Investment-starved Nigeria misses out on $3.7bn metals boom

Nigeria, a nation rich in natural resources, is missing out on a lucrative $3.7 billion global rare earth metals boom as it fails to capitalise on the vast untapped reserves of these critical minerals.

Fortune Business Insights found that the global rare earth elements market grew from $3.39 billion in 2023 to $3.74 billion in 2024 and is projected to hit $8.14 billion by 2032, reflecting a compound annual growth rate (CAGR) of 10.2 percent.

‘Rare earth’ elements are a group of 17 chemically similar elements crucial to the manufacture of many hi-tech products. Despite their name, most are abundant in nature but are hazardous to extract.

The rise of the rare earth metals market continues to move upward as it parallels the recent and future upticks of the electric vehicle (EV) market. EVs need magnets and they are majorly made from rare earth metals.

Additionally, rare earth materials such as dysprosium, neodymium, terbium, europium, and yttrium are often critical components of renewable energy hardware.

Countries like China, which currently dominate the global supply chain, as well as Australia and the United States, have been ramping up production to meet the demand. Meanwhile, African nations such as South Africa, Malawi, and Burundi have begun to position themselves as key players in the sector.

Nigeria, however, has remained on the sidelines despite having significant deposits of rare earth metals in states like Nasarawa, Kano, and Plateau.

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Nigeria’s untapped potential

Despite Nigeria’s vast reserves of critical minerals such as monazite and xenotime, which contain rare earth elements, the country has yet to exploit these resources fully.

The United States Geological Survey estimates Nigeria has about six million tons of monazite ore reserves located in Cross River, Kaduna, Kebbi, and Niger states.

According to the Nigerian Geological Survey Agency (NGSA), the country holds substantial reserves of rare earth metals, with estimates suggesting that its deposits could be worth billions of dollars, if properly harnessed.

However, a lack of investment, inadequate infrastructure, and weak regulatory frameworks have hindered the development of the sector.

Experts argue that Nigeria’s focus on oil and gas has overshadowed the potential of its solid minerals sector.

“Nigeria has been too dependent on oil revenues, neglecting other sectors like mining that could diversify the economy and create jobs,” said Fatima Ibrahim, a doctorate student in geography at the University of Abuja. “Rare earth metals present a golden opportunity, but we need the right policies and investments to unlock this potential.”

A 2024 report by the Lagos Chamber of Commerce and Industry (LCCI) identified barriers to Nigeria’s participation in the rare earth market. These include: challenges in mineral beneficiation, value addition, and the absence of a robust strategy to attract investment in mineral exploration and development.

“The government must review the mining strategy to reignite exploration, accelerate discoveries, and encourage optimal utilisation of resources. This should align with Environmental, Social, and Corporate Governance (ESG) principles for sustainable growth,” the LCCI report stated.

It further recommended addressing funding gaps by creating seed funds and special incentives to attract both foreign and domestic investors into the sector.