange where the company is listed, Tinci plans to set up two Moroccan subsidiaries with capital of $5m. The first – Morocco Tinci Materials Technology SARL – will deal with the production and sale of materials, while its sister company, Tinci Materials Morocco SARL, will be devoted to the research and development of new materials technologies, and the manufacture and sale of chemical products.

Volkswagen has also decided to buy standard lithium iron phosphate batteries to equip new models of the brand. With its immense reserves, Morocco has great potential in this phosphate-based industry.

These two Chinese groups are not the only ones to have set their sights on the North African country. In April, South Korea’s LG Energy Solution, one of the world’s largest battery manufacturers, announced, alongside China’s Sichuan Yahua Industrial, the creation of a factory to produce lithium hydroxide, another key material in the electric battery industry. And according to our sources, there are yet more projects in the planning stages.

“Work is continuing in the right direction. Because of the strategic nature of the issue, we are not in a position to say any more at the moment,” is the response from the Moroccan Ministry of Industry and Trade.

Advantages of phosphate

In this global race towards an industry considered vital for the future, Morocco has one major advantage: phosphate. It has more than 70% of the world’s reserves. Significantly cheaper than NCM batteries – which are made from nickel, cobalt and manganese – LFP (lithium iron phosphate) batteries are increasingly popular with manufacturers, such as Gotion High-Tech, which has developed an installed capacity of more than 13GWh using this technology.

In its annual report for 2021, electric car manufacturer Tesla promised to switch to LFP batteries on a global scale for its standard-range vehicles. “Volkswagen has also decided to buy standard lithium iron phosphate batteries to equip new models of the brand. With its immense reserves, Morocco has great potential in this phosphate-based industry,” said Bouchiba.

The Middle East Institute echoed this, in a report published in August 2022: “Phosphate-based LFP batteries are cheaper, safer and last longer than their cobalt-based counterparts. The growing use of LFP batteries favours Morocco for the production of batteries for electric vehicles.”

The report added: “In the 1980s and 90s, OCP began manufacturing phosphoric acid, the chemical input for phosphorus-based fertilisers, and the fertiliser itself. Phosphoric acid is also the input for making iron phosphate, an iron salt of phosphoric acid. Iron phosphate can then be used to make lithium iron phosphate, now the increasingly preferred material for Li-ion cathodes in EV batteries.”

In addition to phosphate, the country also has significant reserves of cobalt, of which it is the world’s ninth-largest producer with almost 2,000tn a year. In 2022, mining company Managem, majority-owned by the royal holding company Al Mada, signed an agreement to supply Renault with 5,000tn of cobalt sulphate for seven years from 2025, to be used in the production of electric batteries.

The two have also decided to build a new plant to transform cobalt into cobalt sulphate. Managem – which operates the Pumpi mine in the Democratic Republic of Congo (DRC), home to 70% of the world’s cobalt production – is also developing a project to recycle end-of-life batteries in partnership with mining giant Glencore.

A note of caution

As the continent’s leading producer of passenger cars (700,000 vehicles a year), Morocco has started the transition to electric vehicles in order to catch up with Europe, the market which accounts for 90% of its exports, and in 2021 adopted new regulations to put an end to the sale of new combustion-powered cars from 2035. Here again, the country has an advantage “as the leading producer of renewable energy in Africa,” as investment minister Mohcine Jazouli told The Africa Report in March.

However, Bouchiba warns: “Morocco’s potential is undeniable, and its companies have a good reputation in the market. But we need to keep a close eye on these Chinese investments, which will need the backing and support of their country’s authorities if they are to go ahead with their projects. Some recent examples should make us cautious.”

One such is the Chinese company Haite, which abandoned its ambitious Cité Mohammed VI Tanger Tech project in 2018, just a few years after signing a memo of understanding with the Bank of Africa and the Tangiers region, in the presence of the king.

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