Chariot Lines Up China-Backed Nigerian Lithium Offtake Deal

The recent partnership between Chariot Resources and Xiamen C&D Inc. has generated significant interest in the lithium market, with investors driving up shares in the Australian mining company. The proposed agreement includes a subsidiary of C&D, Hong Kong ZhongNuo Energy, and C&C Minerals Ltd., offering a low-capital pathway for Chariot to accelerate exploration and generate early cash flow from its Nigerian lithium projects.

Xiamen C&D’s involvement adds considerable weight to the venture, given its status as one of China’s largest supply-chain companies. As a major player in securing high-grade lithium for the rapidly growing battery market, C&D’s participation signals a strategic move to ensure a reliable source of this critical material. The company will act as the offtake buyer for all qualifying DSO delivered during phase one, underscoring its commitment to the project.

The partnership’s proposed structure is designed to minimize upfront costs, with funding and a minimum 1500-metre diamond drilling program followed by a potential trial-mining campaign capped at 240,000 tonnes of DSO. This approach allows Chariot to identify a low-cost pathway to developing Nigeria’s lithium industry.

Nigeria has a relatively recent history of artisanal lithium mining, dating back to around 2014 when informal miners extracted and sold raw pegmatite ores containing spodumene to foreign buyers primarily targeting Chinese markets. The trade gained momentum from 2021 as demand for lithium surged, with Core Lithium selling lithium fines at a base price of US$290 per tonne.

For Chariot, the proposal represents a shrewd corporate development that potentially enables the company to explore and drill its Nigerian ground with minimal upfront costs. C&D’s payment of a refundable US$100,000 exclusivity fee is a sign of its commitment to the project.

However, concerns remain about the potential environmental and social implications of this deal. Nigeria’s history of artisanal mining has raised questions about the exploitation of local resources and the impact on local communities. Chariot must prioritize responsible mining practices and engage with local stakeholders to mitigate any negative impacts.

The proposed deal comes as Nigeria seeks to carve out a more significant role in the global battery supply chain, actively shifting towards boosting domestic processing capabilities. The country recently opened a new US$250 million Chinese-built lithium processing plant, signaling its ambition to move beyond exporting raw ore. This deal could be a crucial step towards achieving that goal.

The commercial terms of the deal remain subject to due diligence, the signing of definitive agreements, and the completion of Chariot’s underlying acquisition of the Nigerian portfolio. If the parties proceed to a definitive agreement, C&D will provide Chariot with a US$500,000 interest-free prepayment, which would be amortized against future DSO sales invoices.

The proposed deal has sent a clear signal that Africa is emerging as a serious player in the global lithium market. Nigeria’s ambition to move beyond exporting raw ore and become a major player in the battery supply chain is a significant development for the region. Chariot’s gamble on this partnership could pay off handsomely if executed correctly, but it also carries risks that need to be carefully managed.

Ultimately, this deal marks a new chapter for Africa’s battery supply chain, with far-reaching implications. As investors, analysts, and policymakers watch closely, one thing is certain: the future of lithium in Nigeria has never looked brighter.