With clean energy systems gaining momentum, the market for near-zero emission materials such as lithium, copper, cobalt, aluminium, copper, steel, and rare earth elements (REEs) has risen, and is projected to exceed the solar PV market by 2035. In September 2023, Nigeria’s Minister of Solid Minerals Development, Dr Oladele Alake, stated that Nigeria's unexplored critical mineral deposit is valued at over $700billion.
Figure 1. Annual Capacity Additions for Selected Clean Energy Technologies.
Source: Net Zero by 2050, A Roadmap for the Global Energy Sector, IEA
Figure 1 shows that the annual additions of renewable energy technologies increased in 2023 and are expected to account for 50% of global electricity by 2030. To achieve that, there has to be a transition from a hydrocarbon energy economy to low-carbon technologies and energy systems. The most common low-carbon technologies (as seen above) are wind turbines, electric vehicles, and solar panels. These technologies utilise processed critical minerals, thereby increasing their demand. The demand for critical minerals and REEs led to a major increase in their overall market, valued at $325 billion and expected to reach $770 billion by 2040.
Figure 2 illustrates a 30% increase in global lithium demand in 2023, while the demand for nickel, cobalt, graphite, and REEs has risen between 8% and 15% over the same period. Despite a drop in market price1 due to a surge in supply, these price declines don’t affect market value or investment opportunities, as demand remains strong.
Figure 2. Demand Outlook for Selected Minerals, 2021-2023.
Source: Global Critical Minerals Outlook 2024, IEA.
Nigeria experiences a significant overdependence on fossil fuel exports and revenue generation. More than 80% of its export earnings and 50% of its revenue are from fossil fuels. According to the International Energy Agency's Renewable Report 2024, renewable energy sources will generate 11000 GW of electricity, accounting for up to 50% of global electricity by 2030. Given that Nigeria’s top five destinations for fossil fuel exports are transitioning to a zero-carbon economy, the country needs to restructure its mining sector. A sharp decline in oil revenue is projected, leading to a foreign exchange deficit that may weaken the country's export earnings. More than ever, it is crucial to pivot to sustainable practices and diversify beyond oil and gas.
State of Critical Minerals in Nigeria
The mining sector significantly improved Nigeria’s economy before the discovery of oil and gas in the late 20th century. The major economic minerals contributing to the country’s GDP are baryte, bitumen, coal, gold, iron ore, lead, zinc, and limestone. Nigeria also has key energy transition minerals like lithium, nickel, copper, graphite, cobalt, and rare earth minerals.
Figure 3. Nigeria’s mineral production data from 2019 to 2024 and the forecasted production for years 2025 and 2026.
A review of Nigeria’s mineral production forecast in Figure 3 shows a positive trend; however, despite the expected increase in production to 309 million tonnes in 2026, this remains significantly below the target of a $27 billion contribution to GDP by 2025.
Critical Minerals and Energy Transition
Low-carbon technologies such as solar photovoltaic (PV) cells, wind turbines, energy storage systems, hydrogen technologies, and electric vehicles (EVs) predominantly require mineral inputs for their production. Lithium, nickel, cobalt, manganese, and graphite are essential elements for energy storage systems like batteries and their performance; rare earth minerals play a huge role in wind turbines and EV manufacturing; and copper and aluminium for electricity networks, making these minerals an important driver of energy transition.
Known Reserves of Selected Energy Transition Minerals in Nigeria and their Global Market Size
Rare Earth Elements (REE)
REEs have magnetic and electronic properties, making them an effective byproduct for wind turbine nacelles, EVs, smartphones, laptops, etc. Key rare earth elements (REEs) like neodymium, cerium, lanthanum, praseodymium, and yttrium can be found in mineral deposits like monazite, xenotime, and bastnasite in places like Adamawa, Gombe, Taraba, Borno, and Katsina. Mr Idrees Salisu Abdulhameed, C.E.O. of Sadaris Integrated Services—a monazite mining company—confirmed to Veriv Africa that an average of 135 metric tonnes of these REEs are processed on a weekly basis. This is just one among hundreds of REE miners and processors around.
Another potential source of REEs is coal fly ash. Coal fly ash is produced in coal-fired plants or steam engines and has a high fraction of critical REE compared to REE-bearing ores. Due to their high carbon footprints, rare earth elements (REEs) extracted from fly ash face limited acceptance. However, with a carbon offset framework, Nigeria can generate over 450 kilotons of REE annually through this method. The global market for REEs is valued at $4.17 billion in 2025 and is expected to reach $8.23 billion by 2032.
