Have you seen how crazy we Zambians have gone over electric cars? Zambians are convinced that we can make some of the components that go into electric cars, mainly batteries and there is a gold rush to mine Lithium in rural areas. Sorry to burst your bubble, but it is a fantasy. Want to know why?
Lithium Ion Batteries (LIBs) are extremely complex Engineering products and the result of over five decades of Research and Development (R&D) in many fields running into billions of US Dollars. Every battery component is meticulously researched, designed, tested and manufactured. You need a complex national ecosystem of Engineering talent, manufacturing capabilities, efficient logistics, strong infrastructure (roads, railways, airports, ports), venture capital financing, strong banking system, top notch universities for R&D partnerships and critically, sufficient energy to run factories. This is not to mention other important factors like the cost of doing business viz-a-viz the regulatory environment.
Do we really believe we can begin making any battery component in Zambia for the global market anytime soon, given the above and what we know about Zambia? Imagine Toyota orders millions of some component in a battery but the Zambian factory has to shut down because of 12 hours of load shedding. Imagine the time taken to move things by road in trucks on our pothole ridden roads with craters, whilst going through time-wasting roadblocks and dealing with corrupt police.
Imagine Panasonic (one of the world’s biggest battery makers) trying to open a factory in Zambia and getting permits, but someone somewhere sits on the application because they are trying to extort a “small fee” or because they are incompetent. The process takes 3 years. Imagine Panasonic wants to send Zambian Engineers for training abroad, but it takes 7 months to get passports (as is happening right now). Imagine the hassle of getting work permits. You think serious investors have time for that?
Unlike mining which is relatively easier, it takes many years for a nation to build sufficient capacity to manufacture for the global market with many interdependent factors at play. Just look at Copper. We hardly make anything beyond simple cables at ZAMEFA, but we think we can start manufacturing car battery components? Not even South Africa, as far advanced as they are with decades old manufacturing ability makes LIBs for electric car batteries.
The overall investment to make it possible is so large that investors will carefully look at our risk rating. Right now, Zambia is a high risk destination. It is simply not a reliable country to make LIBs or any component of them. And the question of quality manpower looms large. Tim Cook, Apple CEO, once said that they make iPhones in China not just because of low labour costs, but the strong manufacturing ecosystem that makes it easy to find thousands of well qualified Engineers to build things quickly and efficiently, and transport them fast due to good infrastructure. None of this is true in Zambia where we don’t even have a properly functioning railway system.
But the most important reason you won’t be seeing any battery components being manufactured in Zambia anytime soon is the issue of economies of scale. It is cheaper to manufacture in Asia even with transport and logistics added than in Zambia where the cost of doing business is too high. Zambia is simply too small a player to produce at scale and will thus not produce at comparable costs to China which can buy raw materials at huge volume discounts and better spread their fixed costs.
Our leaders have unfortunately not helped matters with their vague leading statements like “electric car value chain”. They never give clear details of what they are talking about but carelessly throw around terms like “value addition” and they apparently seem to believe that just because Zambia has some of the metals required in batteries, turning them into manufactured components is a piece of cake. We just need to change a few procedures and voila! The big investors will come and bring billions in investment.
Most disappointing has been media reporting. It seems much of the media hardly know the difference between manufacturing, assembling or buying cheap junk from China and slapping a label on it with the logo of a local Zambian company. Our reporters should do proper research and ask the right questions. Bottom line. A Tesla Gigafactory isn’t coming anywhere near us anytime soon.