The mining sector is dominated by joint venture operations between the Nigerian government and six major international oil companies, namely Shell, Mobil, Chevron, Agip, Elf and Texaco. The federal government is currently looking to attract investment into the sector to promote growth. The Nigerian Investment Promotion Council Decree deregulation of the mining sector allows for 100% foreign ownership of mining operations and related enterprises.
Nigeria’s solid mineral resources include 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.
The mining of solid minerals in Nigeria accounts for less than 1% of GDP (2010), since oil and gas dominate the nation’s extractive industry. The main solid minerals in Nigeria’s mining industry include coal, tin, niobium and gold. In 2010, Nigeria produced an estimated 21,200 metric tons of aluminium, 600 kg of gold, 50,000 metric tons of iron ore, 450,000 metric tons of bituminous coal, 190 metric tons of niobium (columbium) and 230 metric tons of tin (US Geological Survey).
Before the discovery of oil in the 1950’s, solid minerals played a central role in the economic development of Nigeria. Indeed, the export of solid minerals was once a major foreign exchange earner. Having become monopolised by state-owned corporations, the industry became privatised in the early 2000s. As a result of the immense concentration on the oil and gas industries by domestic and multinational companies, the mining of solid minerals in Nigeria remains underdeveloped and thus contains much potential. Various reports suggest that Nigeria may have the largest coal deposits in Africa.
A number of international and Nigerian companies are engaged in the mining sector. The activities of Dangote Group, started up by a Nigerian and one of West Africa’s largest industrial conglomerates, include mining as well as food products, cement, textiles, real estate, oil and gas and maritime operations. Izabella Nigeria Limited is a Japanese/ Nigerian company, and is one of the few primary silver, lead and zinc exploration and mining companies in Nigeria. Examples of smaller mining companies include Proper Technologies, Rhodium Limited and A. G. Nassima Minerals Limited.
Exact employment figures for the mining sector were unavailable. Data suggests that there are a lot of people employed in artisanal and small-scale mining, and that there is significant amount of illegal mining taking place.
The Ministry of Solid Minerals offers a number of incentives for potential investors, including a 3 to 5 year tax holiday, deferred royalty payments and provision of 100% foreign ownership of mining companies or concerns.
The federal government holds all mineral rights and is responsible for issuing exploration and development licenses. The Minerals and Mining Act of 2007 provides the legal basis for exploration in this sector. The Ministry of Mines and Steel Development (MMSD) was established in 1985 in an effort to boost the development of the country’s solid mineral resources. The Mining Cadastre Office (MCO) was established by the Ministry of Solid Minerals Development as an autonomous body with exclusive responsibility to consider, issue, suspend and revoke applications for mineral permits.
The Nigerian Geological Survey Agency provides geological data/information and services to potential investors. Extractive Industries Transparency Initiative (EITI) aims to increase transparency over payments by companies to governments and government-linked entities, as well as transparency over revenues by those host country governments.
The government is trying to promote the employment of Nigerian nationals for most of the senior positions in quarries to help stem the tide of foreigners taking the best-paid jobs. Consequently, all technical jobs on any quarry site are meant to be carried out by Nigerians who are registered members of the Nigerian Council for Mining Engineers and Geoscientists (COMEG).
Legislation that covers quarries includes the Quarries Decree No 26 of the 1969 Quarry Regulations 1969, the Explosives Act of 1964 and Explosives Regulations 1967. There is also a Code of Practice for Quarrying.
The Federal Ministry of Mines and Steel Development is responsible for issuing permits, licenses and leases, and collecting rent, fees and royalties. The Nigerian Minerals and Mining Act 2007 regulates the exploration and exploitation of solid materials in the country.
Nigeria received a ‘weak’ score of 42 on the Resource Governance Index compiled by the Natural Resource Governance Institute in 2013, ranking 40th out of 58 countries. The Nigeria country report cited relatively strong performance on the Institutional and Legal Setting component, which contrasted with a low Enabling Environment score.
EITI status
Nigeria became an EITI-compliant country on 1 March 2011. The Nigeria Extractive Industries Transparency Initiative Act 2007 provides for the establishment of the initiative.
The Nigeria EITI process has exposed outstanding debts that are owed by the national oil company to the federal government, recovered uncollected taxes, identified weaknesses in regulatory bodies, audited oil-related transfers to subnational government, estimated oil theft and examined oil sales (EITI, 2014). In 2013 a Tax Appeal Tribunal ordered Mobil Nigeria to pay US$83.4 million to the federal government as unremitted education tax following the NEITI audit.
The 2009–11 EITI audit report for Nigeria stated that government revenue from oil and gas was US$143.5 billion for the three years covered. The 2011 EITI Solid Minerals Report assessed the mining industry as having high potential, but requiring stronger regulatory and monitoring systems to flourish.
