Nigeria missing from electric vehicles value chain despite mineral deposits

The electric vehicle industry has grown exponentially in recent years. Growth forecasts from BloombergNEF see the share of electric vehicle sales rising from 2 percent in 2018 to 35 percent in 2030.

But the growth will depend on strong supply chains, which rely on a secure and sustainable supply of raw materials, specifically minerals, and metals most of which are in large supply in Nigeria but are grossly underutilised.

Lithium ore, Nickel ore, and Cobalt, the three raw materials required for batteries used to power electric vehicles are found in large commercial quantities in different Nigerian states.

Lithium which is derived from a Greek word meaning “stone” is a very soft, silvery-white metal that smokes and sizzles if water is poured upon it. Lithium is so light that a bar of it will float on water. It also has a melting point and the highest heat capacity of any element. Hence, it is used as a coolant in some nuclear reactors and also in lubricating grease, industrial dryers, and air-conditioners, batteries, glass, medicines, and nuclear bombs.

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Lithium ore is found in large quantities in Nigerian states such as Kogi, Nasarawa, Ekiti, Kwara, Cross River, Oyo, Plateau, and a few other states. Recently, Gbenga Okunlola, a Professor of Geology at the University of Ibadan, in research submitted to the World Bank, announced the discovery of over 3000 lithium pegmatite bodies across the country. Pegmatite lithium deposits, also known as hard-rock lithium deposits, can contain a number of elements, including lithium, tin, tantalum, and niobium.

There are also preliminary results that have shown that the grades of Nigerian Lithium bearing ores are comparable with grades obtained in lithium-producing mines across the world.

Nickel ore, a recent discovery in Nigeria, is reportedly in large deposits in various locations. Comet Mineral, a private mining company which holds the nickel mining licence at Wudil, Kano State said the deposit is almost pure nickel metal of between 0.1 and 5.0 mm diameter in size, grading at 90 percent nickel, as opposed to more traditional nickel, which needs to be refined to extract the metal. The Nickel balls discovered are said to grade better than 90 percent of nickel found in other countries.

Analysts say there is a potential shortfall in the global mining capacity required to extract the minerals needed to manufacture sufficient batteries to meet projected EV demand. Hence, it is a great time for countries to position themselves for the windfall in investments in countries that have developed capacity in mining these raw materials.

Analysts at Rystad, an Oslo-based global energy research firm also noted that global demand for high-grade nickel will outweigh supply by 2024. The analysts noted that while supply will continue its steady year-on-year climb to 3.4 million tonnes (Mt) in 2024 from 2.5 Mt in 2021, rising demand spurred in part by the energy transition will lead to a shortage in less than two years, with a production of 3.2 Mt. this gap will widen quickly to a deficit of 0.56 Mt by 2026.

Unfortunately, the most populous country in Africa has its attention elsewhere.

Nigeria may be the largest economy in Africa but it is largely dependent on oil export. In fact, the country realised a meagre N496 billion from solid minerals in 13 years despite the country’s huge deposits, the Nigeria Extractive Industries Transparency Initiative (NEITI) has said in its latest audit report.

“It is very delighting to note that available report today from the Nigerian Geological Survey Agency (NGSA) confirms that Nigeria is endowed with over 44 mineral deposits occurring in commercial quantities in over 500 locations across the 36 states and Federal Capital Territory of Nigeria,” Yemi Osinbajo, Vice President of Nigeria said recently.

However, while investors knock down doors in search of these raw materials in countries like the US and China, and in Africa, Zimbabwe, and the Democratic Republic, in Nigeria they remain largely untapped, and where they are being explored not much attention is given to producing them at scale for exportation purposes.

A report by the Carnegie Endowment International released in October, found that consumption of critical raw material (CRM) is projected to increase by a factor of four for graphite, five for cobalt, and eighteen for lithium by 2030; and by a factor of thirteen for graphite, fourteen for cobalt, and nearly sixty for lithium by 2050.

“The projected demand in CRMs creates opportunities for Africa to replace Asian supply chains,” the report noted.

China still continues to dominate the lithium-ion battery supply chain ranking due to continued investment and strong local and domestic demand for its lithium-ion batteries. The Asian nation hosts 80 percent of all battery cell manufacturing capacity today, with capacity expected to more than double, enough for more than 20 million electric vehicles, in the next five years, the BloombergNEF report said.

In Nigeria, the Nigerian Geological Survey Agency (NGSA) has done some level of exploration in lithium but experts say research needs to be conducted at par with the advanced countries.