The credit ratings agency Moody’s said that if electric cars reach 8% of road traffic by the mid-2020, then demand for material used in battery of electric vehicles could rise six times, which would be delivering larger benefits to countries like Democratic Republic of Congo.
Countries shifting towards electric vehicles worldwide would potentially be boosting the demand for material like cobalt, nickel, copper and lithium, the agency said.
Cobalt is the main basic material used in the production of batteries and DRC is the number one producer of cobalt in the world, however country’s poor governance could discourage investors and could harm its potential to grow, Moody’s added in a research note.
Chile and Philippines are the other countries that would garner the advantage of the worldwide electric cars push, while Peru, Indonesia and Australia will stand among following economies that would also reap the benefit of the same, the note said.
Because of the relatively extremely larger size of production value of metals used in battery production than that of Congo’s economy, the boom in the battery world have greatest potential to increase the country’s sovereign credit rating.
The value of increasing cobalt production, by 2030, is likely to be reaching 16% of DRC’s last year GDP, or could be above 50% of country’s exports, or reach up to equivalent of 133% of country’s last year revenue; and all this can result in significant increase in DRC’s current and fiscal account balances, Moody’s wrote.
But weaker governance, outdated infrastructure and country’s continual exposure to pockets of social instability remained major hurdles for the foreign investors, which slowed down the production of these metals in the country, they said.
In addition to country’s internal risks, other factors like the traceability of metals and an increased focus on social as well economical issues are other risks for DRC, Moody’s added.