Blessed with limitless natural resources, new discoveries of high grade resources are found in Nigeria consistently. Recently, lithium was discovered across different regions in the country such as Kogi, Nasarawa, Kwara, Plateau, Oyo, Ekiti and Cross River. With the resources expected to triple in demand by 2040, the price for a ton of lithium skyrocketed from $6,000 in 2020 to $78,000 in 2022. Despite the industrial development that this recent discovery might offer Nigeria’s economic revenue and improve the foreign exchange, numerous critics have been critical of the guarantees put in place to ensure a prevention of environmental pollution like that crude oil extraction and its pollution of the Niger Delta region of the country.
This development heralded a bidding war between powerhouses including Tesla and China. In August, Nigeria’s Minister of Mines and Steel Development, Olamilekan Adegbite, revealed Tesla’s interest to mine lithium in Nigeria which was rejected, giving the company an ultimatum to situate one of its battery making factories in Nigeria. This ultimatum, the minister said, was aimed at retaining value along the processing chain of lithium worldwide.
Tesla’s proposal rejected as it does not align Nigeria’s new mining policy.
Ming Xin Mineral Separation Nig Ltd., China (MXMS) has however been chosen by Kaduna to build Nigeria’s first lithium processing plant to enable the manufacturing of batteries for electric vehicles (EVs). The Kaduna Investment Promotion Agency, on January 13, took to social media to post pictures of its leadership reviewing the construction plan of the plant. The Kaduna State Mining Company indicated that the plant was being built on a 9.3 hectares of land and the executive secretary of the Kaduna state investment promotion agency, Khalil Nur Khalil also disclosed that the plant was going to be a game changer that would lay the foundation for Nigeria’s ambition for manufacturing EVs in Kaduna.
On the rejected proposal of Tesla, Ayodele Adeyemi, a special assistant to the minister of mines and steel development, disclosed that the company’s proposal did not align with Nigeria’s new mining policies. He indicated that the new mining policy demanded an addition to the value of raw material before exports, for the creation of jobs and development of industries. Adeyemi noted that they weren’t demanded to turn ores into finished products but to add value to it before exportation.
China’s loan represents 3.94 percent of Nigeria’s total debt.
Earlier in January, Elon Musk, the CEO of Tesla, indicated that he saw Tesla’s biggest competition emerging from China and in that same month, Tesla was forced to slash its car prices in China for the second time since September 2022. According to the International Energy Agency, China is already controlling about 60 percent of the global lithium processing and with this development with Nigeria, the country is exploring more frontiers to expand their control of the resource.
The Nigerian government has been significantly dependent on funding from China for numerous projects such as the Abuja Light Rail Project, terminal expansions at four major airports, as well as the National Public Security Communication System project. In fact, Nigeria’s Debt Management Office disclosed that China’s loans represented 3.94 percent of the country’s total debt. However, in spite of the efforts of the Chinese in financing and constructing the infrastructure, the United States is still recognized as one of Nigeria’s major sources for import capital. The National Bureau of Statistics’ show that in 2021, $2.2 billion was granted by the United Kingdom, $677 million and $10 Million in USA and China respectively.
Nigeria must exploit chance by leveraging domestic value-added process.
According to IEA, about 2 million electric vehicles and hybrids must be produced to achieve a net zero emission by 2050. With this, lithium would continually be valued and in demand, given that it has no alternative for producing EVs batteries and batteries for phones, literature, digital cameras, as well as the manufacturing of trains and planes. Oghosa Erhanon, a lawyer and energy transition analyst, noted that Nigeria must exploit this opportunity by leveraging its domestic value-added process to the natural resource.