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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Nigeria Looks to Lithium as Its Oil Industry Struggles

  • Facing declining oil reserves, Nigeria seeks to develop its lithium resources to capitalize on the global demand for battery metals.
  • The government prioritizes responsible mining practices, requiring foreign companies to establish processing plants within Nigeria.
  • Nigeria tackles illegal mining activities to prevent environmental damage and lost revenue, aiming for a sustainable and secure lithium industry.
Lithium

As Nigeria’s oil reserves begin to dwindle after decades of drilling for crude, the West African country is shifting its attention to another valuable resource – lithium. There is a growing global demand for the “white gold”, which is needed to produce batteries for electrical appliances, electric vehicles and renewable energy storage. There are thought to be significant lithium resources in Nigeria, but the country’s mining industry is currently underdeveloped. Further, the government must tackle the issue of resource theft, support the sustainable development of the mining industry, and ensure that any foreign players are adding value to the Nigerian lithium market for it to be successful. 

Many international energy companies are setting their sights on emerging oil markets, such as Ghana in Africa and Guyana in the Caribbean, as they fund major new “low-carbon” projects that they hope will provide them with decades more crude. This has led energy companies to show less interest in previously strong oil markets, as their crude reserves become depleted. There have been other complications in Nigeria, with oil companies having to contend with the crime of oil theft, which has plagued the industry for several years. In addition, environmentalists have blamed oil producers for destroying the country’s Niger Delta with drilling that led to multiple oil spills. In 2020, after years of fighting, Shell Plc was ordered by a High Court to pay $878 million to communities of Egbalor Ebubu in Rivers State due to oil-spill damage to waterways and farms.

The challenges facing Nigeria’s oil industry, and the dwindling revenues from its crude production, have led the country to assess the potential of its other natural resources. The Government of Nigeria now hopes to mine for lithium, which is greatly needed for global battery production. There is significant potential to develop Nigeria’s mining industry, as the country is also home to gold, limestone, and zinc reserves. However, its mining industry is underdeveloped at present, contributing less than one percent of Nigeria’s GDP. The government plans to invest over $19.6 million over the next seven years to gather data on the country’s mining sector through the National Integrated Mineral Exploration Project (NIMEP), which is expected to provide a better picture of the country’s lithium potential.

China’s Ganfeng Lithium Industry Ltd. is currently developing a new lithium processing plant in the central Nasarawa state, with plans to process up to 10,000 tonnes of lithium ore every day. A separate Chinese company, Avatar New Energy Materials Company Ltd., recently opened another processing facility in Nasarawa with a daily production capacity of 4,000 tonnes. The processing facility is expected to provide $500 million in revenue and continue production for between 15 and 20 years. 

In 2023, Nigeria tightened rules on lithium mining across the country after several foreign companies showed significant interest in the industry. The government announced that no foreign company would be permitted to mine and export raw lithium unless they establish processing and refining plants in Nigeria. The government has learnt from the mistakes it made with its oil industry, having lost a huge proportion of the value of its crude to foreign players over the years. Now, the government is determined to add value to any new natural resources it develops. Dele Alake, the Minister of Solid Materials, stated, "I want to emphasize the fact that the era of exporting raw solid minerals from Nigeria is over. Any company wishing to come and invest in the solid minerals industrial sector in Nigeria henceforth must add local value.” The new licensing criteria mean that mining companies must demonstrate that their projects will benefit local communities to be eligible for a license. 

Lithium can be found in several regions of Nigeria, including Nassarawa, Kogi, Kwara, Ekiti, and Cross River States. While there is significant potential for Nigeria to expand its lithium mining industry, the government wants to ensure that it is not to the detriment of the environment and that no illegal mining takes place, as it aims to avoid the problems previously faced in the oil industry. The Miners Association of Nigeria has emphasised the need for the government to crack down on any illegal mining activities, particularly as it has sometimes failed to do so in the past. In addition, environmentalists are putting pressure on the government to make mining activities more sustainable by using lower-impact mining techniques, reusing mining waste, acquiring eco-friendly equipment, and rehabilitating the mining site after it has been depleted. 

In April and May, the government made dozens of arrests in association with illegal mining activities. Some of those arrested were Chinese nationals, who paid locals to carry out clandestine mining activities. The government has previously warned foreign nationals not to engage in illegal mining operations. President Bola Tinubu has blamed illegal mining for worsening conflicts in the north of the country. Resource theft in Nigeria is extremely lucrative, with government estimations suggesting that the country loses around $9 billion a year in relation to this crime. Recently, the government enlisted a 2,200-strong corps of mining marshals to tackle the problem and support the development of a fair and safe mining industry. 

By Felicity Bradstock for Oilprice.com

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