Tesla wants to mine Lithium in Nigeria: What are the hidden costs?

By Temitayo Lawal
Posted on Wednesday, 14 September 2022 10:57

Tesla Inc CEO Elon Musk walks next to a screen showing an image of Tesla Model 3 car during an opening ceremony for Tesla China-made Model Y program in Shanghai
Tesla Inc CEO Elon Musk walks next to a screen showing an image of Tesla Model 3 car during an opening ceremony for Tesla China-made Model Y program in Shanghai, China January 7, 2020. REUTERS/Aly Song/

Tesla has been told it needs to double down on value addition before Nigeria will allow lithium mining. Nigeria's minister of mines is now on a mission to Australia to find lithium miners who better align with Nigerian industrial policy.

In August, Nigeria’s minister of mines and steel development, Olamilekan Adegbite, said the country had rejected Tesla Inc’s request to mine lithium, unless the company were to situate a battery-making factory in the West African nation.

He said this is to retain value along the global processing chain of lithium.

Lithium is expected to triple in demand by 2040, according to the World Bank. The price of a tonne of lithium jumped from about $6,000 in 2020 to over $78,000 in 2022.

Lithium has so far been discovered in the northern states of Kogi, Nasarawa, Kwara and Plateau, as well as Oyo, Ekiti and Cross River in the south.

Although the industrial exploration of lithium could earn Nigeria much needed revenue and foreign exchange, critics ask: What guarantees are in place to prevent a repeat of the long history of pollution induced by extraction of raw materials?

However, Ayodeji Adeyemi, special assistant on media and publicity to the minister of mines and steel development, says: “There is a new overarching policy that guides […] the mining of lithium […]. The Nigeria Mineral Value Chain Regulation aims to end the export of crude mineral ores from Nigeria and thus demands that miners add some value,”

“As for lithium, it doesn’t necessarily mean investors must produce batteries here before they can mine, but some form of industrial processing of the ore is required,” he says.

The costs

Lithium has traditionally been mined via hard rock and solar evaporation methods, which have proven to be environmentally damaging, says Dairo Victoria Abiola, a lecturer at Crawford University’s department of physical and earth sciences.

Hard rock mining – digging through pegmatite (a form of rock) for the ores – takes up large quantities of chemicals and utilises tailing ponds and waste chemical lagoons. She says this can lead to contamination of groundwater, rivers and soil while the use of the heavy-duty machinery to dig holes can also disrupt wildlife.

[Lithium mining can also lead to] air pollution, land degradation, disruption of the ecosystem and other health risks to communities and the miners

In the evaporation method, the lithium brine evaporates through some chemical process that must have been collected to the surface, which significantly reduces the groundwater available for use in surrounding communities and also contaminates it.

Lithium mining can also lead to “air pollution, land degradation, disruption of the ecosystem and other health risks to communities and the miners”, Dairo says.

Pollution already a problem

This is already a reality in many Nigerian communities who live near mines and oil wells.

Several oil spills on water bodies in the Niger Delta have prevented many locals from farming or fishing. Ill-managed industrial and artisanal oil exploration has also left oil-rich cities like Port Harcourt battling with soot and other forms of air pollution.

On assumption of office, President Buhari set up a $1bn fund in 2016 to clean up the region, but last month a Bloomberg investigation revealed that little had been achieved.

“We have learnt from what happened in the oil industry. Before they mine […], environmental impact analysis is done to identify potential environmental hazards, how to prevent or manage them and their plan to reclaim or restore the land after. […],” Adeyemi says.

The Mining Environmental Compliance, a department in the ministry, also visits mining sites regularly to ensure that best practices are upheld, he adds.

In Zamfara, mining has turned the state into a ‘capital’ of banditry and kidnapping-for-ransom. Zamfara has also had its share of mining-induced environmental hazards; for example, lead poisoning killed 500 children in 2010.

Considering the spate of attacks across the country that the government is already labouring to resolve, will it deal with mining complexities too?

