For decades, Nigeria has been Africa’s largest oil producer. But as oil production falls to record lows, the abundance of another mineral that could hold the keys to the next economic revolution is coming to the fore.
In 2016, the famous Nigerian author and former Minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu, described his country’s relationship with oil boldly. “My name is oil, the very kind people who are kind to me call me black gold. I worry for my future; everyone now talks down on me.” It is doubtful that an accomplished author like him could have predicted such a reversal of fortunes occurring so quickly.
According to the Organization of Petroleum Exporting Countries (OPEC) monthly oil market report for August, Nigeria’s production declined by more than 100,000 barrels a day compared to July. Subsequently, the West African country has been knocked off its perch as the continent’s largest oil producer, dropping to third behind Angola and Libya.
However, as oil production falters, the discovery of high-grade lithium is shifting the economic outlook.
New black gold?
The discovery of oil in the 1970s kickstarted an economic boom. Oil quickly became the biggest earner and contributor to national GDP at the behest of traditional exports such as palm oil and rice. But in recent years, theft and sabotage at production sites have hampered output. Over 200,000 barrels are reportedly lost daily as a result.
Last Friday, President Muhammadu Buhari said the situation was putting the economy in a precarious situation. And earlier this week, Nigerian lawmakers sent a delegation to oil-rich Rivers State to investigate the problem and report their findings to the Senate.
“At this particular point in time when the oil prices are rising, Nigeria is supposed to sit back and be enjoying revenue and inflows of forex [foreign exchange trading] through the sales and export of crude oil. But the reverse is the case, so it’s a negative thing for the country falling from that position of being the biggest producer.” Emmanuel Afimia, an oil and gas expert based in Abuja, said.
Although Nigeria is slowly losing its influence in the global oil market, it could capitalize and gain control of the race towards green energy.
Lithium is a metallic mineral in very high demand by industries across the globe. Traditionally, lithium was coveted by ceramic and glass manufacturers, but the increasing push for electric vehicles has powered the recent bulk of demand. The price of a tonne of lithium jumped from about $6,000 in 2020 to over $78,000 in 2022.
Electric vehicles use lithium-powered batteries, which are expected to account for 95% of demand by 2030. Overall demand is expected to triple by 2040.
Nigeria is sitting on large deposits of the mineral that remain untapped. Lithium has so far been discovered in the northern states of Kogi, Nasarawa, Kwara, and Plateau, as well as Oyo, Ekiti, and Cross River in the south.
Unlike with oil, there’s focus on value addition
Despite lithium production hitting a record high of 100,000 tonnes in 2021, a 21% increase from 2020, demand continues to outpace supply.
Just three countries, Australia, Chile, and China account for 86% of the world’s lithium exports. Africa has significant untapped lithium deposits, and investors are knocking.
“Nigeria lithium is the hot cake now. The mineral was discovered in several parts of the country in the course of the National Integrated Mineral Exploration Project during exploration. We did an investigation and came up with analysis and discovered that Nigerian lithium is of high grade,” The Director-General, Nigerian Geological Survey Agency, Dr. Abdulrazaq Garba, told reporters in August.
He added, “High grade in the sense that the standard worldwide for even exploration and mining starts from 0.4% lithium oxide, but when we started exploration and mining, we saw 1% up to 13% lithium oxide content.”
The Nigerian government has been quick to set clear guidelines before exploration begins. In August, Nigeria’s Minister of Mines and Steel Development, Olamilekan Adegbite, said the country had rejected Tesla’s request to purchase raw lithium from the country because it was no longer interested in allowing foreign companies to mine the nation’s mineral resources and ship them out without local value addition.
“Anything that is mined in Nigeria must have value addition to the country; we must try to use them within Nigeria than exporting them. When I was in Saudi Arabia, we were approached by Tesla (The American firm owned by the world’s richest man Elon Musk). A lot of its battery companies were there and they approached Nigeria. They were interested in our Lithium and I said no, we don’t want to export lithium from Nigeria,” Adegbite said.
“Come to Nigeria, come and establish your factory plant. Mine the lithium, produce the batteries, and then you can export that. Gone are the days when we would export raw minerals.”
The minor show of defiance illustrated that the government had learned its lesson. For years, economists have documented how the lack of oil refineries in the country was massively hindering maximum exploitation of the resource.
Lithium supply chains are more complex than oil. They include exploration, mining, processing, manufacturing, use, and recycling. Currently, Africa has little capacity for lithium mineral processing, further refining of lithium chemicals, or manufacturing of battery components. This leads to a typical situation where the mineral concentrate is exported, value is added outside Africa, and products using lithium-ion batteries are then imported.
With over 90% of lithium demand coming from batteries, the government believes that investors like Tesla establishing their battery factories within the country would better position Nigeria in the global electric vehicle market.
In 2020, that market was valued at $163.01 billion. However, this valuation is set to rise significantly to $823.75 billion by 2030, with the lithium market expected to grow from $3.64 billion in 2020 to $6.62 billion in 2028.
Nigeria’s dominance of oil could be over, but if the government competently manages the exploration of its large untapped deposits of lithium, even more, economic riches beckon. Perhaps, a country so synonymous with fossil fuels could help usher the transition toward green energy. What a story that would be.