China's Backdoor: How Morocco Became Key in the Battery Trade War
Doha – Morocco has become a prime destination for large-scale Chinese investments in electric vehicle battery production, raising questions about whether this represents a genuine opportunity for industrialization or simply makes the country a pawn in the geopolitical rivalry between China and the West.
In a paper published Wednesday by the Transnational Institute (TNI), Moroccan researcher Ali Amouzai examines how Morocco has positioned itself amid the global competition for strategic minerals essential to the green energy transition, particularly those used in electric vehicle batteries.
'Morocco has become a prime destination for large-scale investments in the refining of strategic and critical minerals that are used in the production of electric vehicle batteries, with Chinese companies taking the lead in this regard,' Amouzai writes in the paper titled 'Critical Raw Minerals in Morocco: An opportunity for industrialisation or a geopolitical battlefield between China and the West?'
The analysis comes as several major Chinese battery manufacturers have announced investments totaling billions of dollars in Morocco. In September 2023, CNGR announced a $2 billion plan to build what it called a 'base in the world and pan-Atlantic region' in Jorf Lasfar, in a joint venture with the Moroccan royal family's investment group Al Mada.
In June of the same year, Chinese-German battery maker Gotion High-Tech signed a deal with Morocco for a $6.4 billion investment to build Africa's first electric vehicle battery factory in BouKnadel, near Rabat, which is expected to have an annual production capacity of about 100 gigawatt-hours of electric vehicle batteries.
Additionally, in March 2024, the Moroccan Ministry of Economy and Finance signed an investment agreement with China's BTR New Material Group, worth more than $3 billion, to build a new battery factory in the industrial zone of Tangier Automotive City.
China's strategic workaround
Amouzai explains that these investments are part of China's strategy to circumvent trade restrictions. 'The US–China trade war and the resulting geopolitical tensions, especially after Joe Biden's announcement of the Inflation Reduction Act, have left China in need of countries with open access to the US market, which means countries that have a free trade agreement with the US,' he notes.
Morocco, with its free trade agreement with the United States, provides Chinese manufacturers a way to qualify for subsidies of up to $7,500 under the US Inflation Reduction Act. This represents what industry experts call 'friends-shoring' – sourcing minerals from mines and supply chains developed in countries with free trade agreements.
The paper points out that Morocco ranks ninth globally in cobalt production and eleventh in cobalt reserves, making it Africa's second-largest producer after the Democratic Republic of Congo. The country also holds 70% of the world's phosphate reserves, which are used in cheaper electric vehicle batteries.
Beyond the promised benefits
While the Moroccan government has promoted these investments as transformative for the country's economy and industrial development, Amouzai questions the actual benefits.
Then-Investment Minister Jazouli announced that Gotion High-Tech would create 30,000 jobs over 10 years, but the researcher argues these figures may be overstated.
'Permanent employment is one of the conditions for a fair green transition, but Morocco's experience thus far has shown that recent job creation in the country has largely been based on outsourcing/subcontracting,' Amouzai states. 'The jobs that are created are precarious, under flexible labour laws that were first introduced 20 years ago.'
The researcher clarified that most major projects, such as renewable energy plants, are capital-intensive and mainly offer job opportunities during the construction phase. 'Once these stages are completed, most of these positions vanish, leaving behind only a limited number of high-skilled jobs,' he explains.
Dependency and strategic position
The paper argues that Morocco's strategy of embedding itself within global capital networks and exploiting rivalries between major powers will merely improve its position within the existing international division of labor rather than achieve true industrialization.
'Morocco remains a very small economy, ranking sixth in Africa in terms of GDP, behind Ethiopia, Algeria, South Africa, Nigeria and Egypt. Moreover, its productive economy is predominantly based on agriculture and the extraction of raw materials,' Amouzai explains, contextualizing the country's economic limitations.
He challenges the notion that these investments will lead to technological transfer and industrial sovereignty. According to the researcher, Morocco's dependence on imperial centers is reflected in 'the tiresome repetition of the word 'sovereignty' in recent state documents: 'economic sovereignty', 'energy sovereignty', 'food sovereignty', etc.'
The analysis highlights a fundamental contradiction in Morocco's approach. 'The state (and large capital) relies on foreign investments to overcome the second and third obstacles,' Amouzai writes.
Meanwhile, 'the first obstacle (Morocco's political economy) is accepted by large Moroccan and foreign capital and international financial institutions, as the monarchy is the guarantor of political stability and social peace in a country located in a tense region,' he adds.
He points out that 'Morocco's large (globalised) capital, which relies on the monarchy, has already a guaranteed share in the investments in critical and strategic minerals, and thus it has no interest in imposing conditions on them (e.g. technology transfer) that could yield increased industrialisation.'
Environmental concerns
Amouzai also questions the environmental credentials of these investments, arguing that the primary objective of Moroccan capital and the state in adopting green discourse is 'to obtain internationally pledged green funds, to signal its adaptation to the transformations taking place in its northern neighbour (especially after the EU's adoption of CBAM).'
He adds that another key motive is 'to avoid any obstacles that may hinder Moroccan companies' ability to enter the European market.'
The analysis suggests that Chinese companies have chosen Morocco partly to avoid stricter environmental regulations in Europe. As quoted in the report, Thorsten Lahrs, CEO of CNGR Europe, declared that obtaining environmental permits in Europe would take 'several years,' involving court proceedings and appeals, while in Morocco, '[CNGR Europe has] made significant progress in a month.'
The paper concludes with recommendations for a green industrialization policy based on local demand rather than the prevailing export-based strategy. It calls for public industrial programs, a focus on domestic energy needs, urban planning changes, and greater Maghreb-wide cooperation.
'Energy (regardless of the source of that energy) can contribute to building a greener and more socially just future for Morocco, but energy is not independent of the world's economic structure, its social framework, its state institutions, and the various forms of oppression that permeate them,' Amouzai concludes. Tags: chinese investments in MoroccoUS-China trade war
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