How America’s rare earth crisis offers a warning to Nigeria’s oil and gas sector

BY ABDULAI OMOSUNLADE

The United States, long regarded as a global leader in long-term strategic planning, has spent the past decade confronting the realities of securing its own critical resources. The experience of its rare-earth sector, which underpins modern technology and clean-energy manufacturing, shows that even highly advanced economies must continuously adapt to shifting global dynamics.

For Nigeria, the world’s tenth-largest holder of crude reserves, the trajectory of the US rare-earth sector offers a timely warning about the future of its oil and gas assets. The world is changing. Countries that plan ahead will thrive, while those that cling to legacy resource systems risk watching their assets become stranded and obsolete.

Rare earth elements such as neodymium, praseodymium, dysprosium, and terbium power critical components in electric vehicle motors, wind turbines, military aircraft, smartphones, and advanced medical devices. Yet the U.S. controls less than 10 percent of global rare-earth processing capacity, while China controls more than 70 percent of the global refining market and nearly 90 percent of magnet production. This imbalance has created a strategic chokehold. In 2023, the US Geological Survey reported that the United States imported 74 percent of all rare earths consumed domestically, mainly from China. Any supply disruption could slow US manufacturing, weaken renewable-energy deployment, and escalate defence vulnerabilities.

Washington has responded with unprecedented urgency. Under the Defence Production Act, the United States has allocated more than 800 million dollars to rebuild critical mineral supply chains. The Department of Energy projects that demand for rare earths used in clean-energy technologies could increase by up to 600 percent by 2040. The White House’s National Blueprint for Lithium Batteries and Critical Minerals calls for complete end-to-end domestic capacity.

On Thursday, December 4, 2025, President Donald Trump brokered a major deal with the leaders of Rwanda and the Democratic Republic of Congo (DRC), establishing bilateral agreements for US access to vast reserves of rare earth and critical minerals like cobalt, copper, and tin, vital for defense and clean energy, as part of a broader accord to end the long-running conflict in eastern Congo, with American companies set to invest in mining operations if peace holds. These efforts show how a nation under threat acknowledges dependency and acts decisively to safeguard its economic future.

Nigeria faces a parallel challenge, but in reverse. Instead of a shortage of strategic inputs, Nigeria risks owning energy assets that the world may no longer want. As global economies transition toward cleaner energy systems, upstream oil fields, pipelines, gas processing plants, and export terminals in Nigeria increasingly face the risk of becoming financially unattractive long before their engineering life ends. This is the stranded asset dilemma. Already, Nigeria struggles to meet its OPEC quota, producing just 1.2 million barrels per day in 2024 against a capacity of more than 2 million.

The warning signs are clear. Just as the US became dependent on foreign rare earths because it underinvested in processing and downstream value chains, Nigeria risks losing global competitiveness because it has failed to modernise and diversify its energy system. The International Energy Agency estimates that African crude demand will face downward pressure as global EV adoption accelerates, potentially lowering long-term oil prices. Meanwhile, Nigeria’s 200-plus onshore and shallow-water oil infrastructure units, many over 40 years old, face rising costs, declining reserves, and regulatory uncertainty. Without reform, these could become stranded in the same way America’s neglected rare earth capacity became a strategic liability.

The US response offers key lessons for Nigeria. First, diversify early. America’s rebuilding of rare earth supply chains is costly because it waited too long. Nigeria should accelerate diversification within energy itself by expanding gas midstream projects, promoting modular refining, and developing infrastructure for petrochemicals and clean-energy components such as lithium-ion storage.

Second, build downstream value, not just raw extraction. The United States is investing not only in mining but in refining, separation, metal-making, and magnet production. Nigeria should adopt the same approach. Nigeria must build refining resilience, petrochemical capacity, and industrial clusters that convert hydrocarbons into higher-value goods. The Dangote Refinery is a strong step in this direction, yet complementary investments will still be required, and Nigeria must position the refinery as a $20 billion bet that can attract substantial global investment in 2026.

Lastly, strengthen regulatory certainty. US agencies have aligned national security, industrial policy, and clean-energy goals into one coordinated approach. Nigeria’s energy regulation, on the other hand, remains fragmented. A coherent policy that stabilises fiscal terms, ensures transparent pipeline access, and de-risks infrastructure investment is necessary to prevent stranded oil and gas assets.

Both countries sit at pivotal moments. The United States is rebuilding what it ignored. Nigeria still has time to act before declining demand and ageing infrastructure leave billions in assets stranded. The lesson is simple: nations that anticipate the future will shape it. Those who fail to adapt will be defined by what they lost.

Abdulai Omosunlade is an energy, finance and M&A advisor whose work spans economic policy, sustainable energy, strategic investment, and ethical governance