Nigerian authorities rejected Elon Musk’s pursuit of strategic minerals. Will he try again?

Elon Musk suspects Nigeria has the minerals needed to build the lithium batteries that power his electric vehicles. Last year, Tesla, a Musk-owned company, began pursuing Nigeria’s lithium deposits. However, Tesla backed away when Nigeria’s Minister of Mines and Steel Development, Olamilekan Adegbite, rebuffed its initial approach. Adegbite believed that Tesla’s plan conflicted with the government’s strategy of requiring foreign companies to process strategic minerals in-country before export. 

Nigeria’s plan to diversify exports beyond oil and gas is spurring interest in minerals. Lithium mining is growing quickly, and the government has increased its issuance of exploration and production permits. Yet, as Tesla’s initial approach shows, investment proposals must align with government priorities to succeed. This means investors must understand local politics, state and federal government policy, the regulatory environment, and the various players involved. 

You can find a successful case for lithium value chain investment in Kaduna State, in Nigeria’s North West region. State officials recently announced that Chinese company Ming Xin Mineral Separation (MXMS) would build the country’s first lithium-processing plant in Kaduna. 

MXMS owes some of its success to its decision to partner with the Kaduna State Investment Promotion Agency (KADIPA). Kaduna State has taken a proactive approach toward engaging diplomatic missions and helping companies from their countries enter the Nigerian market—especially opportunities related to strategic minerals.

Whether Musk will resume Tesla’s pursuit of lithium in Nigeria or other American investors will even try to source strategic minerals in Africa remains to be seen. The United States is a minor player in Africa’s mining sector. This is no surprise, given Washington’s lack of a strategy for sourcing minerals from overseas beyond simply deferring to Canada and Australia. In contrast, China is actively pursuing strategic mineral opportunities in Africa for its companies and investors. This also explains MXMS’s success in Nigeria and China’s dominance in strategic mineral mining and investment across the continent.