$92bn lithium rush leaves Nigerian investors behind

According to recent reports, there is a concern that Nigerian investors are being sidelined in the country’s booming lithium mining sector, with foreign, particularly Chinese, interests taking the lead.¹ This is despite Nigeria possessing significant high-grade lithium deposits, estimated to be worth over $34 billion.²

Why Foreigners are Dominating

• Financial and Technical Capacity: Foreign companies, especially from China, have the substantial capital and technical expertise required for large-scale mining and processing.³
• Infrastructure: The infrastructure for mining, processing, and transportation is underdeveloped in Nigeria.⁴ Foreign firms are building their own plants, allowing them to control the entire value chain.
• Government Policies: While the government has implemented policies requiring companies to establish local processing plants, the business environment for local investors remains challenging. Experts say a lack of geological data, high-risk, and insufficient government support for local companies hinder their participation.⁵
• Partnership Models: Foreign companies are utilizing partnership models like joint ventures, technical service agreements, and equity participation to gain a foothold in the Nigerian market, often with local partners who hold mining licenses.⁶

Government’s Position and Reforms

The Nigerian government, under President Bola Tinubu, is making efforts to change this dynamic.⁷ The Minister of Solid Minerals Development, Dele Alake, has highlighted new policies aimed at ensuring local value addition.⁸

• Local Processing Mandate: A key policy shift in early 2024 mandates that companies can only get a mining license if they have a clear plan to establish a local processing plant.⁹ The government’s goal is to end the “export of raw minerals from pit to port.”¹⁰
• Increased Revenue: The government claims its new policies have led to a six-fold increase in revenue from the solid minerals sector, from ₦6 billion in 2023 to ₦38 billion in 2024.¹¹
• Foreign Investment: The government has attracted an estimated $800 million in foreign investment for lithium processing projects in 2024, including a $600 million plant near the Kaduna-Niger border and a $200 million refinery near Abuja.¹²
• Formalization of Artisanal Miners: The government has been working to formalize small-scale miners into cooperatives, providing them with legal status and a pathway to finance.¹³

Challenges and Concerns

Despite the government’s efforts, significant challenges remain, and the benefits of the lithium rush have yet to trickle down to local communities and investors.¹⁴

• Implementation Gaps: Some processing plants, inaugurated with much fanfare, are not yet fully operational due to bureaucratic delays in securing necessary federal approvals.¹⁵
• Lack of Local Benefit: Investigations have revealed that promises of jobs and infrastructure for local communities have largely not been met, with many of the benefits going to a few individuals or security guards.¹⁶
• Environmental Concerns: Environmental groups have raised alarms about the potential for land and water pollution from lithium extraction and processing, and the lack of transparency in environmental impact assessments.¹⁷
• Informal Sector: A significant portion of the lithium supply chain remains informal, with artisanal miners selling to middlemen who operate without licenses.¹⁸ This leads to revenue leakage and makes the industry difficult to regulate.