Demand for metals utilized in batteries of electric vehicles (EVs) may rise sixfold if electric vehicles reach 8% of street traffic by the mid-2020s, delivering huge dividends for producing nations like the Democratic Republic of Congo, Moody’s stated Tuesday.
The credit rankings agency said a worldwide turn to EVs would likely push demand for cobalt, of which DRC is the world’s number one producer, in addition to lithium, nickel, and copper.
Nevertheless, weak governance in the central African nation could prevent investors and scupper its potential, it added in a note.
Different economies that will reap the advantages of the push toward EVs include Chile, and the Philippines, followed by Peru, Indonesia, and Australia.
The battery boom has the best potential to boost-rocket Congo’s sovereign credit rating as the production value of these metals can be “extraordinarily large” relative to its economy.
By 2030 cobalt production could be equivalent to almost 16% of DRC’s total 2018 GDP, more than half of its items exports and 133% of its authorities revenue, and significantly enhance its fiscal and current account balances, Moody’s wrote.
However, “fragile governance, poor infrastructure and persistent pockets of social instability” remain critical challenges to international investment, slowing the nation’s boost of production, they stated.
An increased focus on environmental and social challenges and the traceability of metals adds one other risk for DRC.
DRC’s economy is already in vassal to volatile battery metal values. It’s expected to grow 4.3% this year versus 5.8% last year because of lower copper and cobalt costs, the International Monetary Fund estimate.