the mining sector in nigeria industry

The Mining Sector in Nigeria: An Industry Overview

Nigeria's mining sector, while historically overshadowed by its dominant oil and gas industry, holds significant potential to contribute to economic diversification, job creation, and industrial growth. The country is endowed with over 44 solid mineral types spread across its 36 states and the Federal Capital Territory. Key resources include gold, iron ore, coal, bitumen, baryte, limestone, lead-zinc ores, and strategic minerals like lithium. Despite this wealth, the sector's contribution to the nation's Gross Domestic Product (GDP) remains below 1%, highlighting a vast gap between potential and current output. This article explores the sector's structure, major minerals, challenges, government initiatives, and future prospects.

Structure and Key Minerals
The sector is regulated by the Ministry of Mines and Steel Development (MMSD) and its agencies, primarily the Mining Cadastre Office (MCO) for licenses and the Nigerian Geological Survey Agency (NGSA) for data. Mining rights are granted through various licenses. The industry features both artisanal and small-scale miners (ASMs), who dominate activities informally, and a growing number of formalized junior and major mining companies.

A comparison of key mineral resources illustrates the sector's diversity:

Mineral	Primary Locations	Key Uses & Potential
Gold	Osun, Zamfara, Niger, Kaduna States	Jewelry, electronics reserves; formal operations by Thor Explorations at Segilola Mine.
Bitumen	Ondo, Ogun Lagos States	Road construction; could reduce import dependency for asphalt.
Coal	Enugu,Kogi States	Energy cement production; potential for steel manufacturing.
Iron Ore	Kogi,Nasarawa States	Steel production; critical for domestic steel industry revival.
Lead-Zinc	Ebonyi Nasarawa Plateau States	Batteries galvanizing; historical production at Abakaliki fields.
Limestone	Cross River Benue Sokoto States	Cement production; backbone of Nigeria's thriving cement industry.
Baryte	Benue Cross River States	Drilling mud for oil gas; local sourcing mandates by govt.
**Lithium*** (Emerging) Nasarawa Kwara States Electric vehicle batteries energy storage high global demand.

Note: Lithium is an emerging focus with new discoveries attracting investment interest.

Challenges Facing the Sector
The sector's underperformance stems from several interconnected challenges:

1. Informality Security: ASM activities are largely unregulated leading to revenue loss environmental degradation security issues particularly in gold-rich regions.
2. Infrastructure Deficit: Inadequate road networks rail links reliable power supply significantly increase operational costs logistics.
3. Limited Access Financing: Banks perceive mining as high-risk due to geological data gaps long gestation periods making capital scarce especially for small-scale miners.
4. Insufficient Geoscience Data: While improved outdated or limited public geological data discourages investment requiring companies conduct costly preliminary explorations.
5. Regulatory Institutional Capacity: Overlapping mandates bureaucratic delays instances of illegal mining hinder efficient administration enforcement.

Government Initiatives Real Case Example
The government has launched several initiatives to address these challenges notably through the Roadmap for the Growth Development of the Nigerian Mining Industry (2016). A cornerstone policy is the National Integrated Mineral Exploration Project (NIMEP) which aims to generate credible public geoscientific data de-risk the sector attract investors.

A tangible case is the successful exploration auctioning of Nigeria's first commercially viable gold mine through these efforts: The Segilola Gold Project in Osun State operated by Thor Explorations Ltd. It achieved first gold pour in 2021 becoming Nigeria's first large-scale commercial gold mine. Its development was facilitated by:

• Engagement with federal state governments secure a Mining Lease.
• Utilization of improved geological data.
• Adherence to international environmental social governance (ESG) standards.
  This project serves as a benchmark demonstrating that with appropriate frameworks foreign direct investment can flow into Nigerian mining yielding exports formal employment (over 1 jobs created directly indirectly).

Future Outlook
The future hinges on consistent policy implementation continued investment in geoscience data infrastructure formalization of ASMs into cooperatives enhanced security around mine sites growing domestic industrial demand for minerals (e.g., steel cement). With global energy transition fueling demand for minerals like lithium baryte Nigeria has an opportunity to position itself strategically.

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FAQ

1 What is the most promising mineral in Nigeria currently?
While gold has seen recent success with Segilola lithium is generating considerable excitement due to global demand for electric vehicles energy storage systems discoveries of high-grade spodumene lithium in parts of Nasarawa other states have attracted numerous exploration licenses investments.

2 Can individuals or foreigners own mining rights in Nigeria?
Yes Both Nigerians foreign entities can acquire mineral rights subject to Nigerian laws incorporation The Mining Cadastre Office grants licenses based on application merit Foreign companies must incorporate locally operate through a Nigerian registered entity

3 How does the government benefit from mining activities?
Government revenue comes from various fees royalties taxes These include annual service fees for permits royalties on mineral production (3%-5% value) corporate income taxes duties The government aims to capture more value through increased formalization monitoring

4 What is being done about unsafe informal (artisanal) mining?
The government through MMSD initiated the formalization of Artisanal Small-Scale Miners (ASMs) into cooperatives This provides them with legal recognition technical training access financing safer mining practices The National Council on Mining Mineral Resources Development also addresses inter-state issues related to informal mining

5 Is there a link between mining insecurity in some regions?
Yes particularly in northwest north-central zones Illegal uncontrolled mining of minerals like gold tin has been linked to increased criminality banditry resource control conflicts This has prompted tighter regulations inter-agency collaboration between mining ministries security agencies to sanitize those areas

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Sources Reference Basis: This overview synthesizes information from official publications reports including: The Nigerian Mining Roadmap (2016) reports from Ministry Mines Steel Development annual reports by Thor Explorations Ltd on Segilola analyses from Nigerian Extractive Industries Transparency Initiative (NEITI) audits World Bank-supported Mineral Sector Support for Economic Diversification (MinDiver) Project documents publications from Nigerian Geological Survey Agency.