Nigeria’s mining industry is full of fresh opportunities for both foreign and local investors and offers potentials for rapid wealth creation and diversification from our oil dependent economy.
As an affirmation of the potentials in the mining industry, the Federal Government recently introduced a N30 billion financial intervention fund, prioritized for exploitation of seven strategic minerals of vital importance to the economy namely: coal, bitumen, iron ore, barites, gold and lead/zinc, which are available in commercial qualities to sustain mining activities.
Another indicator of the viability of the industry is that its contribution to Gross Domestic Product (GDP) has increased to 23.4% as of the first quarter of 2018, with the federal government now recognizing it as a prime income earner.
Unlike oil and gas that is found only in the Niger Delta region, solid minerals are scattered in all the 774 local governments in Nigeria. Every state has at least five to six types of solid minerals including tin, iron ore, coal, limestone, niobium, lead, zinc, gold, talc, rock salt, gypsum, bitumen, gemstones, kaolin, tantalite and columbite. In recent years the British Geological Survey discovered several significant uranium deposits in a handful of states.
Though many of the earlier discoveries were in the Northern part of the country, there are substantial deposits in every state and entrepreneurs who are interested in the industry should do a study of their state of residence in the first instance.
There are four main mining methods: underground, open surface (pit), placer, and in-situ mining. Underground mines are more expensive and are often used to reach deeper deposits. The method is determined mainly by the characteristics of the mineral deposit and the limits imposed by safety, technology, environmental and economic concerns.
Every investor or company willing to engage in the Nigerian mining sector requires a government approval or license to proceed. Mining license in Nigeria is usually relevant for companies seeking to engage in the mining sector, with or without a mining lease.
There are two major types of mining licenses in Nigeria that are relevant and important for every company engaging in mining sector, depending on their type of activities in the sector.
These licenses are: Possess or Purchase License (companies that wish to deal in mineral resources) and Mineral Buying Centre license (required for companies willing to process mineral resources in Nigeria. It is also relevant for any companies that choose to warehouse mineral resources, either temporarily or permanently).
Mineral Export Permit is also important for companies that choose to export mineral resources. All the mining licenses and permit serve different purposes and their conditions for issuance come with different requirements. The Mining Cadastre Office within the Ministry of Mines and Steel Development (MMSD) is responsible for the issuance of mining licenses and permits. The official fees are usually around N30,000.
The domestic mining industry is underdeveloped, leading to Nigeria having to import minerals that it could produce domestically, such as salt or iron ore, and interested entrepreneurs can make money while plugging the wide gap.