KPMG Africa 2

The Nigerian mining sector brief

Nigeria is endowed with vast reserves of solid minerals, including, but not limited to, precious metals, stones and industrial minerals. The country was a major exporter of tin, columbite and coal in the early 1970s. However, activities in this sector nose-dived considerably when crude oil production began to take the centre stage, and became a major source of foreign exchange for the country.

With the return to democracy in 1999, the need to diversify the revenue base of the country became paramount. A new national focus and strategy on mining evolved such that in 2007, the Nigerian Minerals and Mining Act (the Act) was enacted to revitalize the Nigerian mining industry.

There are over 40 different types of minerals spread across the country, including gold, barite, bentonite, limestone, coal, bitumen, iron ore, tantalite / columbite, lead/zinc, barites, gemstones, granite, marble, gypsum, talc, iron ore, lead, lithium, silver, etc. However, not all the minerals are available in commercial quantities.

As part of the strategies to reform the sector, the Ministry of Mines and Steel Development (MMSD)1 has identified seven (7) strategic minerals, namely, Coal, Bitumen, Limestone, Iron Ore, Barites, Gold and Lead/Zinc for priority development as further discussed in the Mining sector brief.

Land and Regulatory Framework

The Act is the principal legislation that regulates the Nigerian mining sector. The Act vests the control, regulation and ownership of all mineral resources in the Federal Government of Nigeria (FGN).

The provisions of the National Minerals and Metals Policy and the Minerals and Mining Regulations also regulate the sector. The Mining Regulations contain specific provisions with respect to royalties, fees and compensation payable by holders of mining rights.

The provisions of the National Minerals and Metals Policy and the Minerals and Mining Regulations also regulate the sector. The Mining Regulations contain specific provisions with respect to royalties, fees and compensation payable by holders of mining rights.

Types of Mineral Titles and Licences

A mining title can be granted to an individual, a company or a co-operative. The grant of exploration licence or mining lease could be by competitive bidding or on individual request. In competitive bidding, the government consolidates various mineral locations into blocks, and offer the blocks for sale to international and local investors with sufficient financial and technical capabilities to carry on mining operations. The bidding procedure will normally include:

  • An advertisement in both local and international media
  • Data room due diligence process
  • Receiving Expression of Interest (EOI)
  • Selection of preferred investor
  • Communication of selected investors to the National Assembly Committee on Solid Minerals
  • Offer of the mineral title

The last bid round was conducted in 2006. It is uncertain when the government would offer new blocks/mineral concessions for competitive bidding.

The above is an excerpt from the Nigerian Mining Sector Brief, please feel free to download a copy.

For more information, please contact:

Adewale Ajayi

 

 

 

 

 

 

Adewale Ajayi
Partner, Tax, Regulatory & People Services
KPMG Nigeria
T: +234 803 402 1014
E: mailto:adewale.ajayi@ng.kpmg.com

 

 

 

 

 

 

David Okwara

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