Nigeria’s ambition to build a value-added supply chain for critical minerals including lithium is getting a significant boost from an unlikely source: an e-marketplace startup.
Sabi, the Lagos-headquartered business-to-business e-commerce company focused on the informal economy, has been quietly building expertise as a middle man for miners seeking to export. In recent weeks, it inked separate deals with two companies — Italy’s Snowball Holdings, and Transition Resources from the US — that plan to set up lithium processing plants in the country over the coming year.
Sabi will ensure both companies have regular supply from discrete small-scale lithium miners across Nigeria, chief executive officer Anu Adasolum told Semafor Africa. It will also manage the companies’ access to services like quality control and logistics needed to export the refined mineral abroad.
The expected daily processing capacity for each plant will be 500 tons per day “with scalable capacity of up to 1,000 tons per day,” Adasolum said. The US will be the primary export destination for now but Italy and Germany could be accessible in the future, she said.
Sabi is also exploring avenues to advance mineral processing in Zambia for copper and Tanzania for nickel. These moves reflect a broader regional wave to supply in-demand commodities to the world, especially in relation to the energy transition.
There is a big push by African countries determined that the transition to clean energy does not leave them at the bottom of the chain as mere raw materials suppliers. In this case, that would be critical minerals including lithium, cobalt, and copper, all used for producing rechargeable batteries.
Lithium’s use in cleantech is expected to see demand rise 13-fold by 2040, according to the International Energy Agency. African governments see a move up the value chain as an important step in expanding their economies and creating much-needed employment. Basic processing of lithium in-country could double the value of exports, according to experts.
Dele Alake, Nigeria’s mines chief, said last year that Nigeria will “do everything possible to discourage the carting away of our solid minerals without value addition.” The country’s lithium sector has achieved a few milestones on the value addition front this year.
Two processing plants were opened in two separate northern states within two weeks of each other in May. Each was built by a different Chinese company with the respective state government as a part owner.
The take-off of these plants is “a clear indication” that Nigeria is “postured 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 rules, including those governing local content requirements and sustainability practices, Alex-Adedipe said.
Sabi’s ability to service the minerals value chain builds on lessons from other sectors. It was founded in 2021 as a middleman of sorts, using software to match and move supply from groceries producers to demand from wholesalers and retailers.
After initially expanding to multiple categories, including chemicals and electronics, the startup narrowed its focus to minerals, agriculture commodities, and fast moving consumer goods. It has raised $66 million to date and was valued at $300 million after a funding round last year.
African tech features dozens of startups with similar or adjacent business-to-business services. While they typically set out to bring structure to local informal trade, enabling the export of high-grade commodities is increasingly seen as where the most money stands to be made.
Some fulfill the intermediary role by owning physical assets, like delivery vehicles and warehouses, while others rely on software to organize transactions. Sabi has no trucks or warehouses. To meet the needs of mineral exporters, it relies on in-house software called TRACE, short for Technology Rails for African Commodities Exchange.
The startup currently uses TRACE to provide sustainability data to commodity exporters that need to comply with the European Union’s rules on the ethical sourcing of the ingredients of products sold in Europe, Adasolum said. They apply the technology to enable mineral exports as well.
As for the economics of the business, Sabi will make its money from “revenue share on the export value” of processed minerals, the CEO said. “But there is also the option where they can just purchase the inputs,” she said of the processing plants.
In September, Chile’s SQM — one of the world’s largest lithium mining companies — signed its first ever Africa deal with South Africa-based Andrada Mining to co-develop the Lithium Ridge. The asset is a mine in Namibia’s lithium-rich Erongo region that also contains tin and tantalum.
The joint venture could see SQM pay Andrada Mining $40 million over time, depending on certain milestones. Both parties will explore the mine for lithium with a view to developing “a vertically integrated industry within the country,” Andrada Mining said in a disclosure to the London Stock Exchange.