Nigeria’s mineral development has been highly focussed on its oil industry. Nigeria is Africa’s largest oil producer and contributes 3% to global production. As a result, the mining industry has been neglected and has only been rekindled by the Ministry of Solid Mineral Development, intent in increasing the role of this sector of Nigeria’s economy. The Ministry, in conjunction with assistance from South Africa, is to develop a geochemical database of Nigeria that is intended to facilitate exploration efforts in the country.
Currently mining contributes just 1% to Nigeria’s GDP. Nigeria has significant coal and iron ore reserves as well several gold, uranium, tantalum and REE showings throughout the country. Uranium is found in 6 of the 36 states in Nigeria.
In November 2002, the Dutch firm Geotess International Corp. established the countrys first diamond cutting and polishing centre at Jos. The same company, Geotess, also exports tantalite to China.
In 2004 the Federal Government of Nigeria and the World Bank announced that they will spend a sum of N11billion (US$120 million) to fund the solid minerals sector through the establishment of a project for sustainable management of mineral resources in an attempt to address issues of artisan and small-scale mining as a poverty reduction strategy. The project will also assist government in drafting a new Minerals Act to replace the 1999 Minerals Act. Known as Sustainable Management of Mineral Resources Project, the credit is repayable over 35 years including a 10-year grace period with no interest charged.
Towards the end of 2002 the Ministry was authorised to establish the countrys first Geological Survey, its key tasks being to act as a repository of minerals information and to ensure that this is available to the private sector.
Mineral Policy and Legislation
The Ministry of Solid Minerals Development was only established early 1995 with the aim to boost non-oil exports. A legal committee was set up in 1996 to promulgate a new Mining Law and Allied Regulations. The new Mining Law has been completed and submitted to the government for approval. Till the new law is approved, the following main laws and regulations are controlling the exploration, exploitation, use and exportation of solid minerals in Nigeria and are contained in:
- The Mines Manual – containing the Mineral Act (Cap. 121 of 1946). Minerals Regulations, Safe Mining Regulations, Gold Trading Act and the Goldsmiths’ Act.
- The Quarries Decree No 26 of 1969 and Quarry Regulations 1969.
- The Explosives Act of 1964 and Explosives Regulations 1967.
- Diamond Trading Decree – Decree No 55 of 1971
All solid minerals are owned by the Federal Government of Nigeria. Prospecting Rights (P.R.), Exclusive
Prospecting Licences (E.P.L.), Mining Leases (M.L.), Quarrying Licences (Q/Licence) and Quarrying Leases (Q/Lease) are granted by the Ministry of Solid Minerals Development, in summary as follows :
|Area||Unlimited in free areas||20,72 km²||20,72 km²||1 acre||100 acre|
|Period||1 year available||1 year up to 5 renewals||21 years renewable||1 year renewable||5 years renewable|
All minerals won during prospecting, exploration, mining and quarrying attract the payment of royalties. The royalties have been reviewed and will soon be approved by the Federal Government.
Further charges include surface rents and mineral rents.
Fiscal Regime and Commercial Legislation
The Federal Government has liberalised foreign investment in Nigeria. Furthermore, reductions have been made on:
- Companies Profits Tax from 35% to 30%,
- Capital Gains Tax from 20% to 10%
- Increase of the Initial and Annual Capital Allowances from 20% and 10% to 30% and 20% respectively,
- 3 year tax holiday for new mining companies
These can be considered as strong incentives for any prospective investor into the Nigerian mining industry. In addition, there are several interesting export incentives attracting tax reliefs and tax exemptions.
A.U.S.A. Nigeria LTD, Ableen Farms Limited, Amil Solid Minerals & Agro – Allied Company, Universal Mining & Metal Industries Limited, Bakuwa Mining Works, CME (Nigeria) Ltd, Deros Maritime Limited, Geosearch Investments Limited, Greenwaters Solid Minerals Co Ltd, Ministry of Solid Minerals Development, National Iron Ore Mining Company, Nigeria Federal Ministry of Solid Development, Nigerian Coal Corporation, Nigerian Mining Corporation, Nigerian Tin Mining Co Ltd, Nordic Industries Ltd, Vincent Standard Steel Industries Nigeria Limited