A government spokesperson confirmed on Thursday that Nigeria will only issue new mining licenses to companies that submit plans detailing how minerals will be processed domestically, according to new guidelines being developed.
This marks a departure from Nigeria’s long-standing policy of exporting raw materials, as African nations seek to extract greater value from their solid mineral reserves.
To encourage investment, Nigeria plans to provide incentives to investors.
These include tax waivers for the importation of mining equipment, streamlined processes for obtaining electricity generation licenses, permission for the full repatriation of profits, and enhanced security measures, stated Segun Tomori, spokesperson for Nigeria’s Minister of Solid Minerals Development.
“In exchange, we have to review their plans for setting up a plant and how they would add value to the Nigerian economy,” Tomori is quoted to have said by Reuters.
He did not specify when the guidelines would be finalized or come into effect. However, last week, the Minister of Solid Minerals Development, Dele Alake, stated that it was now government policy to make value addition a requirement for obtaining licenses to create jobs and benefit local communities.
Alake, who also chairs an African mining strategy group comprising mining ministers from Uganda, the Democratic Republic of Congo, Sierra Leone, Somalia, South Sudan, Botswana, Zambia, and Namibia, is advocating for a continent-wide effort to maximize local benefits from mineral exploration.
Nigeria, Africa’s top energy producer, has faced challenges in extracting value from its vast mineral resources due to poor incentives and neglect. The underdeveloped mining sector contributes less than 1% to the country’s GDP.
Last year, Nigeria exported mostly tin ore and concentrates worth about 137.59 billion naira ($108.34 million), mainly to China and Malaysia, according to the country’s statistics bureau.
The government aims to attract more investment into the sector by issuing more licenses. It has established a state-owned solid minerals corporation offering investors a 75% stake and set up a special security unit to combat illegal miners.
Additionally, the government is seeking to regulate artisanal miners, who dominate the sector, by organizing them into cooperatives.
Foreign mining companies operating in Nigeria include Canada-based Thor Explorations, involved in gold exploration; Chinese-owned Xiang Hui International Mining, which partnered with a local company for gold processing; and Indian-owned African Natural Resources and Mines, constructing a $600 million iron ore processing plant in northern Nigeria.
Source: Reuters