Lithium must not go the way of oil

BY UMAR ABDULSALAM

Just over five years ago, Nigeria reported the discovery of vast lithium, with confirmed deposits across 10 states of Cross River, Ekiti, Kaduna, Kogi, Kwara, Nasarawa, Niger, Ogun, Plateau and Zamfara, with a total estimated value worth over $700 billion. Lithium could be Nigeria’s ticket into the green economy, but history warns that resource wealth here has often turned into a curse. Can Nigeria avoid repeating the catastrophic mismanagement that squandered decades of oil wealth?

Like with oil in the 1970s, the stakes are high with global lithium demand expected to surge 13-fold by 2040, and Nigeria is sitting on some of the world’s highest-grade lithium deposits, far exceeding the quality derived from most markets today, with exploratory samples of Nigerian lithium report as high grade quality, ranging from 3.5% to as high as 13% lithium oxide, far above global averages of 1 – 2%; this makes lithium deposits in the country highly commercially attractive. Yet history suggests caution, for Nigeria has earned over $600 billion in oil revenues since the 1970s, but it remains one of the world’s poverty capitals today.

Already, as of May 2025, these deposits have attracted $1.3 billion in Chinese investment commitments for lithium processing infrastructure, including the $800 million Chinese-backed factories near Abuja, and on the Kaduna/Niger border, and a smaller facility in Nasarawa state, with coming expansions expected.

Independent projections suggest these two processing factories could deliver cumulative investment returns of over $25 billion across their operational cycles, with an expected annual foreign exchange flow of up to $8 billion (Discovery Alert).

Under aggressive development, and assuming that Nigeria is able to capture more value with additional downstream integration, the national revenue from lithium over the next decade could reach tens of billions of USD, and establish Nigeria as a key player in the green tech transition market.

However, the same governance failures that enabled oil’s “resource curse”, elite capture, institutional opacity, and lack of beneficiation are already emerging in lithium licensing.

The Lithium Promise vs. Oil Reality

The question of the exact quantity of lithium available in the identified reserves poses our first challenge. Though Lithium was first discovered in 2019, full reserves volume remains under exploratory survey; the Nigerian Geological Survey Agency (NGSA) is said to be scaling radiometric and airborne electromagnetic mapping to properly quantify deposits.

These untapped reserves, as well as other rare earth mineral deposits, potentially has Nigeria at the brink of a transformative era. Lithium, which is an essential resource for the global green energy transition, has been buzzing of late, with the value of the lithium market rising exponentially over the last decade, driven primarily by the demand for batteries for electric cars (EVs) across global markets.

As of 2024, 70% of total lithium consumption goes towards the manufacturing of lithium-powered batteries, and global demand is expected to surge from around 0.71 million LCE tonnes in 2022 to 1.72 million LCE tonnes by 2029, compound growth of about 22%, driven primarily by the transition from petrol-fueled vehicles to electric.

Currently, China, which leads the world in EV manufacturing, controls about 60% of lithium processing capacity, presenting both strategic opportunities and geopolitical challenges, as western manufacturers and emerging producers struggle for market relevance. Recently, in collaboration with the African Finance Corporation (AFC) and Solid Minerals Development Fund (MDF), China has made investment commitments for 2 lithium processing plants in the country.

This investment, which represents the largest share of capital investment into the Nigerian minerals industry thus far, is projected to generate approximately $1.2 billion in annual economic output once operational, 50,000+ formal jobs across the value chain, with a potential annual export earnings valuation of $5 – $8 billion by the year 2035.

To maximise economic value, the Nigerian government is taking an approach that reflects a deliberate effort to use critical mineral resources as an engine for broader economic transformation, not simply as a source of short-term rents, as seen with other natural resources like oil. Modelled after countries like Chile and Botswana, the establishment of the Nigerian Mining Company (NMC) and adoption of joint venture models, signal a shift towards private sector-driven mining and processing, which could lead to improvement in governance and efficiency.

The government has also been instituting plans to tighten and potentially ban raw mineral exports, placing an emphasis on domestic beneficiation intended to foster local manufacturing, technology transfer, and higher-value job creation. These crucial steps are key to reducing illicit leakage by formalising the sector and closing the loopholes that allowed for tax evasion and illegal commercial activities, attracting Foreign Direct Investments (FDI) as seen in $1.3 billion investment commitments, which in turn increases the in-country value generated from the mineral resources.

If managed properly, we can expect to see industrial upgrading, technology transfer and further industrial development, higher-value job creation across the sector and other related sectors, as well as much-needed community benefit sharing and sustainability initiatives that allocate profits to local renewable energy and infrastructure, potentially catalysing broader economic modernisation.

Umar Abdulsalam writes from Manitoba, Canada. He can be reached on X @umar_aslm