The Untapped Wealth beneath Nigeria’s Mining Deals

The global race for strategic minerals is accelerating. In Washington and Beijing, lithium, cobalt, and rare earths are no longer just commodities; they are treated as national security assets. The United States has poured billions into magnet mineral projects abroad, while China has locked up supply chains from South America to Central Africa. Nigeria, meanwhile, is home to lithium reserves valued at over $34 billion, according to Business Day, and gold deposits estimated at 21.37 tons worth more than $1.7 billion, according to the Nigerian Geological Survey Agency. Yet the country’s mining sector remains shaped by concession-style licenses and foreign-financed processing plants. In 2023 alone, the government issued 146 lithium licenses and 91 gold licenses, with the bulk of investment and ownership flowing to foreign companies. Even the two large lithium processing plants under construction, worth nearly $800 million, are majority-financed by Chinese firms, leaving Nigerian partners with minority stakes. These deals reflect a familiar pattern in Nigeria’s resource story: the state earns royalties and short-term fees, while the real equity and long-term gains flow elsewhere. As the world scrambles for strategic minerals, the question is no longer whether Nigeria can attract investment, it is whether the country can claim true ownership of the wealth beneath its soil.

Why Minerals Are the New Oil

The global energy and technology transition has elevated strategic minerals to the same status that oil once held in the 20th century. Lithium, cobalt, nickel, and rare earths are no longer treated as commodities traded solely on market price; they are increasingly regarded as strategic assets embedded in national security strategies, industrial policy, and climate commitments. This shift is driven by two interrelated factors. First, projected demand growth is significant. The International Energy Agency estimates that lithium demand could expand more than fortyfold by 2040 in a net-zero pathway, with similar multi-fold increases for cobalt, nickel, and graphite. Second, processing capacity is dangerously concentrated: China currently accounts for over 80% of global rare earth processing and more than 60% of lithium refining. This concentration creates systemic risk: any disruption or restriction can reverberate across global supply chains. Major economies are responding.

The European Union’s Critical Raw Materials Act (2023) sets binding targets to reduce reliance on single suppliers and mandates diversification. The United States has embedded critical minerals within its Defense Production Act and Inflation Reduction Act frameworks, linking supply security directly to industrial competitiveness. In early 2025, U.S. policymakers advanced a multibillion-dollar fund, backed by the Development Finance Corporation and private partners, designed to acquire equity stakes in overseas mining ventures and secure long-term off-take agreements. These steps reflect a deliberate move away from transactional access toward structural ownership. China’s approach underscores this point. In 2024, Beijing raised its rare earth quotas by more than 10%, consolidating an already dominant position in global processing. The policy is not designed for short-term revenue but for long-term leverage: controlling the middle of the supply chain ensures influence over pricing, technology transfer, and geopolitical bargaining power. African producers are beginning to respond. In March 2025, the African Union adopted the Green Minerals Strategy, calling for coordinated diplomacy and stronger value retention. Around the same time, the EU committed €4.7 billion to South Africa for mineral processing and infrastructure, explicitly emphasizing beneficiation over raw exports. The UN Secretary-General has also reiterated that host countries must secure first-order benefits from their mineral wealth if the green transition is to be equitable. The global direction is clear: the world is moving from royalty-driven concessions toward equity stakes, local processing, and long-term industrial alignment. For Nigeria, staying within a concession-driven model risks repeating the missed opportunities of the oil era.

Nigeria’s Resource Profile and the Cost of Concession-Driven Deals

Nigeria is not short of geological potential. Lithium reserves are estimated at tens of billions of dollars, while gold deposits are valued at more than $1.7 billion. Columbite and tantalite, key sources of niobium and tantalum, are also found across the Jos Plateau, Nasarawa, and Osun. These are precisely the minerals global powers now treat as strategic assets. Yet Nigeria’s development model lags behind this potential. The mining sector remains anchored in concession-style agreements, where exploration and extraction licenses are granted to private operators, many of them foreign. Alongside this formal channel, artisanal and informal mining persists, especially in gold-rich regions. Unregulated activity reduces tax collection, fuels smuggling, and exposes communities to unsafe practices. Even in formal projects, ownership tilts outward. The clearest examples are the two lithium processing plants under construction, valued at nearly $800 million. While they mark progress in moving beyond raw exports, both are majority-financed and controlled by Chinese investors, leaving Nigerian partners with minority stakes. This reflects the same dynamic: Nigeria collects royalties, but the equity, technology, and long-term profits sit with outsiders. Royalties provide predictable receipts, but they do not grow with mineral prices, generate dividend streams, or embed local industrial capacity. Nigeria is effectively positioned as a supplier of ore, while external investors capture refining and downstream leverage. This model mirrors the oil sector, where decades of exports produced fiscal inflows but left the country dependent on foreign operators, exposed to volatility, and with little broad-based industrial development. Nigeria’s reserves provide an opportunity to choose differently. But under the current concession framework, wealth risks being monetized for short-term revenue rather than translated into long-term national assets.

