Nigeria’s New Mining Law: What You Need to Know
Nigeria is in the process of enacting substantial adjustments to its mining legislation, known as the Nigeria Minerals and Mining Act (NMMA). This initiative forms part of the government’s strategy to rejuvenate the nation’s ailing mining sector, which currently contributes a meagre 0.3% to the GDP. The antiquated law, unaltered since 2007, has attracted severe criticism for impeding growth in the sector and leading Nigeria to heavily rely on imports for essential minerals, such as salt and iron ore, which could be domestically produced. This heavy reliance on imports sharply contrasts with the oil and gas sector, which contributes approximately 10% to the nation’s GDP and 65% to government revenues.
Kwadwo Sarkodie, a partner at the legal firm Mayer Brown International, underscores the compelling narrative behind Nigeria’s mining sector, stating, “There is undoubtedly an intriguing story behind the mining sector in Nigeria.” Prior to the civil war in the late 1960s, Nigeria boasted a thriving mining industry, serving as a major exporter of minerals like coal and tin. However, the oil boom in the 1970s instigated a significant paradigm shift, diverting attention and resources away from the mining sector, leading to the closure of several mines.
The 2007 law was established to attract private investments to the underperforming sector. The recent amendments, however, seek to decentralize power from the federal government to local administrations. This would grant local communities and state governments greater authority over mining activities in their respective regions. The objective is to enhance revenues, incentivizing these local entities to enforce laws and combat illicit mining.
Illicit mining is a contentious issue in Nigeria, particularly in the northern states, where around 80% of mining activities are conducted illegally on an artisanal scale, involving over two million individuals. This has resulted in the trade of illegally mined gold for weapons, exploitation of women and girls in illicit mining, and environmental challenges, including water pollution, deforestation, and reduced agricultural land.
Notwithstanding the amendments to the mining law, various substantial obstacles continue to impede the sector’s development, including security concerns, power supply, transportation infrastructure, and the already dominant oil and gas industry.
The bill is presently under review by the House of Representatives and will subsequently undergo approval by the Senate before being enacted into law. It is pertinent to acknowledge that the process of enacting a new law can be protracted, as exemplified by the Petroleum Industries Act, which took approximately 20 years to come into effect.
The heightened attention on the mining sector is attributed to Nigeria’s heavy dependency on oil and gas, leaving its economy susceptible to fluctuations in oil prices. Consequently, there is an increasing acknowledgment of the imperative to diversify the nation’s economy and diminish reliance on the energy sector.
In conclusion, the proposed revisions to Nigeria’s mining law represent a step towards revitalizing the country’s mining sector. Nonetheless, the extent to which these changes will stimulate substantial investment and revenues remains to be seen. For comprehensive coverage of this issue and other pertinent news, we encourage subscription to gain unrestricted access to all our articles, opinions, and podcasts. Stay informed and join the discourse by subscribing today!