Adeyemi says: “We have since revitalised the defunct Mining Police and forged a partnership with the ministry of interior and the Nigerian Police Force. We have established the Special Mines Task Force comprising the Police, Civil Defence and the army that can be mobilised if the need arises. We want to ensure investors safety and confidence as they embark on mining operations in Nigeria.”

Australian options

Although not yet public, The Africa Report has learnt that the minister of mines is currently in Australia for talks with the Australian Battery Institute. This, say ministry sources, is to show that they are ready to collaborate with countries or investors whose corporate and commercial objectives align with the ministry’s.

Australia (40,000 tonnes), Chile (20,600 tonnes) and China (14,000 tonnes) are the largest lithium miners in the world, having mined 86% of global lithium in 2020.

“[…] our job is to formulate policy and communicate the government’s position, but we don’t sit idly as you can see with what we are currently doing in Australia. We are optimistic,” the ministry source tells The Africa Report.

Nigeria can become an emerging exporter of premium quality refined minerals to the other parts of Africa.

Lithium exploration and processing, if well managed, has a rich value chain that can build industries, create jobs, boost government revenue or foreign exchange and grow the economy, the government says. The federal government has identified the ore as one of the seven strategic minerals of the future.

Beyond these benefits, the government says the policy on lithium and other strategic minerals will build and sustain a pipeline of knowledge and skills. It is expected that Nigerians studying mineral processing abroad or those who learn from expatriates can transfer their skills to others, fueling future innovation to develop the country.

“With the opportunities provided by the African Continental Free Trade Agreement [AfCFTA], Nigeria can become an emerging exporter of premium quality refined minerals to the other parts of Africa,” Chinyere Almona, the director general of the Lagos Chamber of Commerce and Industry, says.

“We have also always advised that it is more profitable to add value to our primary products before exporting them. Export of finished products earns more forex for the government than primary exports,” she says.

Nigeria’s export to other African countries is very low compared with other continents. Africa’s share of Nigeria’s export in 2021 was 12.9% while the value of exports to Europe and Asia were 39.8% and 34%, respectively. Six of the country’s top ten exports in 2021 were primary products, constituting 92.2%.

Solutions – balancing profit and environment

Considering its economic growth prospects, lithium and such other minerals are valuable minerals to exploit, but the concern remains: How will Nigeria balance profits with the environment?

Adeyemi says the mines and environment ministries have been issuing Environmental Impact Assessment (EIA) certificates to mining companies to rehabilitate inactive mines sites and minimise degradation through the preservation of the ecosystem.

“The ministry has also produced the mining environment regulatory compliance handbook, as well as the guideline for environment protection and rehabilitation programmes to aid safer mining practices and to conserve the environment,” he says.

However, at the core of the potential environmental pollution is the miners’ preferred excavation method. Which one will Nigeria approve for the kinds of miners or investors it seeks?

Dairo urges the government to ensure that miners adopt the Direct Lithium Extraction (DLE) method that is cleaner, faster, less expensive and environmentally friendly.

“This method extracts lithium from brine resources using little or no water. […] brine water used for the extraction is recycled back with no requirement for heavy metals or chemical additives and substantial increase in the tonnage yield,” she says.

Alternatively, they could employ naturally occurring underground steam instead of outside supply of water. “This method entails immersion of reusable ion-exchange beads to extract the dissolved metal from the salty brines below the surface,” she says.

However, as critical as it is for Nigeria to balance profits with the environment, it is equally important that its regulation of lithium exploration or the entire mining sector is clear and consistent so that it does not deter much needed large-scale investment. Considering Nigeria’s ease of doing business challenge, regulation should be to enforce best practices and boost growth, and not be so complicated that it draws businesses back.

“The Chamber is always concerned with having the right environment where foreign investors can thrive and generate impressive Return on Investment [ROI]. A stable policy and regulatory environment is critical in creating an enabling investment environment,” Almona says.

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