Botswana’s Strategic Shift from Concessions to Equity

The dilemma Nigeria faces with its concession-driven approach is not unique. Other resource-rich states have wrestled with the same question: how to move beyond royalties and ensure that mineral wealth translates into long-term national value. Botswana’s diamond industry offers one of the clearest examples of what can be gained and what risks persist. Initially, Botswana’s agreements with De Beers resembled today’s Nigerian model: foreign-controlled concessions, modest royalties, and most of the value captured offshore. Recognizing the limitations of this approach, Botswana renegotiated its position. The result was Debswana, a 50:50 joint venture with De Beers. This gave the state direct equity participation, profit-sharing rights, and influence over production and sales decisions. Over time, Botswana used this leverage to secure downstream gains, most notably the relocation of De Beers’ international sales office to Gaborone in 2013, which created new jobs in valuation, sorting, and limited cutting and polishing. The arrangement delivered steady fiscal revenues and greater resilience than a pure concession model could have provided. It also gave the government the fiscal space to create the Pula Fund, a sovereign vehicle designed to stabilize public finances and save part of the diamond rents for future generations.

These institutional mechanisms remain widely cited as a model for resource-backed wealth management in Africa. Yet Botswana’s approach was not without vulnerabilities. Diamonds became highly concentrated in national accounts, generating more than two-thirds of exports and a large share of government revenue. According to the IMF and World Bank, this left the economy exposed to global demand shocks and price volatility. When the diamond market contracted, revenues fell abruptly, placing strain on fiscal planning and growth momentum. Operational challenges compounded this exposure. Negotiating with a dominant private partner required protracted bargaining, as seen in the most recent 2023 sales and license extension talks with De Beers. Despite high mineral revenues, diversification into non-diamond sectors lagged, unemployment remained persistent, and debates continue over whether the Pula Fund has delivered its full stabilization mandate. For Nigeria, the implication is straightforward: moving beyond simple extraction contracts and taking an equity stake in resource ventures is not just a policy choice but a strategic necessity. Botswana’s example shows that renegotiating terms, building processing capacity, and aligning partnerships with long-term national goals can shift the balance of value.

Structuring Nigeria’s Path from Concessions to Equity

Nigeria faces a clear choice: continue to treat minerals primarily as sources of concession fees and royalties, or build a framework that captures equity value, drives domestic processing, and stabilizes returns over time. The alternative path begins with state participation in the projects themselves. Equity stakes, whether through direct holdings or via a sovereign-minerals vehicle, shift the government’s role from passive rent collection to active partnership. This creates dividend streams, influence over governance and off-take terms, and a stronger hand in securing technology transfer. The fact that major investors have already committed hundreds of millions of dollars to Nigerian lithium processing plants shows that the window for demanding structured equity is open. To make it work, Nigeria must clearly define acquisition mandates, capitalize a dedicated vehicle, and hardwire rules for valuation, exits, and reporting so that equity becomes an asset, not a liability. Equity alone, however, cannot guarantee transformation. The license regime itself must be recast. Rather than handing out permits that function as little more than extraction tickets, licenses should be structured as contracts for industrialization, binding operators to measurable processing milestones, local procurement, and technology transfer. Nigeria’s recent surge in license awards, 146 for lithium and 91 for gold in 2023, illustrates the demand, but also highlights the opportunity to insist that every licence delivers more than raw exports. These terms must be enforceable, with penalties and claw-backs for companies that fail to meet commitments. A dedicated unit within the Ministry, properly staffed and empowered, could monitor compliance and ensure the system retains credibility. Even with stronger equity terms and tougher licenses, the revenues themselves must be insulated from the familiar cycle of boom and bust. Nigeria already has the Nigerian Sovereign Investment Authority, but its minerals mandate is undefined and underpowered. Creating a dedicated sovereign-minerals fund, or formally mandating the NSIA to manage one, would allow the country to ring-fence resource income with explicit withdrawal rules, independent oversight, and a split between stabilization savings and developmental investment. Done well, this would not only smooth fiscal volatility but also channel part of the windfall into processing infrastructure, skills, and industrial projects that anchor long-term growth. Finally, Nigeria must recognize that processing plants and refineries require more than capital; they need stable power, reliable logistics, and guaranteed off-takes. Strategic partnerships are essential here. By blending public capital with private expertise and leveraging multilateral guarantees or development finance instruments, Nigeria can lower financing costs and de-risk projects without ceding control. The global shift toward equity-backed critical minerals funds shows that investors are open to structures where host countries take meaningful stakes, provided governance is credible and risk is shared. This is where Nigeria’s bargaining power lies: in offering scale and resource depth while setting terms that align private incentives with national industrial goals.

Conclusion

Global demand for lithium, gold, and other critical minerals is rising sharply, yet Nigeria’s concession-based approach continues to trade long-term wealth for short-term fees. The result is predictable: foreign operators extract value, while the country gains little beyond royalties. Botswana’s diamond experience shows another path. Through equity stakes, binding processing requirements, and a sovereign savings framework, it turned finite resources into fiscal stability and modest downstream activity. While challenges remain, the lesson is clear; ownership and strategic negotiation matter. For Nigeria, the opportunity lies not just underground but in the structure of its mining deals. Equity participation, stricter licence terms, and a minerals-backed sovereign fund could transform raw extraction into lasting assets.