A recent study released by KPMG in June regarding Nigeria’s solid minerals industry, has revealed that as of May 2024, the country has granted licenses to a total of 7,182 companies and individuals interested in participating in the upstream subsector. These licenses encompass activities such as exploration, Mining lease, quarrying lease, and small scale mining license. The report highlighted Nigeria’s abundant Mineral resources, indicating that the country’s potential as a mining hub should make it an attractive destination for numerous multinational corporations. One of the issues highlighted in the industry is the insufficient infrastructure, such as a consistent Electricity supply and proper access roads to reach mineral deposit locations.
Another significant challenge plaguing the industry is the insufficient, inaccessible, and unreliable geological data regarding mineral resources and their whereabouts, hindering the sector’s appeal to potential investors. While access to accurate data is crucial for Investors to make informed decisions, yet much of the geological information currently available in the country is outdated. Thus, the credibility of the resource information is now in doubt, which could have significant implications for the feasibility of mining projects.
Conflicts still arise in mineral abundant regions.
However, the federal government has just made a proactive step towards this with the launch of the Nigerian Mineral Resources Decision Support System (NMRDSS) via the Nigerian Geological Survey Agency earlier in May. This web-based tool offers read-only access to Nigeria’s geo-scientific and geo-economic data. KPMG also highlighted Insecurity as a major hindrance to the development of Nigeria’s minerals sector. While some mineral-rich communities in northern Nigeria have been freed from terrorist control, conflicts based on Religion and community still arise in the Middle Belt region, which is abundant in valuable minerals and metals.
The firm praised the efforts of the Mines Surveillance Task Team in addressing Illegal Mining challenges and highlighted the importance of the recent establishment of the Transport and Mining Marshals. These initiatives aim to create a safer environment for operators and address the health, safety, and environmental risks associated with illegal activities in certain regions, as well as community challenges. With the nation’s Security apparatus being bolstered, there is optimism that it will effectively limit and diminish the malicious operations of illegal miners.
Uncertainly in policies, security issues deter investment.
KPMG also highlighted the issue of project funding as a significant obstacle, noting that Nigeria has faced difficulties in attracting essential investments in the minerals industry. This is mainly due to a lack of viable projects stemming from uncertainty in policies, security issues, limited geoscience data on reserves and changes in the global economy. It is believed that the current fiscal framework for investors lacks appeal and fails to account for the unique characteristics of the industry, such as its extended development timeline.
To boost the sector, it is important to consolidate incentives for miners that are currently dispersed across various fiscal laws. This will help clarify the prevailing rules for operators. It is also crucial for National agencies to join international mining organizations in order to attract more Foreign Direct Investment (FDI) into the country’s numerous solid mineral deposits across the country. According to KPMG, being part of well-known global mining organizations can bring numerous advantages to Nigeria and those involved in the industry. This could also help Nigeria become a top destination for foreign direct investments.
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Nigeria’s mineral reserves are vast and diverse, containing a wide range of valuable resources such as gold, barite, bentonite, limestone, tantalite/columbite, iron ore, lead/zinc, gemstones, marble, granite, gypsum, iron ore, lithium, nickel, and silver. Despite this wealth of resources, the mineral sector faces numerous obstacles that have prevented it from attracting the foreign investment it desperately needs, the report noted. Hence, alongside addressing local issues and enhancing the business environment in Nigeria, the report suggested that the federal government should explore joining well-known global mining associations, either through relevant ministries or key industry groups.