Author: Neha Mishra, Visiting Fellow, Centre for Air Power Studies
Keywords: Minerals Supply Chain, Electric Vehicles, India-Nigeria Economic Synergy, Nigeria’s Mineral Wealth
The first visit of Prime Minister Narendra Modi to Nigeria recently underscored the strategic necessity of improving bilateral cooperation between India and Nigeria in certain significant sectors. The awarding of the Grand Commander of the Order of the Niger (GCON), Nigeria’s second-highest national honor, to PM Modi further highlighted the growing importance of partnership for both nations. the collaboration to advance the critical mineral value chain shows a promising future. With Nigeria’s need for technological expertise to advance its resource mining and processing, and India seeking to secure its supply chain of raw materials to boost its renewable energy sector most particularly Electric Vehicles (EVs), the India-Nigeria collaboration to advance the critical mineral value chain shows a promising future. Considering this context and ongoing geopolitical changes, this article is an attempt to examine the potential, involved challenges, and key strategies that can develop stronger collaboration between both nations in critical minerals.
Why India needs to Secure Critical Minerals Supply Chain?
India’s need for critical minerals lies in its growing role in every aspect of economic growth and national security, ranging from technological development and green energy transition to the growth of defence industry. Being a promising market for clean technologies, high value metals, with the goal of becoming a global manufacturing hub, India needs to secure the supply chain of raw materials to sustain the growth as a long-term plan.[1] As per the critical minerals for India published by the Ministry of Mines that published 30 critical minerals as important for the supply chain of India, India relies heavily on imports for 10 out of 30 critical mineral which reflect a dependency leading vulnerabilities to its supply chain important for its clean and defence technologies. With the goal to secure its supply chain and reduce import dependency, Certain policy reforms have been introduced in India, like the Mines and Minerals (Development & Regulation) Amendment Act, 2023 recently, which aims to develop the capabilities of the domestic mining sector through updating the mining leasing procedure and empower private companies back into the mining business.[2]
Both the Ministry of Mines and the Geological Survey of India (GSI) have been prioritising the discovering of these minerals, along with other relevant agencies. As a result, GSI has completed more than 123 exploration projects in India since 2020. Three Central Public Sector Enterprises—National Aluminium Company Ltd., Hindustan Copper Ltd., and Mineral Exploration Company Ltd.—have invested in a joint venture company called Khanij Bidesh India Ltd. (KABIL) to identify and acquire critical and strategic mineral assets like lithium, cobalt, and others to ensure supply side assurance.[3] The recent discoveries of lithium reserves in Jammu & Kashmir[4], 15 rare earth elements (REEs) in the Anantapur district of Andhra Pradesh[5], and the initiatives by the Indian Rare Earth Limited (IREL), a public-sector undertaking, intends to strengthen the domestic supply chain. While at the international level, the joining of the 14-countries Mineral Security Partnership (MSP) is focused on increasing domestic production and securing raw materials through international partnerships.[6]
In addition, India is increasingly engaging into the Strategic bilateral alliances with resource-rich nations, including USA, Australia, Japan and others, to ensure supply chain diversification.[7] It is investing in the recycling technologies for materials such as nickel, lithium, and cobalt, to address mineral availability constraints. Research is also being conducted to identify substitutes for irreplaceable minerals, thereby for assuring resource efficiency and sustainability in sectors such as defence and clean energy.[8] The recently announced National Critical Minerals Mission as part of the Union Budget 2024-25 intends to reinforce the domestic critical mineral value chain, from extraction and mining to processing and recycling of end-to-life products, to ensure India’s self-sufficiency in meeting industrial demands for critical minerals. The most important aspect of this mission is the tariff reduction on the critical minerals import, enhance capacity for domestic production, acquire overseas assets, skilling the workforce in mining industry, and develop required financing mechanisms.[9] Overall, India has been prioritising critical minerals for its domestic needs through promoting its bilateral and multilateral collaborations, reducing import dependency, and investing in recycling and substitution technologies.
