Analysts say that China’s manufacturing overcapacity has granted it an edge over the United States in the African transition to renewables. Speaking at the recent Semafor World Economy Summit (WES), Center for Global Development senior fellow W. Guide Moore said the east Asian nation’s “reported overcapacity” allowed its companies to offer renewable-energy firms in low-income countries with relatively competitive prices.
Manufacturing overcapacity means that China’s production capabilities have far surpassed domestic demand, allowing local companies to export renewables infrastructure to African companies at prices they can afford. Stimulated by massive government subsidies, this overcapacity has granted China a significant lead in Africa’s emerging green-energy landscape. As China currently produces some of the most affordable solar panels on the globe, it is no wonder African tech companies in the green-energy space are opting for Chinese technology.
During a recent visit to Beijing, U.S. Treasury Secretary Janet Yellen said that China could potentially impact prices and jobs in other markets if the country offloaded its excess production capacity through exports. In response, Beijing said America’s claim of Chinese overcapacity was a “vicious attempt to curb and suppress” the Asian country’s growth under the guise of an economic concept. China has seen explosive economic growth over the past several decades and is now fighting neck and neck with the U.S. to be the top economy on the globe.
Beijing is clearly winning on the green-energy side, currently boasting the largest network of green-energy infrastructure on the globe. Furthermore, the country’s overcapacity has enabled it to offload a significant amount of green technology to Africa. Furthermore, China has greater access to the critical minerals located in Africa that are used to develop green technology, such as electric car batteries.
A recent United States Institute of Peace (USIP) report pointed out that the U.S. was almost 100% reliant on Chinese companies for critical minerals, including cobalt, manganese and graphite. The report recommended that the U.S. take steps to build up alternative supply lines from regions such as Africa where the Democratic Republic of Congo (DR Congo) hosts a majority (70%) of the globe’s copper deposits.
Carnegie Endowment for International Peace Africa program’s Zainab Usman says African nations with critical mineral deposits have begun taking steps to curb the export of unprocessed minerals and invest in increased local processing. In that vein, Zimbabwe, Namibia and DR Congo have banned the export of unprocessed minerals via legislation, setting the stage for a future where African nations process their abundant mineral resources locally. Usman said that African countries want to “go up the value chain” and get involved in mineral processing and refining as well as the manufacture of electric vehicles and clean-energy hardware.
With companies such as Mullen Automotive Inc. (NASDAQ: MULN) showing that affordable EVs can be made and they can work as good as or even better than conventional ICE vehicles, it may not be long before companies set up shop in Africa to make models targeting this market.
NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN
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