Nigeria’s Entrancing Opportunity in the Lithium Industry
The opportunity to capitalize on the global demand for lithium has presented itself to Nigeria, as the country’s large metal deposit offers a lucrative chance to benefit from the growing need for this sought-after mineral. This demand for lithium has surged due to its use in high-end smartphones, electric cars, and its crucial role in battery production, contributing to a staggering 10.81% increase in value in the first half of this year. This makes lithium one of the best-performing commodities, second only to gold, according to an analysis by U.S. Global Investors, Inc. Nigeria’s lithium deposits in Plateau, Oyo, and Kaduna states have sparked interest in the industry, with companies like Thor Explorations Ltd and Landmark Lithium Mining Company making significant strides in the exploration and production of lithium in the country.
The potential for lithium mining in Nigeria has attracted attention from global investors, with the discovery of substantial lithium ore deposits in the country. Kian Smith Trade & Co, a prominent Nigerian mining company, announced the discovery of 15,000 tonnes of lithium ore in 2018, signifying the commercial viability of lithium mining in Nigeria. Moreover, the construction of a lithium factory by a Chinese firm in Nasarawa State highlights the growing interest and investment in Nigeria’s lithium industry, with the aim of producing approximately 3000 tonnes of lithium per day at an estimated cost of $100 million.
The significance of the high-grade lithium discovered in Nigeria has piqued the interest of foreign investors, as confirmed by Abdulrazaq Garba, the director-general of the Nigerian Geological Survey Agency. The agency’s national mapping programme has revealed high-grade lithium that meets global exploration and mining standards, showcasing lithium oxide content ranging from one per cent up to 13 per cent. This presents a promising prospect for investors, especially considering the demand for lithium, driven by the exponential growth in electric vehicle sales.
The surge in demand for lithium has been primarily attributed to the rising sales of electric vehicles, with first-quarter sales reaching 14 million vehicles globally, marking a 35% increase from 2022. As the electric vehicle market continues to expand, the demand for lithium is projected to grow in tandem, with global lithium production expected to reach 964,000 tonnes in 2023 and 1.17 million tonnes in 2024. This surge in production has resulted in significant market capitalisation for lithium stocks, with eight U.S. publicly traded lithium stocks grossing $93 billion in the first half of 2023, indicating a remarkable increase compared to previous years.
The dominance of Australia, Chile, and China as the top lithium suppliers underscores the competitive landscape in the lithium market. These countries have solidified their positions as leading suppliers by implementing strategic policies to bolster their lithium industries, a model that Nigeria could emulate to strengthen its own lithium sector. The increasing shift from combustion engine models to electric vehicles and hybrids by car manufacturers like Tesla and Lamborghini has contributed to the growing demand for lithium, further accentuating the potential for Nigeria to capitalise on its lithium resources.
Recognising the strategic importance of lithium, the Nigerian government has issued licences and incentives to facilitate investment in the lithium mining industry, underscoring its commitment to fostering a robust and sustainable lithium sector. These steps, coupled with the prohibition on foreign companies from mining or purchasing lithium without incorporating a local company, indicate the government’s dedication to promoting local participation and development in the lithium industry.
In conclusion, Nigeria’s burgeoning lithium industry presents a compelling opportunity for the country to position itself as a significant player in the global lithium market. With the demand for lithium continuing to soar, driven by the exponential growth of electric vehicles, Nigeria stands to benefit substantially from its extensive lithium reserves. By leveraging its high-grade lithium resources and implementing conducive policies for investment and development, Nigeria can capitalise on the world’s most sought-after mineral, paving the way for a lucrative and sustainable lithium industry.