Nigeria’s Mineral Wealth
The mineral wealth of Nigeria reflects in its extensive reserves of over 44 minerals spread across 500 locations, which has been enhancing the potential of Nigerian mining industry to contribute towards national economic growth. It is worth noting that Nigeria has established as an important player in the global green energy transition, considering its reserves of lithium, cobalt, nickel, gold, baryte, lead, and zinc. Nigeria has the capacity to meet the increasing global demand for battery minerals through its lithium deposits and processing facility in Kaduna, whose mining and exports share are expected to formalise through the designed strategies by the Presidential Artisanal Gold Mining Initiative (PAGMI).[10] Although the mining sector contributes only 0.77% to the national GDP, there are certain government initiatives aiming to develop the strength of the sector such as Nigerian Minerals and Mining Act (NMMA) and the Nigerian Mineral Resources Decision Support System (NMRDSS). The growing global demand of critical minerals makes it important for Nigeria to develop its midstream mining activities such as mineral processing and beneficiation, which can be done through strategic investments in its lithium processing facilities and gold mining projects that could further bolster the need for mineral value chain regulation regulations in Nigeria.[11]
Nigeria’s requirement for international partnerships underscored by the challenges to its mining sector such as regulatory inconsistencies, management insecurities, and infrastructure deficits. The sector can grow with the collaboration of foreign partners like India, since it is committed to grow the contribution of the sector to 10% of Nigeria’s GDP through the means of targeted reforms and investment, thus can advance Nigeria’s economic objectives and goal to integrate into the global supply chain by 2026.[12]
Unlocking India-Nigeria Economic Synergy
The current India-Nigeria bilateral relations traces back to their historical ties, cultural exchanges, and continuous growing economic collaborations. India has evolved as Nigeria’s largest trading partner primarily in the sectors of oil, gas, pharmaceuticals, machinery sector, with bilateral trade figure exceeding $14 billion.[13]
Over the past two decades, the partnership between both nations has become highly strategic considering over 200 Indian companies have invested more than $27 billion in Nigeria and became second leading source of employment for local population in Nigeria after the government. India has also been supporting Nigeria as part of the Indian Technical and Economic Cooperation (ITEC) initiative, through concessional loans and capacity-building programs. Both nations shared deep social and cultural bonds that can be expanded further in sectors of energy, critical minerals, infrastructure development that can align with Nigeria’s goal to diversify its international partnerships.[14]
Nigeria currently meets approximately 11-12% of India’s crude oil requirement as part of the long-term agreements with India. The legal stability and protection of the Indian investors in Nigeria has been ensured under the agreement like the Economic Cooperation Agreement (ECA), the Double Taxation Avoidance Agreement (DTAA), and the Bilateral Investment Treaty (BIT), which covers sectors such as energy, mining, and manufacturing. In terms of expanding partnership in critical minerals sector, India and Nigeria have the potential to develop joint ventures to advance the upstream extraction and downstream processing technologies. This arrangement has the capacity to utilise India’s technological proficiency to improve operational mining infrastructure in Nigeria through skilling its labour force via technical training as part of the Indian Technical and Economic Cooperation (ITEC) initiative. The training programs can enhance the local proficiency in upstream resource extraction and downstream processing, which can sustain the development of Nigeria’s mining industry.[15] The commitment of both nations to sustainable mining methods and global ESG standards would ensure the resource development initiatives are driven in the favour of local populations with reduced ecological damage.[16]
In addition to other factors, the collaboration with Nigeria can enable India to reduce dependency on traditional sources like China, achieve the goal of supply chain resilience, and counter the growing geo-economic presence of China in the African region under the Belt and Road Initiative.[17] Overall, India-Nigeria partnership in the critical mineral sector has the potential to develop a mutual beneficial framework, with combining India’s advanced mining technologies and resource strength of Nigeria. The initiatives like CII-EXIM Bank conclave and the establishment of Nigeria-India Business council are contributing towards advancing commercial and industrial partnership.[18]
Challenges and Way Ahead
Despite the growing potential, both nations need to address the challenges related to regulatory and infrastructure problem restricting the mining practices in Nigeria, thus dissuading the foreign investors. The absence of clear and stable policies, due to different compliance standards at federal and state levels, restricts the foreign investor to plan their operations in Nigeria. In addition, the mining activities face a considerable obstacle due to insufficient infrastructure, inconsistent access to electricity and water.[19] To deal with the policy and infrastructure challenges, the Nigerian government has introduced the Energy Transition Plan that implies the goal of achieving universal energy access by 2030 and a carbon-neutral energy system by 2060. Initiatives have also made for expansion of rural electricity via distributed solar power, mini-grids, and off-grid alternatives.[20] In addition, China’s expanding influence in Africa via substantial investments and commercial partnerships under BRI framework present hurdles for India’s commercial initiatives with Nigeria. However, India’s presence can serve as a reliable and strategic partner countering China’s dominance throughout the African continent.[21]
Despite all challenges, the critical mineral partnership between India and Nigeria can serve as an example of South-South Cooperation driven from the principle of absolute gains. Both nations can promote responsible and sustainable mining practices, keeping the environment and local populations into consideration, thus addressing the global supply chain vulnerabilities in the long run. Overall, this collaboration has the potential to advance a greener, more resilient, and equitable global economy through securing critical minerals value chain.
******
CLICK TO VIEW THE PDF
Notes
[1] Rajesh Chadha and Ganesh Sivamani, “Critical Minerals for India Assessing their Criticality and Projecting their Needs for Green Technologies”, CSEP Working Paper 19, October 20, 2022, https://csep.org/working-paper/critical-minerals-for-india-assessing-their-criticality-and-projecting-their-needs-for-green-technologies/. Accessed on 12 November 2024.
[2] Ministry of Mines, “Critical Minerals of India”, June 2023, https://mines.gov.in/admin/download/649d4212cceb01688027666.pdf. Accessed on 12 November 2024.
