Nigeria to Grant Mining Licenses Exclusively to Companies

The decision to grant new mining licenses in Nigeria based on plans for local mineral processing marks a significant departure from the country’s longstanding practice of primarily exporting raw materials. This shift reflects a broader trend among African nations seeking to maximize the value extracted from their mineral resources.

To attract investment in the mining sector, Nigeria is offering incentives to investors, including tax waivers for importing mining equipment, streamlined processes for obtaining electricity generation licenses, full repatriation of profits, and enhanced security measures, according to Segun Tomori, a spokesperson for Nigeria’s Minister of Solid Minerals Development. In return, companies seeking licenses must present comprehensive plans outlining their commitment to establishing processing plants and adding value to the Nigerian economy. However, the timeframe for finalizing and implementing these guidelines has not been specified.

Minister of Solid Minerals Development, Dele Alake, emphasized the government’s new policy of prioritizing value addition as a prerequisite for obtaining mining licenses, with the aim of creating employment opportunities and benefiting local communities. Alake, who leads an African mining strategy group comprising mining ministers from several countries, advocates for a continent-wide initiative to maximize local benefits from mineral exploration.

Nigeria, a leading energy producer in Africa, has historically struggled to capitalize on its abundant mineral resources due to inadequate incentives and neglect. The underdeveloped mining sector contributes less than 1% to the country’s gross domestic product (GDP). Last year, Nigeria predominantly exported tin ore and concentrates, primarily to China and Malaysia.

To stimulate investment, the Nigerian government plans to issue more licenses and has established a state-owned solid minerals corporation offering investors a significant stake. Additionally, a special security unit has been tasked with combating illegal mining activities, while efforts are underway to regulate artisanal miners by organizing them into cooperatives.

Several foreign mining companies, including Canada-based Thor Explorations, Chinese-owned Xiang Hui International Mining, and Indian-owned African Natural Resources and Mines, are operating in Nigeria across various mineral sectors, such as gold, iron ore, and others. These initiatives aim to enhance Nigeria’s mining sector and promote economic growth and development.