China to process lithium in Nigeria

Photo credit: Abubakar B.

Chinese firms are set to transform the lithium mining and processing industry in Nigeria. Earlier this month, China’s Avatar New Energy Materials officially launched Nigeria’s largest lithium processing plant in Nasarawa State, located in the centre of the country. The US$100m facility has a capacity of 4,000 tonnes per day. In a separate development, Canmax Technology, a prominent Chinese company responsible for approximately one-third of global battery material production, announced a US$200m investment for another lithium factory in Nasarawa. In neighbouring Kaduna State, Chinese outfit Ming Xin Mineral Separation is also constructing a lithium-processing plant to produce EV batteries. Lithium, primarily used in the production of rechargeable batteries for products such as electric vehicles (EV) and mobile phones, could help Nigeria diversify its economy and reduce its dependence on crude oil production.

Several Nigerian states possess lithium deposits in commercial quantities. However, the country has tightened regulations around the mining of the commodity. The government has stipulated that no company will be allowed to mine and export raw lithium unless they establish processing plants within Nigeria. In 2022, Nigeria rejected a request from Elon Musk’s Tesla to mine lithium because the EV-maker could not commit to building a battery manufacturing facility in the West African country.

In the 1960s and 1970s, Nigeria's mining industry played a meaningful role in the economy, contributing around 4-5% to GDP. However, the discovery of crude oil led to the neglect of the mining sector, which has seen its contribution to GDP drop to below 0.2% in recent years (2018-2022).

Despite this decline, the government aims to boost mining's contribution to GDP to 3%. According to a PwC report published in 2023, the previous administration under President Muhammadu Buhari made notable progress in advancing the sector. This included the implementation of the Electronic Mining Cadastre System (eMC+), which facilitates the online management of mineral titles. The eMC+ platform aims to enhance transparency in licensing and regulation while improving communication between the government and industry stakeholders. It allows for the online preparation, processing, recording, monitoring, and granting of mineral rights in Nigeria.

In April last year, the cabinet approved the Nigerian Minerals and Mining Bill 2023, which was subsequently sent to the National Assembly for consideration. This bill addresses several critical issues in the sector, from governance to local content requirements. PwC says that for the government to achieve its ambitions for the mining sector, it must tackle ongoing challenges such as insecurity, the need for alignment between state and federal taxes, and weak value addition in the industry.

The Solid Minerals Development Fund (SMDF), established by the Nigerian government to stimulate private sector mining investments, recently partnered with the Africa Finance Corporation (AFC) to combine their resources and expertise to support promising mining projects with the necessary guidance and funding to succeed. Additionally, the AFC and SMDF have commissioned a study to evaluate the feasibility of midstream processing plants in Nigeria for lithium, nickel, and other energy transition metals. Commenting on the partnership, Samaila Zubairu, CEO of AFC, emphasised that African resources are essential for the global clean energy transition, and increased investment is necessary to mine and process these commodities on the continent.

References

‘Nigeria missing from electric vehicles value chain despite mineral deposits’, Business Day, 25 October 2021

‘China beats Tesla to Nigeria’s lithium riches’, Rest of World, 20 February 2023

‘Nigerian Mining – Progress, but still a long way to go’, PwC, July 2023

‘Nigeria mining outlook wrap up of recent developments and updates’, Jackson, Etti & Edu, August 2023

‘Africa Finance Corporation and Solid Minerals Development Fund of Nigeria forge strategic partnership to derisk mining industry’, Africa Finance Corporation, 17 October 2023  

‘Nigeria taps into the global lithium market’, DW, 18 October 2023

‘My government is set to make Nigeria the solar panel and EV battery manufacturing hub of Africa – President Tinubu’, The State House Abuja, 10 May 2024

‘Tinubu welcomes Nigeria’s largest lithium plant’, Business Day, 11 May 2024

‘Thor mining bets on Nigeria’s underexplored lithium potential’, The Africa Report, 14 May 2024

‘Chinese company to build lithium plant in Nigeria’, Semafor Africa, 21 May 2024