Expanding The Investment Coast Of Mining And Solid Minerals Industry In Nigeria
There is no doubt that Nigeria is blessed with so many mineral deposits. As at the last count, the federal ministry of mines and steel development has found over five hundred location of mineral deposit in the country and has thus far identified nine for promotion and possible development.
Those identified by the ministry includes; Iron ore, Coal, Tin Ore, Bitumen, Gold, Columbite-Tantalite, Lead/zinc, Wolframite and industrial minerals. Recent policy reforms have brought the solid minerals sector to the fore. The emphasis is on encouraging massive foreign investors participation in this sector.
There are tremendous opportunities for investment in the solid mineral sector in Nigeria. Solid minerals are found in commercial quantities in the country for possible investment and exploitation. For instance, there are over 40 million tonnes deposits of talc identified in Niger, Osun, Kogi, Ogun and Kaduna States.
Again, there is over 3 billion metric tonnes of iron ore deposits found in Kogi, Enugu and Niger States as well as the Federal Capital Territory. Iron Ore is being mined at Itakpe in Kogi State. The large deposit of oolitic iron ores of Kogi and Enugu States are yet to be fully explored. Itakpe iron ore is being beneficiated to 67% Fe. To feed Aladja and Ajaokuta Steel complexes.
The commercial value of Nigeria’s solid minerals has been estimated to run into hundreds of trillions of dollars. It has also been estimated that Nigeria loses about $40 billion annually in unexploited gold alone. The domestic mining industry is underdeveloped, currently accounting for only 0.5 percent of Nigeria’s GDP, and leading to the importation of commodities that can be produced locally. An audit report released by the Nigeria Extractive Industries Transparency Initiative (NEITI) on the solid minerals sector, showed that a single company, Dangote Group, generates more mineral resource revenue for the government than the rest of the nation put together.
Solid Mineral sector in Nigeria has had a checkered history. This is as a result of neglect of the sector by different administration until 2007 when Nigeria Minerals and Mining Act was enacted. The said Act is based on international best practice and standard. It is also to be noted that the Act was modeled after successful mining jurisdiction to secure tenure of title, create competition on principle of first come, first serve basis
With the global decline in oil prices, Nigeria is seeking to diversify its economy by building a stronger revenue base that would require a stronger performance of the solid minerals sector.
Who Can Invest In Solid Mineral Sector In Nigeria:
Exploitation and exploration of Solid Minerals are governed by the Nigerian Minerals and Mining Act 2007 (hereinafter referred to as ‘the Act’), and the Nigerian Minerals and Mining Regulation 2011. The Act vests control of all properties and minerals in Nigeria in the States and prohibits unauthorized exploitation or exploration of minerals. By virtue of the provisions of the Act, all lands in which minerals are found in commercial quantities shall from the commencement of the Act be acquired by the Federal Government in accordance with the Land Use Act. Property in mineral resources shall pass from the government to the person who lawfully acquires a right over the exploration or mining of the mineral resources.
The Act also provides for the establishment of the Mining Cadastre Office (MCO) which is responsible for the administration of mineral titles and the maintenance of the cadastral registers, and empowers the Minister of Mines and Steel (“the Minister”), by regulation, to determine areas eligible for the grant of an exploration or mining lease based on a competitive bidding process. The Federal Ministry of Mines and Steel Development is the body which is responsible for prospecting licenses for both local and foreign investors to participate in the exploitation of the vast mineral resources in Nigeria.
The Regulation streamlined the procedures for granting licenses to investors and guaranteed access to mining sites with minimal encumbrances. The regulation provided for the right to search for, or exploit minerals in Nigeria which is obtained through any of the following Licenses;
- Reconnaissance Permit:
- Exploration License
- Small Scale Mining License
- Mining Lease
- Quarrying License
- Water Use Permit
A comprehensive package of incentives has been put in place to create a favorable environment for investment into the Nigerian solid mineral sector and also encourage investor to invest in the sector. Some of the incentives include the following:
- Deferred royalty payments
- Capital allowances of up to 95% of qualifying capital expenditure for mining operations.
- 3 to 5 years tax holiday as applicable; and tax concessions
- Possible capitalization of expenditure on exploration and surveys
- Expatriate quota and resident permit in respect of the approved expatriate personnel
- Personnel remittance quota for expatriate personnel, free from any tax imposed by any enactment for the transfer of external currency out of Nigeria.
- Extension of infrastructure such as roads and electricity to mining sites, and provision of 100% foreign ownership of mining concerns
With the current trend gearing towards diversification, why not take a bold step towards actualizing your investment dream by exploiting the opportunity provided the above mentioned Act and Regulation. It is worthy to note that our article herein is not exhaustive but a guild to would be investors to understand the legal requirements of investing in Mining and Solid Mineral Sector of Nigerian economy
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