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How To Invest In The Nigerian Mining Industry

When we talk about Nigeria, it’s vast amount of natural resources and the huge potential comes to mind.

At first glance, you can envisage the impressive potential ahead for the country, especially looking at the mining sector.

Nigeria has 44 different types of solid mineral resource spread across it’s 36 states according to reports by several government sources. But these resources are largely under-explored. For example, gold is found in some states in Nigeria, but you can’t compare the extent of its exploration in countries like Ghana, or South Africa with Nigeria. The difference is huge.

The government knows without a doubt mining in the country needs to go mainstream. A meager 7.12 percent contribution to GDP isn’t sufficient enough for what the country needs- not with the current financial situation in the country- and certainly not with the enormous potential the mining sector possesses.

Good thing government initiatives and policy reforms are being implemented now to support the growth of the sector, however in recent years, turn of events like the drop in oil price, the pandemic, and the fact that Nigeria just barely scraped through economic recession, things are expected to slow down, it is widely hoped that better things are ahead for the mining sector.

So on this post, we’d be providing you with information needed for investing in the solid mineral sector of Nigeria.

Mining Solid Minerals In Nigeria

Operations in the Nigerian mining sector is predominantly informal when compared to mainstream processing operations.

According to Nigerian bureau of Statistics, and KPMG, 80 percent of the miners in Nigeria are Artisanal and small-scale miners like those in the cement and limestone production companies, and activities like marketing and transportation are mostly done by the small scale companies or even individuals.

In terms of employment, mining and quarrying makes up 0.17 percent of employment in Nigeria according to several reports.

Key Players In The Nigerian Mining Industry

The Minister

The Minister is saddled with the administrative role of the Ministry of Mines and Steel Development.

His job is to ensure a well coordinated and sustainable development of the mining sector, designing workable frameworks to support foreign and local investors, amongst other roles.

Cadastre Office

The Cadre Office is responsible for the administration of the mining titles, and the maintenance of registers ( register of Reconnaissance Permits; Exploration Licenses; Mining Leases; Small-Scale Mining Leases; Water Use Permits; and Quarry Leases) within which the Cadre Office administers.

The office also considers applications for mineral titles and permits, issue, suspend and upon the written approval of the Minister revoke mineral titles. And can grant property rights on scenarios there are competing applications for the same exclusive area.

Some Key challenges In The Nigerian Mining Sector

Mining activities carried out by local artisans
  • Illegal mining activities
  • Insecurity challenges
  • Unstable political terrain
  • Poor infrastructure

Solid Mineral Deposits And Their Locations In Nigeria

Solid minerals and their locations across the various states of Nigeria

In terms of volume and production on a large scale, limestone dominates the solid mineral department.

As of 2017, the three largest explored solid minerals were granite(17.5m tonnes), limestone(14m tonnes), and laterite(3.7m tonnes), with each of these minerals being produced in Ogun, Kogi, states and the FCT(Federal Capital Territory) respectively.

In recent years, Cements production made from limestone has been on the rise from N2.3bn ($7.4m) to N5.9bn ($19.1m), with companies like Dangote Cement Plc, Lafarge Cement Plc, CGC Nigeria Limited and Julius Berger Plc being the big players.

Resource Deposits

Talc

Quantity: 40 Million tonnes

Location: Niger, Osun, Kogi, Ogun, Kaduna

Gypsum

Quantity: 1 Billion tonnes

Location: Spread over several states in Nigeria

Iron Ore

Quantity: 3 Billion MT

Location: Kogi, Enugu, Niger

Lead/Zinc

Quantity: Over 10 Million tonnes

Location: Over 8 states in the country

Bentonite and Baryte

Quantity: Over 700 million tonnes

Location: Taraba and Bauchi. With many more to be discovered in several states all over the country waiting to be explored in large quantity

Gold; alluvial and primary gold.

Quantity: Yet to be explored in large quantity

Location: South-west of Nigeria.

Bitumen

Quantity: 42 billion

Location: Ogun state

Coal

Quantity: Over 3billion

Location: Enugu

Rock Salt

Quantity: Over 1.5 Million Tonnes

Location: Plateau, Eboyin, Benue

Gemstones; sapphire, ruby, aquamarine, emerald, tourmaline, topaz, garnet, amethyst.

Quantity: In need of huge exploration

Location: Plateau, Kaduna, Bauchi

Kaolin

Quantity: 3 Billion tonnes

Location: Available in various regions in the country.

Laws and Regulations on Mining in Nigeria

Exploitation and exploration of solid minerals are governed by the Nigerian Minerals and Mining Act 2008 (the Act), and the Nigerian Minerals and Mining Regulation 2011.

The Act confers control of all properties and minerals to the federal government and forbids unauthorized exploitation or exploration of minerals.

According to the Act, in accordance with the Land Use Act, the federal government owns all lands found to contain minerals in commercial quantity.

As such, any person who lawfully acquires a right over the exploitation or mining of any mineral resource in the country is been passed onto by the government.

The Act also established the roles of the mining Cadre Office, and the Minister of the Federal Ministry of Mines and Steel, with the Cadre Office responsible for the administration of mining titles and the maintenance of the cadastral registers, and the Minister is vested the role of fostering the steady development of the mining sector by providing workable plans and templates in place for investors.

The Federal Ministry of Mines and Steel

The Ministry of Mines and Steel Development (MMSD), founded in 1985, was saddled with the task of galvanizing the development of the country’s solid mineral resources, in order to help boost wealth and job creation, and further rural economic development.

The ministry is responsible for the following Activities:

  • Identifying solid mineral deposits.
  • Setting up framework for prospecting investors.
  • Overseeing Quarry and extraction activities.
  • Issuing of permits
  • Licenses and leases for mineral sales and consumption,
  • Collecting rents, fees and royalties from mining companies.
  • Attracting foreign investments.

7 Parastatals Under the Supervision of the Federal Ministry of Mines and Steel

  • The Nigerian Geological Survey Agency (NGSA).
  • The Nigerian Institute of Mining and Geosciences.
  • Mining Cadastre Office
  • Nigerian Mining Corporation
  • Mines Inspectorate Department
  • Mineral Resources and Environmental Management Committees(established in each state of the Federation).
  • Mines Environmental and Compliance Department.

On the back of China’s trade partnership with Nigeria in recent years, Nigeria has seen boost in revenues for Zinc and lead ores and concentrates grow respectively, from $2.2m to $9.7m and from $175,000 to $4.2m. More partnerships like this are expected in the future as Nigeria looks to explore more resources.

Although one cannot overlook the rising issues of insecurity and insurgency in the country, prospects in the Nigerian mining sector is a huge lure and big opportunity for anyone ready to take the plunge.



By Raymond A

International trade and export specialist. Content manager at cokodeal.com

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