Chinese to invest $2 in Morocco1 Dec 2023 09:24
Chinese battery material producers are opting to invest in Morocco rather than the US and Europe due to geopolitical tensions and lengthy permitting processes, according to CNGR Advanced Material, one of the world’s largest battery material producers. CNGR recently announced a $2 billion investment in Morocco to build a cathode materials plant, taking advantage of Morocco’s position as a bridge between Chinese companies and Western markets. The country has become an attractive location as countries race to develop battery industries to support the growing automotive and clean energy sectors.
Morocco’s appeal lies in its ability to expedite construction compared to the target markets, which have more time-consuming permit processes. Additionally, the country provides a less risky investment prospect as it can easily switch exporting locations if the US or Europe implement protectionist policies. Morocco’s status as a free trade partner of the US also presents an advantage, as its raw materials count towards sourcing targets required for electric vehicles sold in the US to qualify for subsidies under President Joe Biden’s Inflation Reduction Act.
China, known for its flexibility, aims to de-risk investments by avoiding direct entry into the US market due to the ongoing tensions between China and the US. Similarly, the EU is also scrutinizing Chinese investments, with an ongoing anti-subsidy probe into Chinese electric vehicles. Morocco, with its strong trade relations with both the US and Europe, offers a favorable opportunity for Chinese companies to access these key markets.
The move towards Morocco is seen as a strategic decision by Chinese battery companies, as the country is rich in phosphate reserves, a key ingredient in low-range batteries. China dominates global production and Morocco’s reserves offer an advantageous route for Chinese companies to expand their reach in both the US and European markets. By investing in Morocco, these companies can secure a stable supply of raw materials and streamline their battery production processes.
CNGR’s CEO, Thorsten Lahrs, highlighted the challenges of securing environmental permits in Europe, which could take several years to obtain through appeals and court processes. In contrast, Morocco’s permitting processes are expected to move much more swiftly. The joint investment between CNGR and Al Mada, a conglomerate owned by the Moroccan royal family, will create enough material for 1 million electric vehicles annually, with the potential for further expansion.
Sources: Financial Times, Wood Mackenzie
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