Lithium
Lithium plays a critical role in the manufacture of energy storage batteries used in solar energy systems and electric vehicles, making it essential for the global energy transition. With a market size of $22.19 billion in 2023, it is expected to reach $134 billion by 2032 at a compound annual growth rate of 22.1%. The global demand for lithium has risen by 30%, and its supply increased by 30% in 2023. Geologically, Nigeria has lithium-bearing ores in complex basement terrains. The most commonly known ones are in Kwara, Ekiti, Ogun, Nasarawa, and Plateau states. In 2024, Governor Uba Sani unveiled a $20 million lithium processing plant in Kaduna with a production capacity of 1500 tonnes per day.
Copper
Copper is obtained from chalcopyrite, largely found in Nassarawa, Zamfara, Bauchi, and the Federal Capital Territory, Abuja. Although the amount in reserve has not been confirmed by the Nigerian Geological Survey Agency (NGSA), NBS, and the Ministry of Mines and Steel Development, a market research report by Forminefera shows that Nigeria has an estimated reserve of 10 million tonnes. The demand for refined copper has increased in 2023 by 2.7% from 0.9% in 2022. The market was valued at $8 billion in 2023 and is projected to reach $11.86 billion by 2032, at a CAGR of 3.13%. Compared to other minerals, copper exploration is limited. More geological surveys and economic analyses should be conducted to know the extent and quality of deposits available.
Nickel
The Nigerian Geological Survey Agency reported that Nigeria has around 5 million metric tonnes of nickel deposits, with an average nickel content of 1-3% in Nasarawa, Kebbi, Kaduna, and Taraba states. In 2016, the then minister of solid minerals and mining confirmed that Dogoma, a city in Kaduna may be sitting on $600 billion worth of nickel. The Dogoma nickel deposit was discovered by an Australian mining company owned by a veteran miner, Hugh Morgan. Skyline reported plans to construct a $5 billion nickel processing plant in Kaduna State, capable of producing 600,000 metric tonnes of pure nickel annually. Since its signing in 2016, there has been no verifiable information on its commencement or progress, raising questions about its status.
Cobalt
Cobalt is a byproduct of mining metals like copper and graphite. The presence of these elements in Nigeria’s mineral mix indicates the presence of cobalt. The demand for cobalt has increased by an average of 9% annually since 2022.
Iron-Ore
With an estimated 802 million metric tonnes of iron ore, Nigeria can potentially be Africa’s steel production hub. However, the obsolescence of the Nigerian Iron Ore Mining Company (NIOMCO) and Ajaokuta Steel Company Limited (ASCL) remains a major hurdle. High-grade iron ore formations have been found in Itakpe, Agbaja, Lokoja, Bassa, Dekina, and Yagba West of Kogi State. These formations, rich in haematite and magnetite, which are the primary sources of iron. Steel, which is extracted from iron ore, is a raw material used in manufacturing wind turbine towers, their mainframes, etc., building supports for solar panels, as well as construction, ships, and marketing automobile manufacturing. Beyond steel production, iron is vital in the production of magnets, which are used for manufacturing generators and electric motors. Renewable energy technologies like wind turbines, geothermal power plants, and hydropower turbines utilise this mineral in their production process.
Existing Policies and Regulatory Frameworks
Nigeria has regulatory frameworks and policies in place to support energy transition metals. The key policies are outlined below:
- The Nigerian Minerals and Mining Act (NMMA, 2007), enacted for the exploration and exploitation of solid minerals in Nigeria, provides ownership of minerals to states, the issuance of various mineral titles, environmental protection, and involvement of local communities. The Act describes all the necessary procedures for attaining a licence for the exploration and processing of minerals, rights, obligations, and duties.
- In 2009, the federal government of Nigeria announced the National Minerals and Metals Policy to promote private sector-led operations. This policy was developed to encourage investment in expert geological surveys, ensure compliance with sustainable mine practices, and promote small-scale mining activities.
- The National Environmental (Mining and Processing of Coal, Ores, and Industrial Minerals) Regulations was established in 2009 to combat Environmental, Social, and Governance (ESG) issues in the mining sector. This framework will serve well for critical mineral mining but needs to be reviewed to include GHG emission tracking and carbon accounting for each mining process.
