Workers in Vidalia, Louisiana, USA began producing anodes for lithium batteries for electric cars in February, using graphite from Balama, Cabo Delgado, mined by Australian company Syrah. In the same month, Syrah agreed a deal to produce identical anodes in Teesside Freeport in the northeast of England. Both projects are subsidised by the host government. The Freeport has generous tax and customs exemptions; the US is giving the Vidalia project a $220 mn grant, a $102 mn loan, and big tax abatements, as well as paying 6% of its wage bill.

Until these deals, the only graphite processing was in China, and the US was anxious to process at home. Batteries will be sold to Tesla and Ford. But as well as subsidising battery production, in May and June the US and EU imposed high tariffs on Chinese batteries and electric cars, to penalise China for building up such a huge lead in the battery and electric vehicle technology. But none of these countries want to create these key jobs in Mozambique.

The US project is creating 319 jobs. The US Department of Energy (DoE) says: “Employing locally, training on-the-job, and progressing through a competency framework will attract and maintain a committed workforce. Syrah’s community strategy includes partnering with over 150 local vendors to prioritize local investments and spending.” The Teesside factory will use exactly the same factory design. Syrah had planned to sell the graphite to China, but US and UK money changed the company’s mind. That same China-US competition could have been used to force Syrah to process the graphite in Mozambique, and then sell it to the US and UK.

Making anodes is not complicated and the whole project could have been done in Mozambique, with good jobs and training. Indeed, just as the whole Vidalia factory design is being copied in Teesside, it could also have been copied in Montepuez or Nacala.

Syrah on its website describes Balama as “simple, low strip, open pit mining”. So the good industrial jobs are in the US and UK, and Mozambique only gets mining jobs and holes in the ground.

Coming to the end of their term in office at the end of this year, campaign rhetoric comes to the fore. Minister of Mineral Resources and Energy, Carlos Zacarias, said on 6 February that the country should take advantage of the graphite it mines for the local production of batteries. “Let the processing [of graphite] go to the final stage” with the aim of “producing batteries, to add more value, provide more jobs for Mozambicans and, of course, to raise more foreign currency,” he said at a meeting at a Syrah mine in Balama.

But Frelimo presidential candidate Daniel Chapo, speaking on 10 June in Inhambane where he is governor, was more realistic. He said “for work such as gardening, or cleaning offices, no specialization is required. It should be local companies that do these jobs, so that the money stays in the local communities, in small and medium enterprises, particularly the enterprises of our young people”.

Short memories

President Filipe Nyusi on 13 October 2023 invited Italian companies operating in Mozambique to prioritise local content. Speaking at a joint press conference in Maputo alongside Italian Prime Minister Giorgia Meloni, visiting Mozambique, Nyusi said “We must work to transform raw materials inside the country, and this is fundamental”, stressed Nyusi. “In the context of the natural gas projects, we must also consider the domestic use of gas”.

But the year before at a private sector conference in Maputo on 29 March 2022, Nyusi said a local content law proposed by Mozambique’s business sector hoping to take part in the country’s gas projects will not move forward because it is “unsustainable”. Nyusi argued that such a policy would erode Mozambique’s international competitiveness.

As part of the original agreement with Anadarko Mozambique was to receive some of the gas for local use, called “domestic gas”, and in 2016 the world’s largest fertilizer company Yara won a contract with a proposal to produce fertilizer desperately needed for agriculture, and which would have hugely benefitted small farmers. Shell won with a proposal to produce diesel fuel and chemicals. But by 2019 the government realised it could make more money selling the domestic gas back to Anadarko, so it raised the price too high for Yara and Shell, who dropped out in 2021.

Government income was more important than local content.

And on 23 January 2020 then Economy and Finance Minister, and now Prime Minister, Adriano Maleiane, admitted for the previous five years he had paid no attention to diversifying and industrialising the economy, because he was too busy dealing with the secret debt.

Moonshot economics

The US and British subsidies to create local jobs and move to battery production marks a sharp change in economic policy. Since the fall of the Berlin Wall in 1989 the West has followed neoliberal economics, which it continues to impose on Mozambique although it is changing at home. Under neoliberalism everything is left to the market, and there are no state subsides. The problem is that private companies need two or three year returns and key new technologies such as batteries and solar panels take 10 years or more to develop.

This has led to a look back to the US moonshot. US President John F Kennedy in 1961 said the US would land a man on the moon and bring him back safely before the end of decade, which was done successfully in July 1969. The moonshot cost more than $200bn in today’s money, and much went to industry and universities to develop the technology

Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, is Founding Director of the UCL Institute for Innovation and Public Purpose. She returned to this in her 2021 book Mission Economy: A moonshot guide to changing capitalism. “To carry out the Apollo mission,” Mazzucato explains, “hundreds of complex problems had to be solved. Some solutions worked, many failed. All came out of a close partnership between government and business: a partnership with a purpose.”

For 30 years this has not been allowed in the US, Europe, and countries like Mozambique with IMF programmes. But it has been policy in China. In 2005 China set a new mission, what it called the “new three”: solar cells, lithium batteries and electric vehicle manufacturing. This was backed up in 2015 with the launch of the “Made in China 2025” strategy. As with Kennedy, the hundreds of complex problems were solved by university and industry, not just with subsides but also with guaranteed markets. (MIT Technology Review, 21Feb2023, “How did China come to dominate the world of electric cars?” https://www.technologyreview.com/2023/02/21/1068880/how-did-china-dominate-electric-cars-policy/) The technology is not simple – there are 14 different minerals in solar panels. (https://palmetto.com/solar/minerals-in-solar-panels-and-solar-batteries) Three of these are produced in Mozambique – ilmenite, graphite, and lithium – but not processed there. China has set up supply chains to guarantee these resources. For the next decade, at least, China will dominate solar panels, batteries, and electric vehicles.