China will bypass US and EU green protectionism through Morocco
Chinese company CNGR, the world's largest producer of nickel cathodes for batteries, will open a factory in Morocco designed for exports to Europe and the United States. Will Morocco become a bridge between China and the West? All the details
The Chinese company CNGR Advanced Material, one of the world's largest producers of battery materials, has announced a $2 billion investment in Morocco. Relevant news not only for the economic size of the deal, but also for the underlying political reasoning: Chinese companies are postponing or giving up direct investments in the United States and Europe due to very strong geopolitical tensions; However, they do not want to give up rich Western markets, and therefore have started looking for third countries in which to install manufacturing bases.
In Morocco, in fact, CNGR will build a plant of materials for the cathode, the positive electrode of batteries, designed to supply the European and US markets.
WHY CNGR IS FOCUSING ON MOROCCO
Thorsten Lahrs, managing director of CNGR Europe, told the Financial Times that Morocco represents a "strong point" for Chinese companies interested in selling in Europe and America. First of all, compared to the two target markets, in Morocco the construction times of factories are faster and there is a lower investment risk because, if Washington or Brussels were to introduce new protectionist policies on "green" technologies, exports will be able be reoriented elsewhere. Just a few days ago the European Commission announced an anti-subsidy investigation into Chinese electric cars that could lead to the imposition of tariffs.
“It takes a lot longer to get something going in Europe,” added Lahrs, while the American political context “plays an important role because of the tensions that exist today between China and the United States, so if you don't address directly to the United States is one less risk."
EVERYTHING ABOUT CNGR ADVANCED MATERIAL
Founded in 2014 and listed on the Shenzhen stock exchange, CNGR is the leading manufacturer of nickel cathodes, with a global market share of 23 percent: among its customers there are Tesla (the most important electric vehicle manufacturing company) and CATL (the most important battery manufacturing company, also Chinese).
Al Mada, a conglomerate controlled by the Moroccan royal family, will participate in the investment in Morocco. The factory will produce enough battery material to power one million electric vehicles a year, and could expand its capacity in the future.
WILL MOROCCO BE A BRIDGE TO CHINESE BATTERIES?
Will Morocco become a bridge between East Asia, where major battery companies are based, and the West, where major automotive markets are located? It's too early to say, but actually – beyond CNGR's investment – last Sunday South Korea's LG Chem and China's Huayou Cobalt announced the construction of a lithium refinery and a cathode materials plant in the North African country.
Morocco can be a manufacturing base for companies interested in exporting to the United States because a free trade agreement exists between Rabat and Washington; therefore, as required by Joe Biden's Inflation Reduction Act, materials for electric cars coming from this country will be counted in the supply targets required for electric vehicles sold in America that want to access state subsidies.
Morocco also has good trade relations with Europe, as well as geographical proximity, as well as possessing 70 percent of global phosphate reserves, one of the constituent "ingredients" of lithium-iron-phosphate batteries, less performing but cheaper than traditional ones: the production of these devices is concentrated in China .
WILL NORTH AFRICA BE THE GREEN ENERGY HUB FOR EUROPE?
Morocco and the other North African countries are considered potential producing and exporting hubs of renewable electricity and green hydrogen: in addition to being able to count on excellent windiness and solar exposure, they are also geographically close to the European market.
According to Snam, the company that manages the Italian gas pipeline network, Italy could import hydrogen from North Africa at a price 14 percent lower than that of domestic production, exploiting existing pipelines between North Africa and Sicily. From southern Italy, the hydrogen would then be transported to the north, where energy demand is higher due to the greater presence of industries, and to the rest of Europe.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/la-cina-aggirera-il-protezionismo-verde-di-usa-e-ue-attraverso-il-marocco/ on Wed, 27 Sep 2023 12:30:57 +0000.