Nigeria will only grant new mining licences to companies that present a plan on how minerals would be processed locally, under new guidelines being developed, a government spokesperson confirmed on Thursday.
This is a departure from Nigeria’s long-standing practice of exporting raw commodities, as governments around Africa work to increase the value derived from their substantial mineral reserves.
To spur investment, Nigeria will offer investors incentives including tax waivers for importing mining equipment, make it easier to secure electricity generation licences, allow full repatriation of profits and boost security, Segun Tomori, a spokesperson for Nigeria’s minister of solid minerals development said.
“In exchange, we have to review their plans for setting up a plant and how they would add value to the Nigerian economy,” Tomori said. He did not say when the guidelines would be finalised or come into effect.
However, last week the minister of solid minerals development, Dele Alake, said it was now government policy to make value addition a condition for obtaining licences so as to create jobs and help local communities.
Alake, who also chairs an African mining strategy group comprising mining ministers from Uganda, Democratic Republic of Congo, Sierra Leone, Somalia, South Sudan, Botswana, Zambia and Namibia, is pushing for a continent-wide effort to get maximum local benefit from mineral exploration.
Nigeria, Africa’s top energy producer, has struggled to extract value from its vast mineral resources due to poor incentives and neglect. The underdeveloped mining sector contributes less than 1% of the country’s gross domestic product.
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 drive more investment into the sector by issuing more licenses. It has set up a state-owned solid minerals corporation offering investors a 75% stake and established a special security unit tasked with fighting illegal miners.
The government is also trying to regulate artisanal miners, who dominate the sector, by grouping them into cooperatives.
Foreign mining companies operating in Nigeria include Canada-based Thor Explorations which is involved in gold exploration, Chinese-owned Xiang Hui International Mining which partnered with a local company to process gold, and Indian-owned African Natural Resources and Mines, which is building a $600m iron ore processing plant in northern Nigeria.
