Unlocking Nigeria’s Mining Potential: A Strategic Collaboration
Nigeria’s Partnership to Harness Untapped Critical Minerals Potential
A significant collaboration between the Africa Finance Corporation (AFC) and the Solid Minerals Development Fund (SMDF) in Nigeria seeks to revolutionize the country’s underfunded mining sector. The two entities have joined forces to co-develop mining projects and mitigate potential risks, thereby facilitating the financing necessary for advancing bankable initiatives.
Expedited Development of Mining Projects
The partnership reflects AFC’s strategic investment in Nigeria’s first commercial-scale gold mining project, the Segilola Gold Mine in Osun State. By offering a comprehensive financing package comprising debt, equity, and a stream, AFC has made a landmark contribution to the industry. The collaboration with SMDF will prioritize project development funding and technical advisory, accelerating the commencement and operation of commercial-scale mining projects in Nigeria.
Tackling Funding Challenges
One of the primary hurdles in Nigeria’s mining sector is the scarcity of funding, with over $700 billion worth of potential mining projects lacking the necessary financial support. In response, AFC and SMDF have committed to creating a pipeline of projects with significant economic impact, leveraging their balance sheets to facilitate investment and implementation.
Focus on Critical Minerals
The partnership between AFC and SMDF will focus on precious metals and minerals crucial for the global energy transition. Drawing from AFC’s experience of deploying over $900 million from its balance sheet and mobilizing $250 million in mining projects across Africa, the collaboration is poised to make a substantial contribution to the critical minerals sector.
Risk Mitigation and Eligibility Criteria
A key aspect of the collaboration involves combining funds and investment tools to mitigate risks associated with exploration, drilling, and other project development costs. Eligible projects must have completed pre-feasibility studies and obtained relevant government and regulatory permits, ensuring a rigorous assessment process.
Driving Economic Diversification
AFC’s commitment in Nigeria’s mining sector aligns with the federal government’s efforts to attract foreign direct investment and diversify the economy. The corporation aims to play a pivotal role in advancing bankable mining projects that are crucial to Africa’s economic diversification, value addition, and energy transition.
A Milestone for SMDF
Fatima Umaru Shinkafi, the executive secretary and CEO of the Solid Minerals Development Fund, expressed the organization’s delight in signing the agreement with AFC. Emphasizing AFC’s dedication to sustainable economic growth through diversification and industrialization, Shinkafi highlighted the significance of the partnership in the development of Nigeria’s mining sector and its potential to position the country as a stable and low-cost supplier of critical minerals.
