SA has the critical minerals, but is that enough to become a global battery storage powerhouse?
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By Sakhile Dube
Sustainable battery storage is crucial for achieving net zero, as it improves renewable energy efficiency, supports the use of electric vehicles (EVs), and keeps the electricity supply steady.
An abundant and secure supply of the minerals essential for the production of these batteries is needed for a successful transition to clean energy. Without them, progress towards net zero will be significantly hindered.
South Africa's mineral advantage
South Africa has large reserves of two critical minerals, manganese and vanadium, allowing the country to play a bigger role in the battery storage sector.
Manganese is a crucial component of lithium-ion batteries, which power EVs and renewable energy grids. In 2023, South Africa was the world’s top producer of this essential mineral, followed by Gabon and Australia, according to the US Geological Survey (USGS).
South Africa is also the third vanadium producer, behind Russia and China. The mineral is used in vanadium redox flow batteries (VRFBs), which are known for their efficiency in storing large amounts of energy, says Mikhail Nikomarov, the CEO of Bushveld Energy, a company that produces these batteries.
A global landscape
China dominates the battery storage sector, producing nearly 85% of the world’s cells and storage. Europe, the US and Korea each hold 10% or less of the supply chain for some battery metals and cells, according to a report by the International Energy Agency (IEA)
South Africa's role in this landscape is primarily as an exporter of raw materials.
Only about 10% of the country’s vanadium is used domestically, the rest is exported, says Nikomarov.
Louis Nel, the CEO of Manganese Metal Company, which processes raw manganese into pure manganese metal, says 90% of the manganese electrolyte that his company produces is exported, leaving only about 5% of domestic use.
China is the main destination where South Africa exports manganese consistently accounting for nearly 60% of the total exports. However, the exports have declined by 21.63% between 2019 and 2023 with South Africa focusing on exporting its manganese to India and Singapore.
The main destination for South Africa’s vanadium is the Netherlands which has increased by nearly 56% between 2019 and 2023.
The challenge of local manufacturing
South Africa lacks the manufacturing capabilities for the production of battery storage. It remains to be proven whether such an activity would be competitive domestically, says Nikomarov.
Limited local manufacturing means that the country misses opportunities for job creation. China has created about 3 million jobs in clean energy manufacturing, with 80% of these jobs making modern battery storage, according to the IEA.
A study by CES Energy Solutions commissioned by the World Bank in 2021, estimates that battery manufacturing could create up to 60 000 new jobs in South Africa. But for this to happen, the country needs to build factories within a decade.
Natasha Ross, a senior lecturer at the University of the Western Cape, highlights that developing manufacturing facilities requires a lot of capital and advanced technology. Bushveld Belco, a production facility for Bushveld Minerals located in Gqeberha, demanded a combined investment of $13.6 million (R241m).
Given the high costs of developing local manufacturing plants, Nikomarov suggests focusing on areas where South Africa holds a competitive advantage, such as the production of raw materials, rather than attempting to dominate the entire supply chain.
Nel points out that refining raw materials into products that have a high profit margin or market value compared to the raw materials used to produce them strengthens local and regional supply chains.
The CES study highlights that refining key battery raw materials in a short-term period of one year could lead to 2500 new jobs directly and 23 000 more jobs indirectly, and add R18.8bn to the economy.
The potential of battery pack imports to fuel local job growth
South Africa exports its battery minerals mostly to China which already has established battery production facilities. To balance exports and domestic, South Africa imports battery packs for assembly.
As the imports increase, more battery-related jobs will, therefore, come from assembling battery packs for local use and distribution to neighbouring countries.
According to Gaylor Montmasson-Clair, a senior economist at Trade and Industrial Policy Strategy (TIPS). South Africa imported $1.1bn (4.4 GWh) of lithium-ion cells and batteries in the first six months of 2023, which is mostly imported from China.
South Africa’s transition from coal-dominated electricity generation to renewable energy sources such as wind and solar presents an opportunity to increase battery pack imports. At present, over 80% of SA’s energy is produced from burning coal - solar and wind contribute around 12%.