[3]PIB, “Thirty Critical Minerals List Released”, Ministry of Mines, July 24, 2023. https://pib.gov.in/PressReleasePage.aspx?PRID=1942027#:~:text=These%20minerals%20are%20Antimony%2C%20Beryllium,%2CZirconium%2C%20Selenium%20and%20Cadmium. Accessed on 5 September 2023.
[4] Amoha Basrur, “Implications of lithium reserves in Jammu and Kashmir”, ORF Raisina Debates, November 23, 2024. https://www.orfonline.org/expert-speak/implications-of-lithium-reserves-in-jammu-and-kashmir, Accessed on 10 October 2023.
[5] U Sudhakar Reddy, “NGRI unearths 15 rare earth elements in Andhra Pradesh’s Anantapur District”, April 4, 2023, https://timesofindia.indiatimes.com/city/visakhapatnam/ngri-unearths-15-rare-earth-elements-in-andhra-pradeshs-anantapur-district/articleshow/99226541.cms#:~:text=NGRI%20unearths%2015%20rare%20earth%20elements%20in%20Andhra%20Pradesh’s%20Anantapur%20district,-U%20Sudhakar%20Reddy&text=HYDERABAD%3A,Andhra%20Pradesh’s%20Anantapur%20district. Accessed on 14 October 2023.
[6] Kirtikumar Randive & Sanjeevani Jawadand, “Strategic minerals in India: present status and future challenges”, Journal of Mineral Economics, Volume 32 (4). 2019. DOI. 10.1007/s13563-019-00189-0. Accessed on 13 November 2024.
[7] Ministry of Mines, “Strategy to Secure Minerals”, July 24, 2024. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2036368. Accessed on 12 November 2024.
[8] Neha Mishra, “India-Australia rare earth supply chain collaboration”, ORF Expert Speak, July 1 2023, https://www.orfonline.org/expert-speak/india-australia-rare-earth-supply-chain-collaboration. Accessed on 13 November 2024.
[9] PIB, “Ministry of Mines to organize Budget Seminar on National Critical Minerals Mission Tomorrow”, Ministry of Mines, August 13, 2024. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2044914. Accessed on 20 October 2024.
[10] PWC, “Nigerian Mining – Progress, but still a long way to go”, July 2023, https://www.pwc.com/ng/en/assets/pdf/nigerian-mining-progress-but-still-a-long-way-to-go1.pdf. Accessed on 14 November 2024.
[11] KPMG, “Nigerian Mining Sector Brief”, June 2024, https://assets.kpmg.com/content/dam/kpmg/ng/pdf/2024/06/Nigerian%20Mining%20Sector%20Brief.pdf. Accessed on 14 November 2024.
[12] Ibid.
[13] Consulate General of India, Lagos (Nigeria), “Brief on India-Nigeria Bilateral Economic & Commercial Relations”, https://cgilagos.gov.in/India-Nigeria-Bilateral-Trade-and-Economic-Relations.php. Accessed on 14 November 2024.
[14] ETV Bharat English Team, “Nigeria Eyes India Ties To Cut Dependency On Western Economies: Expert”, November 14, 2024. https://www.etvbharat.com/en/!international/nigeria-eyes-india-ties-to-cut-dependency-on-western-economies-says-expert-enn24111401069. Accessed on 16 November 2024.
[15] KPMG, “Nigerian Mining Sector Brief”, June 2024, https://assets.kpmg.com/content/dam/kpmg/ng/pdf/2024/06/Nigerian%20Mining%20Sector%20Brief.pdf. Accessed on 14 November 2024.
[16] PWC, “Nigerian Mining – Progress, but still a long way to go”, July 2023, https://www.pwc.com/ng/en/assets/pdf/nigerian-mining-progress-but-still-a-long-way-to-go1.pdf. Accessed on 14 November 2024.
[17] Divya A, “Explained: A brief history of India-Nigeria ties, with PM Modi’s visit”, The Indian Express, November 18, 2024, https://indianexpress.com/article/explained/nigeria-india-relations-history-modi-visit-9676117/. Accessed on 21 November 2024.
[18] Ibid.
[19] Olalekan Fakoyejo, “FG revokes 1,633 mining licences over payment default”, The Cable, November 21, 2023, https://www.thecable.ng/just-in-fg-revokes-1633-mining-licences-over-payment-default/?utm_source=chatgpt.com. Accessed on 22 November 2024.
[20] Abir Ibrahim, Olivia Zeydler, “Here’s how Nigeria is tackling the barriers to its green energy transition”, World Economic Forum, May 8, 2023, https://www.weforum.org/stories/2023/05/how-nigeria-is-tackling-barriers-to-its-green-energy-transition/. Accessed on 22 November 2024.
[21] Energy World, “Nigeria is emerging as a critical mineral hub. The government is cracking down on illegal operations”, May 27, 2024, https://energy.economictimes.indiatimes.com/news/power/nigeria-is-emerging-as-a-critical-mineral-hub-the-government-is-cracking-down-on-illegal-operations/110454830. Accessed on 23 November 2024.