- The Roadmap for the Growth and Development of the Nigerian Mining Industry, 2016, was created by the Ministry of Mines and Steel Development. It aims to provide strategic solutions to the current challenges within the sector, which, when employed, will increase the sector's contribution to the GDP by 10% in 2026.
- The National Policy on Solid Minerals and Metals was developed to boost national income from mining and surpass earnings from the petroleum sector. It also aimed to provide raw materials for manufacturing economic infrastructures and industries.
Established environmental policies should be reviewed to meet current mining practices. Monitoring, reporting, and verification should be performed to ensure sustainable practices are implemented. Carbon offsetting should be properly conducted for minerals obtained from dirty sources like coal and hydrocarbon resources.
Economic Benefits of Building a Critical Mineral Supply Chain in Nigeria
Creating a working value chain will help Nigeria attract foreign direct investments, increasing foreign exchange earnings. Mining projects are multibillion-dollar deals that can directly influence the country’s GDP. Other economic benefits include more job creation. Lithium mining alone has the capacity to employ over 100,000 Nigerians, particularly through the Jupiter project in Kaduna. Wages of workers in the three (3) mining value chains—exploration and mining (upstream), processing and beneficiation (midstream), and marketing and transportation (downstream)—can significantly contribute to the nation’s GDP. Despite these economic opportunities, several challenges hinder the development of this sector, thus affecting Nigeria’s ability to harness these benefits. These challenges include illegal mining, insecurity, lack of sufficient geological data, inadequate infrastructure, weak to no MRV frameworks for monitoring carbon footprint, and outdated policies and regulatory frameworks. Nigeria must address these challenges to unlock these full potentials. So, what strategic steps should we take to build a thriving mining industry?
What Should Nigeria Do?
Nigeria's global success in the oil and gas sector gives the country an advantage in exploration and exploitation as well as the potential to diversify beyond this sector. However, the success of such sectors is hugely influenced by their ability to analyse their economic and financial implications, an enabling environment & infrastructure, and sustainable mine practices. Nigeria should be able to assess its potential reserves through detailed geologic surveys.
Illegal mining can be curbed by engaging community stakeholders and enlightening them on the environmental and economic impacts of these heinous activities. In 2023, the Ministry of Mining and Steel Development started a framework called "Guidelines for the Production of Community Development Agreement (CDA) in the Solid Mineral Sector." This was done to help monitor and give community members a way to be involved in activities during the mining life cycle. Such frameworks should be carefully monitored to ensure sustainability.
With the net-zero scenario of phasing out all fossil power plants by 2040, 70% of electricity generation globally should come from solar PV and wind in 2050. Nigeria should build an exceptional value chain to foster its growth in the renewable energy manufacturing sector. With a working value chain, Nigeria can contribute by establishing its own manufacturing plant for solar PVs, wind turbine towers, gearboxes, energy storage batteries for EVs, and/or green hydrogen. Nigeria has trade relations with China, the world's largest producer of renewable energy technologies. This trade relationship can influence a multibillion-dollar renewable energy investment or research and development partnership.
References
International Energy Agency. (2024, May 1). Global Critical Minerals Outlook 2024—Analysis. https://www.iea.org/reports/global-critical-minerals-outlook-2024
Marketing Report, Andrea Ayemoba. (n.d.). Nigeria confirms nickel discovery in Kaduna. MAfrica Business Communities. https://africabusinesscommunities.com/news/nigeria-confirms-nickel-discovery-in-kaduna.html
Ministry of Mines and Steel Development. (n.d.). Iron ore exploration opportunities in Nigeria. https://nairametrics.com/wp-content/uploads/2012/01/Iron-Ore-Opportunities-in-Nigeria.pdf
Ojonimi, T. I., Pesonen, J., Asuke, F., Mohammed, R. A., Okeme, I., & Groppo, J. (2024). Evaluation of rare earth elements (REEs) in selected Nigerian coal fly ash: A prelude to extraction and waste management. Environmental Science Advances. https://doi.org/10.1039/d4va00164h
PwC. (2023). Nigerian mining – Progress, but still a long way to go. https://www.pwc.com/ng/en/publications/nigerian-mining-progress-but-still-a-long-way-to-go.html
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