$92bn lithium rush leaves Nigerian investors behind

Despite representing a significant share of global Lithium reserves, Nigerian investors may have been overlooked in the mining and processing of Lithium within Nigeria.

Lithium (Li) is a mineral resource deemed essential for the renewable energy sector, electric vehicles (EVs), and energy storage industries.

As the global economy continues its swift transition towards renewable energy and away from fossil fuels (specifically crude oil-based energy), Nigeria's Lithium resources are now being recognized as a strategic mineral crucial for fostering modern and globally-oriented economic growth.

The annual global revenue generated by this industry is projected to reach $92 billion.

Although the reported production volume remains low, Nigeria's Lithium deposits are estimated to hold a value exceeding $34 billion, in contrast to the global total of $500 billion in proven reserves.

These deposits are found in various states, including Nasarawa, Kaduna, Niger, Kwara, Kogi, and Ekiti.

Sources familiar with the Solid Minerals Ministry said that foreign interests, primarily from China, have assumed a dominant role in the extraction and trade of these strategic resources throughout the North Central region, which contains over 70 percent of the proven reserves.

At present, no Nigerian investor is recognized as a major participant in this sector, apart from artisanal miners.

The Chinese investors who have taken the initiative in the Lithium sector in Nigeria include Avatar, the first Chinese company, which operates a facility with an installed capacity of 4,000 metric tons per day.

Likewise, Ganfeng, the second Chinese firm, is currently awaiting the commissioning of its 6,000 metric ton facility.

The majority of the extracted Lithium is exported to EV battery manufacturers located in Shenzhen and Guangdong in China, Tamil Nadu in India, Seoul in South Korea, Osaka in Japan, and other industrial hubs in Southeast Asia.

Industry experts indicate that the Nigerian economy could significantly benefit from the flourishing lithium sector, provided that local investors engage in the industry and the government enforces the Solid Minerals Value-chain regulations.

These regulations were established to guarantee that the nation reaps the full advantages of solid minerals through value addition, rather than merely exporting raw minerals from the mines.

Why domestic investors are not yet present —Muda Yusuf

In response to this situation, Dr. Muda Yusuf, the Executive Director of the Centre for the Promotion of Private Enterprises (CPPE), elaborated on how Nigeria's lithium sector could evolve into a substantial source of foreign exchange for the economy.

He remarked: "Investment is key, and we must develop strategies to attract investment into the lithium industry. Additionally, we need to raise awareness, as this is not a sector that many Nigerians are familiar with.

"The absence of domestic investors in this field can be attributed to the limited capacity of individuals who comprehend the industry and are prepared to take the risks associated with investing.

“We have to start from the primary production first because we have not really expanded the industry to the point where it would be easy to say that people should come in, and of course, that would be the ultimate.

“Let us expand lithium first at the primary level. If it goes to a level that is now very substantial, we can move through policies and all of that to say we are no longer exporting primary products. We now want to be processing but from the word go, we cannot start with saying that if you mine, you have to process that will constrain investment. This also requires a lot of government support because the risk in mining is also high.

“Some investment has to be up front, possibly even by government itself, in terms of the necessary geological information, you can’t expect an investor to come and be the one doing all the research.

If you already have something prepared, in terms of bankable geodata, it will guide investments, and they also reduce risks of investment. This is very critical.

“But then the country has the naughty issue about insecurity because doing a mapping of problem of insecurity and solid minerals it seems to be some strange coincidence when it comes to some of these precious minerals because in many places where you have these minerals there is also the problem of insecurity.

“So it seems as if there are some criminal elements who are also taking advantage of our minerals illegally, and those people create security challenges in the mineral producing areas. That needs to be addressed, in order to be able to elevate the confidence of investors in this sector”.

Yusuf also highlighted that Nigeria possesses significant lithium potential, which is appealing to Foreign Direct Investments (FDIs); however, there are numerous challenges in actualizing this potential.

He elaborated: "The global market is currently shifting towards batteries, marking a significant transition. There is a noticeable movement away from fossil fuels, and even global financing is adapting – it is now more feasible to secure global financial support for initiatives related to lithium than for fuel or oil exploration, due to the ongoing energy transition and the broader decarbonization efforts taking place worldwide."

“It’s an expanding and big market because most things are going electric – automobiles are going electric. There are countries now that within five years they will phase out all these combustion engine vehicles. Everything will go electric”.

Lithium business environment should be easy, attractive —Miners

Additionally addressing the matter, the National President of the Miners Association of Nigeria, MAN, ‘Dele Ayanleke, expressed that the introduction of Lithium into Nigeria’s economic landscape is a positive advancement. However, he emphasized the necessity for the business environment to be simplified and made appealing to local investors.

He pointed out that the division between national and subnational governments poses a significant challenge, as only the federal government is authorized to issue licenses, often to the detriment of state and local governments.

He consequently remarked: “It is essential to create a conducive environment through our regulatory frameworks to ensure that we streamline processes and address the concerns of all stakeholders.
“Furthermore, we should motivate state governments to collaborate with foreign investors in lithium processing, enabling them to oversee and guarantee that the minerals extracted from their regions contribute to the socio-economic advancement of their communities.”

Regarding the involvement of local investors, he stated: “The government must engage local investors in lithium exploration by offering incentives. It is crucial for the government to create a supportive environment and ensure that the capabilities of indigenous operators are significantly improved.

“We are the foundation for these foreign partners entering the country. They should not be permitted to possess 100 percent ownership of mining operations. What we cannot obtain in other countries should not be offered here.

“You can’t go to China to own 100 per cent of their solid minerals as a foreign investor, they will not even give you access to go to their mining sites, no matter what kind of partnership you have with them.

“I pray we will not go back to what countries such as Congo is experiencing now in terms of foreign domination of their mining industry.

“The government should make sure we encourage our local investors to compete very well with any foreign investors that want to come into the sector.

“Give them incentives, and possibly de-risk some of the risk associated with the sector. Our financial institutions should try as much as possible to acquire knowledge about this industry because lack of knowledge is making them to run away from investing in the mining industry.

‘’They should copy what is being done in other climes, where the financial institutions are actually investing and supporting mining businesses to grow.”.

Nasarawa takes lead in Lithium mining-friendly policies —Agya

In an interview, Samuel Agya, the Special Adviser to Governor Abdullahi Sule of Nasarawa State on Mining and Solid Mineral Development, explained what was going on in his state on Lithium mining.
He stated: “Nasarawa State currently hosts the country’s largest lithium processing plant.

‘’Lithium mining was in obscurity in Nasarawa till the advent of Governor Abdullahi Sule, with his years of experience in the sector, embarked on a wide tour to woo the world’s largest investors in lithium processing, considering the huge deposits of the mineral and the world’s demand for green energy.

“The first large lithium firm to carry out processing of the mineral to a finished product is Avatar, Chinese Lithium processing firm. The plany was recently commissioned by the Senate President, Senator Godswill Akpabio, in Nasarawa Local Government and currently mining and processing Lithium into a finished product.

“The second is Ganfeng, also a Chinese company, and one of the largest lithium factory in West Africa is 90 per cent completed.

“Ganfeng Lithium processing company i