By Our Special Correspondent
The worldwide lithium battery market is expected to grow by a factor of 5 to 10 in the next decade. In response to this projected vast increase in market demand, the federal government in some advanced countries like the US has outlined a national blueprint to guide investments in the urgent development of a domestic lithium-battery manufacturing value chain. The benefits derivable from these efforts include equitable clean-energy manufacturing jobs, a clean-energy economy and the mitigation of climate change impacts.
Here, we examine Nigeria’s potentials for lithium ion battery development and the challenges stopping the country from tapping into these potentials and the benefits from them. It focuses on current market factors that impact lithium ion battery development in Nigeria, evaluates market deterrents to widespread usage, and addresses possible scenarios on how the battery market in Nigeria could develop going forward.
However, this growth will depend on strong supply chains, which rely on a secure and sustainable supply of raw minerals and metals most of which are in large supply in Nigeria but are grossly underutilized. Energy storage systems (batteries) have become an essential part of resilient, renewable energy systems globally. The ability to gather and store energy in periods when demand is low, and make the energy available for use during periods of high demand from renewable technologies that are intermittent by nature, such as solar and wind, enables this technology to integrate into traditional energy infrastructure successfully and provide 24-hour service for electricity demand. Battery technology has evolved to meet this need, incorporating large and small-scale battery solutions that can provide storage capacity to technologies which range in size from multi-megawatt generation assets to small-scale solutions.
Many factors are driving this rapid evolution in battery technologies. First of all, countries all over the world are quickly drafting and ratifying a raft of new laws and guidance on the adoption of electric vehicles. This is a signal for a great revolution in the transport system.
In a bid to reduce the use of fossil fuel, electric vehicles have proved to be a substitute for the internal combustion engine (ICE). The production of lithium ion batteries (LIB) is one of the solutions to reducing fossil fuel emissions. These batteries use several minerals which include lithium and cobalt (Li-Co). This growing demand for lithium ion batteries is pushing their prices to astronomical levels, and creating a huge opportunity for economic development of countries endowed with deposits of these minerals.
In Nigeria, a number of states have lithium ore deposits in large, commercial quantities. This is the major raw mineral resource used in the production of lithium ion batteries for home appliances as well as batteries for electric vehicles. These states include Kogi, Nasarawa, Ekiti, Kwara, Cross River, Oyo, Plateau, and a few others. Preliminary results have shown that the grades of lithium in lithium-producing mines across the world are comparable to the grades of Nigerian lithium bearing ores.
The continued miniaturization of electronic devices and the need for high density, long cycle life batteries are another factor driving the rapid development of LIBS. 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 on it. Lithium is so light that a bar of it will float on water. Its melting point and heat capacity are the highest 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.
Compared to lead acid batteries, lithium ion batteries have higher density, resilience and longer life. The major advantage and core strength of a lithium ion battery is its low maintenance compared with that of a lead acid battery. Of the two batteries under similar operating conditions, lithium ion will retain a charge for longer durations than a similarly sized lead acid battery. This superior performance has resulted in lithium ion batteries becoming commonplace in many high- technology applications, including computers, cars, and smart phones.
Analysts say there is a potential shortfall in the global mining capacity required to extract the minerals needed to manufacture sufficient lithium ion batteries to meet projected demands of electronic vehicles as well as those from smart electronics devices. So, while it is a great time for investments in countries that have developed capacity in mining these raw materials, it seems that Nigeria’s attention is yet to shift from oil.
As more electric vehicles prepare to dominate market share by 2030, Volkswagen is investing 20 billion Canadian dollars to build a lithium-ion battery factory in Canada, aiming to capitalize on the country’s abundant lithium supply. The automaker also plans to invest in lithium mines to cut battery production costs and establish itself as a major supplier. Due to such a large investment and government backing, strategic investors have begun casting their nets in emerging lithium mining companies located near the factory, such as Arbor Metals.
Earlier this year, Chile and Mexico nationalized their lithium mines, foreseeing its importance as the “world’s new oil.” In contrast, Volkswagen chose Canada as its strategic partner and the location for its largest battery manufacturing facility, while it competes for exclusive contracts with regional lithium mines. This strategy enables the company to export batteries to lithium-scarce European countries while simultaneously solidifying their share of the North American electric vehicle market.
Media outlets like Yahoo Finance, Financial Times, Market Watch and CNN Business recently reported on Arbor’s advantageous position in the James Bay region in northern Quebec, which is becoming known as a major lithium-rich deposit. The world’s best-selling car in the first quarter of 2023 was Tesla’s Model Y, and it signalled an irreversible shift in electric vehicle adoption. Lithium battery technology advancements are also expanding the range of available electric vehicles. Given the circumstances, it’s no surprise there is a significant surge in battery factory construction, with more than 300 facilities projected by 2030, including 12 confirmed for North America.
While Canada has attracted Europe’s largest automaker, securing a Canadian 20 billion dollar investment for Volkswagen’s electric vehicle battery mega factory, the German automaker also intends to invest in mining operations in order to reduce the cost of battery cells to supply third-party customers while fulfilling half of its own demand. This strategic move aligns with a broader industry trend where automakers are aiming to gain more control over various parts of the supply chain, traditionally outsourced to third parties. From energy generation to raw material sourcing, car manufacturers are competing for the limited resources necessary to meet their objectives, particularly lithium.
As Europe’s largest carmaker, Volkswagen has also set its eyes on transforming its battery unit, PowerCo, into a global battery supplier. This means that Volkswagen plans to satisfy battery demand on a global scale, signalling even more lithium to be produced. In addition, the company plans to establish plants primarily in Europe and North America, starting with its lithium battery factory in Canada, to satisfy half of its internal battery demand.
This new surge in battery material demand has sparked a “gold rush” atmosphere in lithium-rich countries, particularly in Canada’s Quebec region. With the establishment of a new battery cell factory, Volkswagen will require a secure and consistent supply of lithium. The company, planning on investing in nearby mining operations to reduce costs, creates stock growth opportunities for Canadian lithium miners such as Arbor Metals, strategically located in the prominent lithium-rich region of James Bay, Quebec, close to the planned factory.