Nigeria has opened a $250mn lithium processing plant in Nasarawa State, marking a step in the country’s effort to capture more value from its mineral resources and position itself in the global battery supply chain.

The Diamond New Energy lithium mining and processing plant, located in Endo in Nasarawa Local Government Area, was built by Chinese investors in partnership with the Nasarawa State Government and in collaboration with Jiuling Lithium and Shenzhen-listed Canmax Technologies (SZSE:300390).

The plant has a stated processing capacity of 6,000 tonnes of lithium ore per day, or about 3mn tonnes per year. Northern Nigeria holds commercial grade lithium deposits that have attracted growing interest from companies seeking minerals used in batteries and electric vehicles.

Chinese companies have invested more than $1.3bn in developing lithium processing capacity in Nigeria since September 2023, according to Solid Minerals Development Minister Dele Alake. The investors include Canmax, Jiuling Lithium, Avatar New Energy Nigeria Company and Asba, Alake said.

The Nigerian government hopes the new plant will support its ambition to move into solar panel and electric vehicle battery manufacturing, although the project’s immediate role is in lithium mining and ore processing rather than producing finished batteries.

The commissioning reflects a wider policy shift across Africa, where governments are trying to move beyond exporting raw minerals and instead require more local processing before shipment. Producers are under growing pressure to add value locally as demand for battery materials rises.

Africa’s current lithium mine output remains concentrated in Zimbabwe and Namibia, although Mali has now joined the continent’s producing countries through Goulamina. US Geological Survey data put Zimbabwe’s mine production at about 22,000 tonnes of contained lithium in 2024, up from 14,900 tonnes in 2023, while Namibia produced about 2,700 tonnes in both years.

Zimbabwe’s sector is led by Chinese-backed mines including Zhejiang Huayou Cobalt’s (SSE:603799) Arcadia operation, Sinomine Resource Group’s (SZSE:002738) Bikita mine and Chengxin Lithium Group’s (SZSE:002240) Sabi Star project.

Other African developments include the Goulamina mine in Mali, now operated by Ganfeng Lithium Group (SZSE:002460; HKEX:1772), Atlantic Lithium’s (AIM:ALL; ASX:A11) Ewoyaa project in Ghana and Lepidico’s Karibib project in Namibia.

Zimbabwe, Africa’s largest lithium producer, is pursuing a similar strategy. Miners there have asked the government for more time to build processing facilities before a planned ban on concentrate exports takes effect in January 2027.

Nigeria has been seeking to attract investment into solid minerals as part of efforts to diversify an economy still heavily dependent on oil revenues. The lithium push comes as global competition intensifies for critical minerals used in electric vehicles, grid storage and renewable energy technologies.

Nigeria’s challenge will be to move from mineral discovery and ore processing into higher value stages of the battery supply chain. That would require reliable power, transport links, testing and certification capacity, specialist skills and clearer rules on mining licences, community benefits and environmental controls.

Global demand for lithium surging

Global demand for lithium is projected to rise by 353% between 2024 and 2040, while demand for graphite is expected to increase by 131%, underscoring the growing importance of critical minerals in the energy transition, the United Nations Conference on Trade and Development (UNCTAD) said in a recent report.

UNCTAD said clean energy technologies are expected to account for a rising share of total mineral demand over the coming decades as governments accelerate efforts to decarbonise their economies.

The share of lithium demand linked to clean technologies is projected to increase to 87% by 2040 from 62% in 2024, the report said.

“Clean technologies are expected to take a much larger share of total demand. Between 2024 and 2040, the clean technologies share of nickel demand is projected to increase from 17% to 42%, and of magnet rare earth elements from 21% to 31%,” UNCTAD said.

Electric vehicles, battery storage systems, renewable energy infrastructure and other low-carbon technologies are becoming dominant drivers of global demand for minerals including lithium, graphite, nickel, cobalt and rare earth elements.

UNCTAD also noted a growing trend among resource-rich countries to restrict exports of critical minerals as they seek to strengthen domestic processing, value addition and industrialisation.

Since 2020, nearly 100 new export measures have been introduced globally on critical energy transition minerals, including 37 licensing requirements, 31 export taxes, 29 export bans and one export quota, the report said.

The Democratic Republic of Congo (DRC) has introduced the highest number of export measures, followed by China and Indonesia, according to UNCTAD.

The trend reflects rising competition among governments seeking to capture a larger share of the economic benefits associated with the global clean energy transition, rather than exporting raw materials with little domestic processing.

For African producers, the policy balance is difficult. Export bans and local processing rules can help create domestic industry, but they also risk delaying projects if power, roads, finance and processing technology are not in place.

Lithium is a key material in rechargeable batteries used in electric vehicles and energy storage systems, while graphite is widely used in battery anodes and industrial applications. Nickel, cobalt and rare earth elements are also critical to battery manufacturing, wind turbines, power grids and other clean energy technologies.