Nigeria is poised to implement a novel policy mandating mining companies to present a plan for local mineral processing as a prerequisite for acquiring new licences. This strategic shift heralds a departure from the country’s longstanding practice of raw material exports and mirrors a broader trend across African nations seeking to optimise the value of their mineral reserves.
Segun Tomori, a spokesperson for the Nigerian minister of solid minerals development, disclosed that the government will entice investors by offering tax exemptions for importing mining equipment, simplifying the process for obtaining electricity generation licences, permitting full repatriation of profits, and bolstering security measures. In exchange, companies will be required to articulate their strategies for establishing processing facilities and adding value to the Nigerian economy. At present, the specific timeline for finalizing and implementing these guidelines remains undisclosed.
Concurrently, Dele Alake, the minister of solid minerals development, underscored the government’s steadfast commitment to prioritising value addition as a prerequisite for securing mining licences, with the aim of creating job opportunities and bolstering local communities. In line with this policy paradigm, Alake has been advocating for a pan-African initiative to ensure that mineral exploration yields maximal local benefit. This stance has garnered backing from a mining strategy coalition comprising ministers from diverse African countries, including Uganda, the Democratic Republic of Congo, and South Sudan.
Historically, Nigeria, a pivotal energy producer in Africa, has grappled with harnessing its abundant mineral resources due to inadequate incentives and disregard. Consequently, the underdeveloped mining sector accounts for less than 1% of the country’s gross domestic product. In 2020, Nigeria primarily exported tin ore and concentrates, totalling approximately 137.59 billion naira ($108.34 million), with China and Malaysia serving as principal destinations.
In an effort to attract greater investment in the mining sector, Nigeria intends to issue additional licences and has established a state-owned solid minerals corporation offering investors a 75% stake in mining projects. Additionally, a dedicated security unit has been mandated to combat illicit mining activities, while initiatives are underway to formalise the operations of artisanal miners through the establishment of cooperatives.
Prominent foreign mining companies presently operating in Nigeria include Thor Explorations, a Canada-based firm engaged in gold exploration; Xiang Hui International Mining, a Chinese-owned enterprise collaborating with a local partner for gold processing; and African Natural Resources and Mines, an Indian-owned entity undertaking the construction of a $600 million iron ore processing plant in northern Nigeria.
In light of these advancements, Nigeria endeavours to stimulate increased investment and domestic processing of minerals, thereby laying the groundwork for sustainable growth and economic development within the mining sector.