How Nigeria can tap $2bn lithium market to drive earnings, energy access

Lithium, the “white gold” of the millennium 21st century, has become a critical component in the transition to renewable energy globally. This metal is a core material in battery manufacturing for electric vehicles (EVs), smartphones, renewable energy storage systems (solar power batteries), and other battery storage systems.

Tomiwa Bayo-Ojo, the Managing Director and Chief Executive Officer of Volsus Energy Limited, in this interview with Cynthia Egboboh, BusinessDay correspondent, dissects the potentials of lithium ore mining and how Nigeria can leverage it to rake in multibillion-dollar revenue, create jobs, and improve living conditions.

 “Africa has the potential to become a major global supplier of lithium due to the proven abundance of deposits in Zimbabwe, Namibia, the Democratic Republic of the Congo, and Nigeria.”

Can you talk to us about the global lithium market?

Yes, I am passionate about national development; you can call me a national development enthusiast. You may be aware that with the ongoing promotion of action against climate change, the world is shifting towards greener technologies. Countries rich in lithium resources have seen significant economic benefits in terms of economic growth and technological advancement. Some of these countries are Chile, Australia, Argentina, and Bolivia. As global demand for lithium continues to grow, these countries are likely to play increasingly important roles in shaping the future of energy and technology.

Research has shown that Chile stands out as one of the world’s leading producers of lithium with its vast lithium brine reserves in the Atacama Desert. Two major companies: SQM and Albemarle extract lithium from salt flats, which is then processed into lithium carbonate and lithium hydroxide, and these are the key materials for battery production.

Let’s look at Australia, which is another major player in the global lithium market. The Greenbushes lithium mine is located in Western Australia and is focused on spodumene, a mineral rich in lithium. So far, lithium mining has created thousands of jobs and has attracted substantial foreign investments as the largest global exporter of the mineral. Argentina, along with Chile and Bolivia, form part of the “Lithium Triangle,” a region with rich lithium brine deposits. Argentina has lithium reserves in the northwestern provinces of Salta, Jujuy, and Catamarca. The country has benefitted so much from this in terms of foreign direct investment (FDI) while boasting of high investments in local processing facilities. And for Bolivia, the lithium reserve is in the Salar de Uyuni. However, due to technological and investment hurdles, this country has not harnessed the full potential of lithium ore mining, and that is the case for Nigeria. But the good news is that Nigeria can turn the story around.

How can Nigeria become a major player in lithium mining?

Nigeria, known for its rich deposits of oil and natural gas, is heading for a new economic opportunity: lithium mining. As the world increasingly turns towards renewable energy and electric vehicles (EVs), lithium has become a critical component, used primarily in batteries for these technologies. For Nigeria, a country with a growing economy and diverse mineral resources, tapping into its lithium potential could offer substantial benefits.

Studies have identified sites in Nasarawa, Kogi, Kwara, Ekiti, and Cross River. There is the lithium belt that cuts across states in the southwest to the northeast, spanning about half of the country’s vast land.

With these prospects, Nigeria needs to quickly deal with its energy access issues, unlike the United States of America, where the use of solar energy is an option to reduce the cost of grid-based electricity, which is always available. Right here, the grid power is not enough, so solar and other renewables are often resorted to.

For solar energy access, lithium is very important because of the battery technology. Lithium batteries are becoming cheaper and have a longer lifespan. This is how it would impact us greatly if we started manufacturing our lithium batteries here because, in the immediate term, we can’t fix the power problem in Nigeria.

It requires huge investment in transmission and distribution infrastructure and even generation. The funding for these is ridiculously high. Another aspect that maximising the production of lithium-based devices can improve the revenue for Nigeria is in the telecommunications sector. Mobile phone batteries use lithium, and Nigeria has the market for them. It will become cheaper if we get companies to set up and produce those batteries locally. Now that petroleum products are quite expensive, along with the campaign on climate change, there is a spike in the production of electric vehicles (EVs), which largely depend on batteries. Nigeria has a market for EVs and batteries and is suffering from the high cost of petroleum products, which could spur demand for EVs if they become affordable by producing the batteries locally. We could even become a major exporter of lithium-based products after attaining self-sufficiency.

Has there been any move by the government to promote the mining of lithium ore?

I have heard news reports of the efforts of some state governments to promote the mining of lithium, and I believe there is a need for coordinated and accelerated efforts towards this. A report by Fortune Business Insights puts the expected growth of the lithium products market at a 16.2 percent annual rate from 2021 and 2028. The market was valued at 37 billion in 2022 and is projected to hit 90 billion by 2030. However, Asia-Pacific is leading the market, but it is an opportunity for lithium mining companies in Nigeria to leverage this rising demand.

In May this year, President Bola Tinubu inaugurated Nigeria’s largest lithium ore processing plant in Lafia, Nasarawa State, operated by Avatar New Energy Materials Company Limited. The plant has a production capacity of 4,000 metric tonnes per day to mine the lithium potential that could last between 15 and 20 years. Another firm, Canmax Technologies, has plans to invest $200 million in another lithium processing facility in the same state. In Oyo State, Thor Explorations Ltd. has found lithium in some formations and is eager to invest in it. It is also prospecting for lithium in the Kwara and Ekiti States. When this mineral is harnessed and put into proper productive use, there could be several life-changing impacts on the Nigerian economy.

What should the federal government do to create a thriving investment atmosphere?

For Nigeria to seamlessly tap into the global market, the state and federal governments need tailor-made policies. At the federal government level, it would need to ease the documentation procedures to attract investors. For instance, the Mining Cadastre Office should create a one-stop shop in partnership with other government agencies to make it easier for investors to obtain mining licences and permits for lithium.

There should also be conditions that would incentivise those companies to mine the lithium for export, set up firms to process it, and even produce products like batteries (solar, smartphones, etc.) in Nigeria. These incentives can be in the form of tax holidays, waivers on importing production equipment, reduced export fees, and other perks for the first five years of setting up the firms. So far, the Mineral and Mining Act 2007 exempts mining firms from paying customs and import duties for bringing equipment and materials, subject to approval from the Mines Inspectorate Department (MID).

In the medium term, when few companies must have been established to produce lithium-ion batteries for solar energy and mobile phones, the federal government can move to temporarily ban the importation of small solar home systems (SHS), which I believe will increase the patronage of locally assembled solar companies, including the batteries. For the development of EVs, Nigeria can begin to incentivise vehicle assembly and manufacturing firms to commence mass production of electric-powered (lithium-ion) rickshaws or kekes, and gradually, more investments can come in to produce affordable EVs since the battery component, which is the most expensive part of the EVs, is now available locally in Nigeria.

Collaborating with the organised private sector, the Nigerian government can significantly gain from the opportunity of exploring, processing, and exporting lithium ore as the new mineral cash cow. This is especially so as the products can also help to tackle the acute inadequacy of on-grid electricity and access to energy crises that the country is facing by increasing access to alternative renewable energy sources.

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