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Discovery of High-Grade Lithium: What it Could Mean for Nigeria


 


Nigeria, with an estimated population of 218 million and a Gross Domestic Product (GDP) of $477 billion, is regarded as the Giant of Africa. Beneath the surface of the 923,769 square kilometers of landmass that the country covers lie over 40 mineral resources of enormous value, with petroleum currently topping the list.

In July 2022, the Director-General of the Nigerian Geological Survey Agency, Dr Abdulrazaq Garba, announced that the country had discovered a high-grade lithium — a metallic mineral in high demand globally by the manufacturing industries.

While the discovery of this highly sought-after mineral makes Nigeria “a hot cake”, as Dr Garba described it and represents an opportunity for the country, it also has the potential to create new security challenges or exacerbate the existing security issues in the country given antecedent.


What is Lithium, and what benefits does it hold for Nigeria?

Lithium is a highly reactive metal used as a key ingredient in the production of batteries for cell phones, electric vehicles and solar panels. It is also used in the manufacturing of ceramics and glass.

A decade ago, 31% of the demand for lithium was majorly for ceramics and glasses, while its demand for batteries was just 23%.


Source: World Economic Forum (WEF)


However, by 2030, the global demand for lithium for batteries is projected to be at 95%.


Source: McKinsey Lithium Demand Model


This projected high demand in the coming years is predicated on the world’s shift to electric vehicles and move towards renewable energy to combat climate change and achieve Net Zero — a global goal that many countries have shown commitment towards.

As countries in different parts of the world continue to embrace the idea of electric vehicles and produce them, the demand for lithium is expected to rise. In fact, there are already concerns that the demand for lithium will far exceed the supply. Thus making it a high-value commodity that will become a revenue-earning prospect for countries with large volumes of it.

Currently, four countries — Australia, Chile, China and Argentina, are the world's largest producers of lithium.


Source: World Economic Forum (WEF)


In Africa, Zimbabwe leads the continent as the largest producer of high-demand minerals. Other countries in Africa with large deposits of lithium include Namibia, the Democratic Republic of Congo (DRC), Mali and Ghana. Recently, Nigeria joined the list with its discovery of high-grade lithium in Nasarawa State, Kogi, Ondo, Zamfara Kaduna, and other states.

According to the data from Daily Metal Price, the price of a metric ton of lithium as of November 30, 2023, was pegged at $16,605. In 2002, the price was below $2,000, indicating a 730.25% between 2002 and November 2023.



Source: Metalary


This price is projected to increase further in the coming year with more demand for lithium. For countries with significant deposits of high-grade lithium, like Nigeria, this represents a means to earn revenue from royalties, taxes and duties, licencing fees, etc. In addition to revenue, there is the potential for it to create jobs across the mineral processing value chain for Nigeria, which could potentially address, in part, the country’s high unemployment issue.

Furthermore, with the discovery of high-grade lithium, Nigeria could become one of the major players in the global lithium market, which is currently valued at $8.2 billion.



Source: Statista


This can position Nigeria to facilitate new trade relations between existing and/or potential trade partners, especially with countries and organisations seeking lithium for sustainability, trade, and technological advancements. For instance, in 2022, Tesla indicated an interest in purchasing Nigeria's raw lithium for export. Although this offer was rejected by the Nigerian government, it revealed the possibility of Nigeria establishing new and/or strengthening its trade relations, as evident with the agreement reached earlier this year between the Kaduna State government and China’s Ming Xin Mineral Separation Nig Ltd. (MXMS) company to build a lithium-processing plant. We have also seen a similar development in Nasarawa State, where a Chinese company is building a mining factory. Without a doubt, these moves signal a positive development for the states and the country in general.

While more positive development is expected in the short and long term as the government, both at the federal and state levels, continues to liaise with interested investors, a major concern that the government may equally need to pay attention to is the potential of this newly discovered resource creating new or intensifying existing conflicts in the country.



