Investing in Nigerian Lithium

On Friday, I told you what Elon Musk said about lithium.

He called it the “new oil.”

And, boy, was he right.

Last week, Nigeria — Africa’s largest producer of oil — announced its plans to transition away from its reliance on oil and go big on lithium.

Moreover, government officials are implementing stricter mining laws to ensure that foreign companies don’t take their lithium without adding value to the country.

Here’s what Dele Alake, Nigeria's minister of solid materials, had to say:

I want to emphasize the fact that the era of exporting raw solid minerals from Nigeria is over. Any company wishing to come and invest in the solid minerals industrial sector in Nigeria henceforth must add local value.

According to German news outlet Deutsche Welle, mining companies that want to get into Nigeria’s lithium game must adhere to new licensing requirements that show proof of business plans that will benefit local communities.

Companies that are unwilling to provide such proof will not be granted licenses.

The Nigerian government knows just how valuable its lithium reserves are, just as it knows how valuable its oil reserves are. 

More than half of Nigeria’s revenue comes from oil exports. Those exports also account for 90% of the country’s foreign-exchange earnings. 

So as you can imagine, Nigeria is heavily reliant upon consistent global demand.

However, Bloomberg data now indicates a peak in global demand for road fuels in 2027. That’s just a little over three years from now. 

This doesn’t bode well for any oil-producing nation.

That isn’t to say Big Oil is in danger of going gently into that good night. 

However, Nigeria relies on oil to cover more than half of its revenue, and the government knows that demand for oil will start to wane in just three–four years. So to ensure the country’s economy doesn’t deteriorate as oil demand peaks and then eventually begins to taper off, Africa’s largest economy is preparing for the inevitable transition to electric vehicles by developing its lithium resources. 

This is a smart move, to be sure. 

China has already sunk its meat hooks into Nigeria’s bounty of lithium, but in terms of reserves, what Nigeria has is nowhere close to what the U.S. has, thanks to a recent lithium discovery in California that holds enough lithium to satisfy the needs of all electric car makers in America for the next 100 years.

And the value of that supply is massive.

We’re talking nearly half a trillion dollars' worth of lithium from this one region.

In terms of lithium finds, it’s the most valuable in the world, and not just because of its size but also its location.

As I noted last week, the U.S. government has mandated that 40% of critical minerals found in EV batteries will have to be domestically sourced or come from countries with which the U.S. has free trade agreements. And in less than three years, that percentage is expected to rise to 80%.

The U.S. is one of the fastest-growing markets for electric cars. In fact, by 2030, more than half of all new car sales in the U.S. will be electric.

While I certainly won’t trivialize the value of Nigeria’s lithium reserves, from an investment perspective, I’m putting my chips on the company developing this massive reserve in America, which, by the way, is now being called the "Saudi Arabia of lithium."

Between federal mandates on domestic lithium production and the rapid demand for electric cars in the U.S., it’s just a no-brainer.

That’s why I put together this investment note explaining just how big this deposit is and, of course, the company that’s developing it and will ultimately monopolize the domestic lithium market.

So unless you hate money, I’d encourage you to get a piece of this action for yourself right now. 

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.

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