Saudi Arabia and Morocco are making head way in the race to secure a foothold in the global lithium-ion battery supply chain. By leveraging state support, different policy approaches, and geopolitical trends these Middle East/North Africa (MENA) countries are aiming to attract investors and bolster their presence in the electric vehicle (EV) revolution.
In December, nearly 200 nations reached an agreement at COP28 to transition away from fossil fuels by mid-century. Saudi Arabia has earmarked goals to diversify away from fossil fuels and develop its non-oil GDP by the end of the decade, also known as its Vision 2030.
The Saudi government is providing funding and support for mineral production, offering US$182M in de-risking money to kickstart mining projects and financing up to 75% of capital expenditure for advanced exploration and mining activities.
The kingdom has also expanded its estimate of mineral resources, including critical minerals like rare earths, phosphate, and copper; and has developed numerous mining exploration sites as well as awarded over 30 mining exploration licences to foreign investors.
Apart from mineral exploration and mining, Saudi Arabia is focusing on developing mid- and downstream capabilities domestically, establishing pipeline capacity in lithium processing and signed agreements to build a battery chemicals complex and a graphite anode materials facility.
Saudi Arabia has set ambitious goals for itself, including producing 500K EVs by 2030 and making 30% of all vehicles in Riyadh electric, all while investing in various overseas mining assets.
Morocco, on the other hand, aims to become an EV battery-making hub that will serve Western markets. Its status as an EU and US free trade agreement partner (FTA), along with the eligibility of materials produced there for EV tax credits like those in the Inflation reduction Act (IRA), has attracted mid- and downstream investments.
However, growing Chinese involvement in Morocco’s critical minerals sector could pose challenges in selling to the US in the future based on developing guidelines.
Despite this, Chinese firms have made commitments to invest in Morocco, with Gotion’s lithium-ion investment becoming Africa’s first battery cell project. Morocco’s abundant phosphate reserves, used to make phosphoric acid for cathodes, further supporting its position in the EV battery supply chain.
Moreover, South Korean company LG Chem formed a partnership with Youshan, a subsidiary of China’s Huayou Group, to establish a joint EV battery material plant in Morocco. The plant, set to commence operations in 2026, will produce 50,000t of lithium-phosphate-iron (LFP) cathode materials annually, enough for 500K entry-level EVs. LG Chem also announced intentions to invest in a lithium conversion plant in Morocco.
Both Saudi Arabia and Morocco have implemented policies to attract investment into their respective developments in the EV value chain. Proximity to mineral-rich African countries and existing commercial ties create natural synergy for countries in the MENA region. With political support and a focus on diversifying their economies, these countries are well-positioned to capitalize on the growing demand for critical minerals in the global economy.