What security challenges might the discovery of lithium create for Nigeria?

In the early 1950s, the thinking around the discovery of natural resources by some Development Economists was that natural resource abundance would help countries, particularly in the Global South, overcome their challenges of income as these resources would provide revenues for governments to provide public goods and lift citizens out of poverty.

This thinking was logical as the exploration of resources indeed serves as a means of revenue for countries. However, several research has also shown a correlation between resource abundance and a number of socioeconomic problems, one of which is conflict.

As noted earlier, Nigeria has over 40 solid mineral resources in commercial quantities, with crude oil on top of the list. Crude oil was discovered in Oloibiri in 1956 and has been the backbone of the country’s economy, accounting for over 80% of the country’s total export revenue. While the discovery of oil indeed brought some positive gains to the country, such as revenue, employment opportunities and others, it also brought curses (for example, conflict) to the country, as many scholars have posited. Some authors have even argued that oil in Nigeria has, in fact, been more of a curse than a blessing.


Kenneth Mohammed, in his piece titled A Wealth of Sorrow: why Nigeria’s Abundant Oil Reserves are Really a Curse, noted that countries like Nigeria, which are dependent on their natural resource exports, tend to have, on average, lower growth rates, and lower levels of human development. He added that such countries have also been found to have more conflicts.


This is particularly true for Nigeria and was the case with the discovery of oil in the Niger Delta region and some other places where natural resources have been discovered.

In the early 1990s, conflict erupted in the oil-rich Niger Delta region of the country over control of crude oil and exploitation. The conflict, which lasted for years, according to reports, claimed at least 1,000 lives every year between 1990 and 2004. Beyond the killings, the region became known for its rampant cases of kidnapping for ransom (mostly foreign oil workers) and the destruction of critical infrastructures such as oil pipelines. The major reason for this is not far-fetched — the discovery of crude oil in the region. According to some authors, disagreements over the sharing of oil revenues were also partially responsible for the Nigerian Civil War, a conflict that endured for three years (1967 to 1970) and resulted in over a million deaths.

Beyond conflicts arising from disputes over resource control or revenue sharing, there is also the concern of non-state actors rising to gain access to natural resources for funding their activities. This concern may soon manifest in the regions where high-grade lithium has been discovered in Nigeria.


It is an established fact that non-state actors and terrorist groups significantly benefit from the illicit trade in natural resources, using the proceeds to finance their activities. Numerous cases of this phenomenon exist in various countries, including Liberia and the DRC. In Nigeria, Zamfara State serves as a notable example. The state is reported to possess over 40% of the gold deposits in Nigeria. As a result of this, in recent years, the state has become a major hotspot for bandits, with reports indicating illegal gold mining as a source of funding for these groups. A similar pattern has been observed in Nasarawa State, where the government has expressed concerns about an upsurge in banditry in the state because of the discovery of natural resources in the state. The phenomenon of mineral resources discovery acting as a catalyst for conflict is not unique to Nigeria. The exploration and extraction of minerals have been linked to conflicts in countries such as the DRC, Sierra Leone, Liberia, Angola, and many others.

In India, where lithium has also been discovered, concerns have arisen regarding its potential to intensify existing conflicts or ignite new ones. This apprehension is particularly evident in the threat issued by the People's Anti-Fascist Front following the discovery of lithium reserves in Jammu and Kashmir. This situation underscores the possibility of lithium discovery leading to or exacerbating conflicts in certain countries, especially if proper measures are not implemented by the authorities.


Although there has not been any major conflict in Nigeria linked to the exploitation of lithium, the country’s fragile state and its history of mineral resources being a driver of conflict leave much to be worried about. Therefore, the government, at both the federal and state levels, may need to draw lessons from the Niger Delta experience and other countries within and outside the continent. This involves putting in place mechanisms and developing regulations to prevent any form of conflict from arising or intensifying existing ones. Failure to do this may cause the country to lose out on the benefits of this new resource.


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