Nigeria’s New Mining Policy: Local Processing a Must for Licences
Nigeria is in the process of revising its criteria for granting mining licenses, incorporating a new mandate that necessitates companies to have a strategy for processing minerals within the country. This change in policy is geared towards extracting greater value from Nigeria’s solid mineral deposits, a deviation from the previous practice of exporting raw materials.
In order to attract investors, Nigeria will provide incentives such as tax exemptions for the import of mining equipment, simplified procedures for obtaining electricity generation licenses, and the option for full repatriation of profits. However, these measures are contingent upon companies outlining their plans for establishing processing facilities and enhancing the Nigerian economy.
Dele Alake, the Minister of Solid Minerals Development, has underscored the significance of value addition as a prerequisite for obtaining licenses. It is anticipated that this approach will generate employment opportunities and benefit local communities, aligning with a wider initiative across Africa to maximize the local advantages of mineral exploration.
Nigeria has historically encountered challenges in leveraging its abundant mineral resources due to inadequate incentives and neglect. The underdeveloped mining sector contributes less than 1% to the country’s GDP, underscoring the untapped potential for growth.
In an effort to attract investment, the Nigerian government has established a state-owned solid minerals corporation, offering investors a 75% stake, and has heightened security measures to combat illegal mining activities. Initiatives are also in progress to regulate artisanal miners by organizing them into cooperatives.
Foreign mining companies are already operating in Nigeria, such as Canada-based Thor Explorations, which is engaged in gold exploration, Chinese-owned Xiang Hui International Mining which is involved in gold processing through a local partnership, and Indian-owned African Natural Resources and Mines, currently developing a $600 million iron ore processing plant in northern Nigeria.
The country’s objective is to draw more investment by issuing additional licenses and promoting local mineral processing. Last year, Nigeria predominantly exported tin ore and concentrates amounting to approximately 137.59 billion naira, mainly to China and Malaysia. By mandating value addition and local processing, the government aims to elevate the mining sector and establish a more sustainable and profitable industry.
As the guidelines for the new policy are still being formulated, the precise timeline for their implementation remains uncertain. Nevertheless, the emphasis on local processing and value addition presents promise for Nigeria’s mining sector and signifies an active effort to harness the country’s mineral wealth for economic growth.
In closing, Nigeria’s determination to mandate local processing as a requirement for mining licenses reflects a broader shift in African nations towards maximizing the full value of their mineral resources. This renewed approach has the potential to bolster economic development, create employment opportunities, and promote sustainable growth in the mining sector.
