How to get into Nigeria’s Mining Industry

The Nigerian mining industry currently presents opportunities that insightful investors and companies could take advantage of. In addition to the abundance of various mineral resources, the government has instituted numerous investment incentives to promote the sector. These include 5-7 year tax breaks, 0% import duties on imported machineries, and guaranteed capital repatriation among others. Major minerals with strong investment potential include gold, coal, iron ore, and limestone among others.

The Nigerian Mining Cadastre Office is charged with the administration and management of mineral titles in Nigeria. It is responsible for issuance, renewal, modification, and termination of mineral titles. The office is located in Abuja, Nigeria. The aim of this article is to educate intending investors on major pre-mining and mining requirements for operating in the Nigerian mining industry.

Pre-mining requirements

Intending companies are expected to be duly incorporated in Nigeria by the Corporate Affairs Commission. It is expected that all directors and management are without criminal records, are above 18 years and possess good mental health. A company could be incorporated singly or be a joint venture between a foreign and a local company.

In addition to registration, it is expected that the area being considered for exploration or full-scale mining has been duly leased or purchased from the land owner (an individual or the relevant government body).An affidavit demonstrating this would be demanded. Further, it is expected that intending mining companies would have sensitized the host community on the benefits of the mining project as well as develop positive relationship with recognized leaders of the community.

 

Major Licenses:

Reconnaissance permit: This license is issued for one year but could be renewed continuously. The primary purpose of the permit is to enable prospective companies gain access to potential mineral sources with a view to better studying and prospecting the land. This permit doesn’t empower companies to drill or engage in other sub-surface operation. Interested companies should submit all necessary application forms with appropriate fees to the Mining Cadastre office in Abuja. The office confirms that the land is available and hasn’t been issued to other parties. On confirmation (which usually takes about 30 days), and without other impending issues, the license is granted and the land registered.

Exploration license: This is usually the next step after reconnaissance. An exploration license is valid for three years, and could be renewed continuously for a period of two years each. However, this is dependent on meeting minimum operational requirements as set by the Cadastre office. Following receipt of necessary forms and fees, the office issues a license within thirty (30) days.

Mining Lease: This is a longer and usually more complicated license. It is valid for twenty-five (25) years, renewable every 24 years. The lease license is a progression on the exploration permit and is issued to companies who feel confident on the potential economic value of the explored land. This license is issued within 45 days following the submission of necessary forms and duly completed studies including water and environment. The area is currently capped at 50km2.

 

Conclusion

The mining sector presents numerous opportunities and incentives to intelligent investors. Notwithstanding the country’s periodic insecurity and other cultural factors regarding land acquisitions, investors and mining companies can leverage the deep insights and connections of advisory firms with a history of helping firms make intelligent investment decisions.

 

 

Nugwa is Nigeria’s premier Investment and Intelligence consulting firm. Corporations and Investors leverage our deep knowledge of Nigeria and the West Africa region in making intelligent investment decisions. Contact us today, or read more of our Insights.