Nigeria: Mining permits will only be awarded to companies that process them locally

A country very rich in mineral resources, until now overshadowed by the weight of hydrocarbons of which the country is the leading producer on the continent, Nigeria now intends to take full advantage of this windfall and no longer depend on the black gold.

But unlike African countries that remain limited to exporting raw mineral resources, without any local added value, Nigeria has taken a firm decision to grant mining licenses only to companies that commit to local transformation of their gross production so that the country’s significant mineral resources can positively influence the economic development of the country.

Thus, only companies that present plans to transform mining resources at the local level will benefit from mining permits, said Segun Tomori, spokesman for Nigeria’s minister of solid minerals development, as quoted by Reuters.

The information released by the government spokesperson marks a turning point in Nigeria’s mining licensing and exploitation policy. It is clear that Nigeria intends to put an end to the export of raw minerals by forcing companies to locally process the mineral resources mined in the country.

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In order to encourage local and foreign companies to process mining resources locally, the Nigerian authorities intend to provide a more favorable environment for investors, especially by providing incentives to foreign investors. Among the incentives, tax exemptions for the import of mining equipment, facilitation of obtaining permits for the production of electricity, full repatriation of profits, etc.

And to attract foreign investors, the authorities have created a public structure dedicated to solid minerals and offers foreign investors the opportunity to hold shares of up to 75% of the capital of mining companies. Likewise, in order to eliminate unfair competition from artisanal miners, the authorities established a unit dedicated to the fight against illegal mines.

In return, investors must offer guarantees of local transformation of the mining resources they exploit by establishing factories and all the necessary infrastructure, including power plants to deal with the electricity deficit in the country.

Read also: Gas, uranium and phosphate: new riches that Mauritania will begin to exploit from 2024.

This measure comes at the right time when many African countries are trying to start their industrialization processes by focusing on the transformation of agricultural and mining resources at the local level. This means that Nigeria’s decision should be emulated across the continent.

Moreover, other countries in the region, rich in mineral resources, are on the same wavelength as Abuja. These include DRC, South Sudan, Botswana, Zambia, Namibia, Uganda…

Note that Nigeria is a country whose economy is essentially based on hydrocarbons which represent more than 90% of the country’s export earnings. However, the country is full of numerous untapped or poorly exploited mineral resources including iron, gold, tin,

With more than 2 billion tons of reserves, the country holds the second largest deposit of iron ore on the continent and the twelfth in the world. Nigeria’s underground also contains more than 1,000 billion tons of coal resources. The country also discovered rare nickel, gold, uranium, lignite, bitumen, columbite, lead-zinc, copper and cassiterite in 2016.

Read also: Will the UN resolution be enough to block African exports of raw minerals?

However, these minerals are not exploited, except very slightly. We note the presence of the companies Thor Explorations (Canada), Xiang Hui International Minig (China) active in the gold sector and African Natural Resources and Lines (India), which is currently building an iron ore processing complex in the north of the country, investing 600 million dollars.

In 2022, the country exported mostly tin in raw and concentrated form worth about $108 million. The country is the continent’s second sheet metal producer (11th in the world) behind the DRC.

As a result, despite this mineral wealth, the contribution of the mining sector to the Nigerian economy is negligible, between only 0.3 and 0.5% of the country’s gross domestic product (GDP).

With this new policy, the authorities intend to increase this share of the mining sector in the country’s GDP to 10% in 2026 with the creation of several hundred thousand jobs.