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LAGOS – Nigeria’s ambition to build a value-added supply chain for crucial minerals, including lithium, is getting a significant boost from an unlikely source: an e-market startup.
Sabi, the Lagos-headquartered business-to-business e-commerce company that focuses on the informal economy, has quietly built expertise as a middleman for miners looking to export. In recent weeks it has signed separate deals with two companies – Italy’s Snowball Holdings and the US’s Transition Resources – that plan to set up lithium processing plants in the country in the coming year.
Sabi will ensure that both companies are regularly supplied by discreet small-scale lithium miners across Nigeria, CEO Anu Adosolum told Semafor Africa. It will also manage the companies’ access to services such as quality control and logistics required to export the refined mineral abroad.
The expected daily processing capacity for each plant will be 500 tons per day “with a scalable capacity of up to 1,000 tons per day,” Adosolum said. The US will be the main export destination for now, but Italy and Germany could be accessible in the future, she said.
Sabi is also exploring options to promote mineral processing in Zambia for copper and Tanzania for nickel. These moves reflect a broader regional wave to supply the world with in-demand raw materials, especially related to the energy transition.
Step back
There is one big push African countries have found that the transition to clean energy does not leave them at the bottom of the chain as mere raw material suppliers. In this case, those would be crucial minerals including lithium, cobalt and copper, all of which are used to produce rechargeable batteries.
The use of lithium in cleantech is expected to increase demand 13-fold by 2040according to the International Energy Agency. African governments see moving up the value chain as an important step in expanding their economies and creating much-needed jobs. According to experts, basic processing of lithium in the country could double the value of exports.
Dele Alake, Nigeria’s chief of mines, said last year that Nigeria would “do everything possible to do this.” discourage chasing away of our solid minerals without adding value.” The country’s lithium sector has achieved a number of value addition milestones this year.
In May, two processing plants opened within two weeks of each other in two separate northern states. Each was built by a different Chinese company with the respective state government as co-owner.
The start-up of these factories is “a clear indication” that Nigeria is “polished to encourage foreign investment in this sector,” Aderonke Alex-Adedipe, managing partner at Lagos-based tech-focused law firm Pavestones, told Semafor Africa . Foreign companies looking to set up lithium processing in Nigeria face “a comprehensive framework” of permits and regulations, including requirements for local content requirements and sustainability practices, Alex-Adedipe said.
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Sabi‘s ability to serve the mineral value chain builds on lessons learned from other sectors. It was founded in 2021 as a kind of middleman, using software to match and shift supply from food manufacturers to demand from wholesalers and retailers.
After initially expanding into multiple categories, including chemicals and electronics, the startup narrowed its focus on minerals, agricultural commodities and fast-moving consumer goods. It has raised $66 million to date and it was valued at $300 million after a funding round last year.
African technology has dozens of startups with similar or adjacent business-to-business services. Although generally aimed at structuring local informal trade, enabling the export of high-value raw materials is increasingly seen as the way to make the most money.
Some fulfill the intermediary role by owning physical assets such as delivery trucks and warehouses, while others rely on software to organize transactions. Sabi has no trucks or warehouses. To meet the needs of mineral exporters, the company relies on in-house software called TRACE, short for .
The startup currently uses TRACE to provide sustainability data to commodity exporters who must comply with European Union sustainability rules ethical purchasing of the ingredients of products sold in Europe, Adosolum said. They apply the technology to also enable the export of minerals.
In terms of the economics of the business, Sabi will make its money from “the share of revenue on the export value” of processed minerals, the CEO said. “But there is also the option where they can only buy the inputs,” she said of the processing plants.
The View From Namibia
In September, Chile’s SQM – one of the world’s largest lithium mining companies – signed its first-ever African deal with South Africa-based Andrada Mining to co-develop the Lithium Ridge. This concerns a mine in the lithium-rich Erongo region of Namibia, which also contains tin and tantalum.
The joint venture could see SQM pay Andrada Mining $40 million over time, depending on certain milestones. Both sides will explore the lithium mine with a view to developing “a vertically integrated industry in the country,” Andrada Mining said in a statement to the London Stock Exchange.