Morocco’s OCP Group Inks $900 Million Lithium Supply Pact with Tesla, Aiming for AfCFTA Battery Manufacturing

Morocco’s OCP Group signed a $900 million lithium supply agreement with Tesla on Wednesday, aiming to support battery manufacturing under the African Continental Free Trade Area (AfCFTA). According to company officials, the deal is intended to bolster regional electric vehicle production and strengthen Africa’s role in the global battery supply chain.

The agreement, finalized on Wednesday in Casablanca, marks one of the largest lithium supply contracts between an African producer and a global electric vehicle manufacturer, according to officials at OCP Group. The Moroccan state-owned company, traditionally known for phosphate mining and fertilizer production, has been expanding into battery minerals as part of a strategic shift to capitalize on the rising demand for electric vehicle components.

The $900 million deal is expected to span several years, with OCP committing to deliver a significant volume of lithium hydroxide to Tesla’s battery plants.

Company representatives said the contract aligns with Morocco’s broader ambitions under the African Continental Free Trade Area (AfCFTA), which aims to create a unified market across 54 countries to boost intra-African trade and industrial development. According to OCP CEO Mostafa Terrab, the partnership with Tesla will facilitate the establishment of battery manufacturing hubs within the AfCFTA framework, potentially positioning Morocco as a key player in the continent’s emerging electric vehicle supply chain. Tesla officials, speaking on condition of anonymity, confirmed the deal but declined to provide specific delivery schedules or volumes.

Industry analysts note that the deal follows Tesla’s recent efforts to diversify its lithium supply sources, which have included agreements with suppliers in Australia, the United States, and China. Tesla’s contracts with Yahua Industrial Group in China, Piedmont Lithium in the U.S., and Core Lithium in Australia were announced between 2022 and early 2024, reflecting the company’s strategy to secure raw materials amid growing electric vehicle production targets. However, this marks the first publicly disclosed lithium supply agreement involving a major African mining company and Tesla.

OCP Group’s move into lithium production has been supported by investments in mining projects across Morocco and neighboring countries, with the company aiming to leverage its existing logistics and export infrastructure. According to OCP’s 2023 annual report, the company has allocated over $1 billion toward diversifying its portfolio to include battery minerals, including lithium, cobalt, and nickel. The lithium extracted is planned to be processed domestically to produce battery-grade chemicals, which officials said will be critical to meeting Tesla’s quality standards.

The AfCFTA, which came into effect in January 2021, seeks to reduce tariffs and facilitate the movement of goods and services across member states. According to the African Union Commission, the agreement covers a market of more than 1.2 billion people with a combined GDP exceeding $3 trillion. OCP officials emphasized that the lithium supply deal with Tesla is intended to stimulate local value addition and manufacturing within this framework, potentially creating new jobs and industrial capacity in Morocco and the wider region.

Tesla’s expansion into African lithium supply chains coincides with the company’s announced plans to increase electric vehicle production capacity globally. The automaker reported delivering over 1.8 million vehicles in 2023, a 40% increase from the previous year, underscoring the urgency of securing stable and diversified sources of battery materials. According to Tesla’s 2023 impact report, the company aims to reduce its carbon footprint by increasing the use of sustainably sourced minerals, which it said includes engaging with suppliers committed to environmental and social governance standards.

While details on the operational aspects of the lithium supply chain remain limited, OCP and Tesla officials indicated that initial shipments are expected to commence in late 2024. Both parties are reportedly exploring opportunities for joint ventures in battery manufacturing facilities within Morocco and other AfCFTA member states, though formal announcements on such projects have yet to be made.

Morocco’s government has prioritized developing the country’s green energy and mining sectors as part of its Vision 2030 economic plan. The plan includes targets for renewable energy generation, mining output, and industrial diversification. According to the Moroccan Ministry of Energy Transition and Sustainable Development, lithium is considered a strategic mineral for the country’s future economic growth, with several exploration projects underway to increase reserves.

The OCP-Tesla lithium supply agreement represents a significant development in Africa’s role in the global electric vehicle supply chain, reflecting broader trends of resource diversification and regional industrial integration under the AfCFTA framework. Further developments are anticipated as both companies proceed with implementation and explore additional collaboration opportunities.