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Why Mining is the Next Big Thing in Nigeria’s Development Agenda

Nigerian mining has the potential to make a substantial economic contribution to the nation. The domestic mining sector is developing but full of potentials.

The mining industry in Nigeria has historically been dominated by the oil and gas sector, leaving other mineral resources largely untapped. Nevertheless, Nigeria is rich in mineral resources such as coal, limestone, tin, gold, and tantalite, among others. Through their direct operations, mining companies can generate profits, employment, and economic growth in low-income countries. At the same time, mining companies will be called on to extract with responsibility, produce with less waste, use safer processes, incorporate new sustainable technologies, promote the improved wellbeing of local communities, curb emissions, and improve environmental stewardship. Companies committed to the Sustainable Development Goals (SDGs) will benefit from improved relationships with governments and communities and better access to financial resources; those that fail to engage meaningfully with the SDGs will put their operations at risk in the short and long term.

Nigeria has 44 different commercially viable mineral types worth an estimated $700 billion, according to Solid Minerals Development Fund (SMDF) estimates. However, the West African country has struggled to capitalize on its reserves due to a lack of capital infusions, inadequate geo-mapping tools, revenue leakages due to unpaid royalties by legal miners and widespread illegal mining. Mining law is codified in the Federal Minerals and Mining Act of 1999. Factually, Nigeria’s mining trade was monopolized by state-owned public corporations. This led to a decline in productivity in almost all mineral productions.

Aside from agricultural exports, one of Nigeria’s appeals to Britain as a colony was its mining wealth. Early in the 20th century, coal reserves in the southeast and tin and columbite deposits in the central region were particularly significant. In order to transport agricultural and mineral products to Europe, the colonial authority constructed two nearly parallel railway lines, one on the eastern flank and the other on the western, that connected the north to the southern coastal ports.

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With a 4-5% GDP contribution, the sector was a major factor in the expansion of the Nigerian economy in the 1960s and 1970s. But the rise of crude oil made the industry invisible, and as a result, its current GDP contribution is only 0.17% (2018–2022). Nigeria’s GDP grew by 3.52%1 (year-on-year) in the fourth quarter of 2022. The sector also witnessed growth in its contribution to the Nation’s GDP, having contributed 0.85% in 2022 (2021: 0.63%), representing a 32% year on year growth over 2021, report from KPMG Nigeria, a network of professional firms offering Audit, Tax and Advisory services says.

Today, the Nigerian mining sector faces significant challenges that require concerted efforts from the government, industry stakeholders, and the international community. Meanwhile, to further attract investment, generate revenues and develop the local mining industry, the Federal Government of Nigeria has begun legal, regulatory, institutional, and fiscal reforms for the mining sector. While key initiatives in this regard include the establishment and recent automation of a cadastral system for mineral title administration and the review of the Minerals and Mining Act, 2007. Similarly, the revision of the mining act is expected to introduce regulations which align with global best practices and create an enabling environment for much more involvement of both local and foreign investors.

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