The increase in EV sales in South Africa is also driving an increase in imported battery packs. In the first half of 2024, EVs reached almost 3% of new passenger vehicle sales, driven by hybrid cars, says Montmasson-Clair.
Battery boom fuels demand for critical minerals.
South Africa's electricity supply roadmap, the (2019 Integrated Resource Plan) has set a target for a battery storage capacity of between 2GW and 6.6GW by 2032. This aligns with the global push for a 25% annual growth in battery storage to reach 1500 GW by 2030, according to IEA.
To increase battery storage production, more essential minerals like manganese are needed. The global demand for manganese is expected to grow by ninefold by 2030, according to BloombergNEF.
South Africa, as the world's leading producer of manganese, has the potential to meet some of this surging demand. The country has already witnessed growth in manganese mining in recent years.
Most of the world’s battery minerals come from only a few countries. This highlights the fragility of the global supply chain. While South Africa has substantial battery minerals, it is important to expand production responsibly to safeguard local communities and the environment.
Environment and health threats
The challenges posed by manganese mining extend beyond the immediate mining communities.
Gqeberha, the primary export port for manganese, is also affected. According to Mthokozisi Nkosi, a consultant at Aluzar Systems Consultants (ASC), the transportation of manganese by truck generates dust that can be inhaled by residents living near the port. This has led to respiratory issues, including asthma, in some communities. Nkosi stresses the need for comprehensive planning across the entire manganese value chain, including measures to mitigate environmental impacts.
The manufacturing process for vanadium batteries involves handling sulphuric acid and waste materials, necessitating strict environmental compliance to prevent contamination and ensure safety, says Nikomarov.
The growing popularity of lithium-ion batteries creates a significant recycling challenge due to their limited recyclability. South Africa's lack of domestic recycling infrastructure and specific regulations to manage battery waste is a pressing concern, according to Hector King, power division product manager at Dartcom, a network components distributor.
Lithium batteries contain small amounts of toxic substances that, when disposed of improperly, can cause a risk of fire hazards and contaminate groundwater.
South Africa currently lacks the technology to process the hazardous battery waste mixture, forcing the country to export it overseas. This is costly and poses environmental risks during transportation, says King.
South Africa has implemented policies such as waste classification regulations and extended producer responsibility (EPR) rules. However, poor compliance among companies undermines these efforts.
“Many businesses avoid paying the EPR fee, creating an uneven playing field for those who adhere to the regulations. This lack of enforcement allows irresponsible companies to undercut competitors and exacerbates the environmental problem”, says King.
Unless stricter regulations are enforced and investments are made in domestic recycling infrastructure, South Africa will continue to grapple with the mounting consequences of lithium battery waste.
UN Secretary-General António Guterres recently established a panel to develop global guidelines for responsible mining of energy transition minerals. With such initiatives, there is only hope that mining companies in South Africa will comply.
Mining is unavoidable but needs strong policies in place
A report by TIPS highlights that South Africa has competitive labour, skilled workforce, and market access, but current policies have not fully supported local battery manufacturing.
Government initiatives like the Just Energy Transition Investment Plan and the Renewable Energy Master Plan prioritise local battery manufacturing to boost the economy and create jobs. However, the country also needs policies that improve the overall business environment for battery storage companies.
“The government should simplify the process of getting permission to build battery storage plants, and provide more incentives specifically targeted at manufacturers to increase local production”, says Nikomarov.
Despite South Africa’s strides in global research in energy, led by universities and the Council for Scientific and Industrial Research (CSIR), there is still significant room for growth.
Increasing research on materials like nickel capitalises expertise in mining, says Nikomarov.
Nikomarov notes that research should align with the needs of industries like car manufacturing to create a market for new technologies and products.
”We must recognise that the minerals in batteries can be recycled and reused provided the technical expertise in this area is nurtured”, says McLean.
Nikomarov points out that vanadium redox flow batteries offer a major advantage as their electrolyte can be reused in new batteries. This significantly reduces waste and lowers long-term costs compared to lithium-ion technology, he says.
Sakhile Dube is a freelance journalist passionate about climate change and renewable energy.
*This story was produced with support from Internews’ Earth Journalism Network.
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