Chinese corporations are making substantial investments in Nigeria’s lithium mining and processing industry, aiming to revolutionize the sector. Recently, Avatar New Energy Materials, a Chinese company, unveiled Nigeria’s largest lithium processing plant in Nasarawa State with a staggering US$100 million facility, set at a capacity of 4,000 tonnes per day. In addition, Canmax Technology, another prominent Chinese company, has disclosed a significant US$200 million investment for yet another lithium factory in Nasarawa. This investment is anticipated to stimulate Nigeria’s economy by broadening its economic activities and reducing its dependence on crude oil production.
Lithium, the primary component used in rechargeable batteries for electric vehicles and mobile phones, is plentiful in various Nigerian states. However, regulations concerning lithium mining have become more rigorous, with the government requiring mining companies to establish processing plants within the country in order to mine and export raw lithium. Notably, Nigeria rejected a request from Tesla to mine lithium due to the company’s failure to commit to constructing a battery manufacturing facility within the country.
The mining sector once played a significant role in Nigeria’s economy, contributing around 4-5% to the GDP in the 1960s and 1970s. However, the discovery of crude oil led to the neglect of the industry, causing its contribution to GDP to drop to less than 0.2% in recent years. Irrespective of this decline, the government aspires to elevate the industry’s GDP contribution to 3%, building on the progress achieved under the previous administration of President Muhammadu Buhari.
To address challenges in the mining sector, the government implemented the Electronic Mining Cadastre System (eMC+), which facilitates the online management of mineral titles, enhancing the transparency and regulation of licensing, and improving communication between the government and industry stakeholders. Furthermore, the approval of the Nigerian Minerals and Mining Bill 2023, aimed at addressing critical issues in the sector, represents a step in the right direction towards the industry’s development in Nigeria. The Solid Minerals Development Fund (SMDF) has partnered with the Africa Finance Corporation (AFC) to provide guidance and funding to the industry, working together to assess the feasibility of midstream processing plants in Nigeria for lithium, nickel, and other energy transition metals. These resources are essential for the global clean energy transition, which necessitates increased investment in the mining and processing of commodities in Africa.
The Chinese investments in lithium processing signify a substantial stride in revitalising Nigeria’s mining industry, creating prospects for economic diversification and growth. It is crucial for the government to address challenges such as insecurity, tax alignment, and value addition in the industry to fully realise the potential of the mining sector and achieve its objectives for economic development.