the nigerian solid minerals sector - an investment destination
TRANSCRIPT
MARCH 2015
The Nigerian Solid Minerals Sector - An Investment Destination
"The desire for the diversification of our national economy away from over-dependence
on oil as the principal revenue source gave rise to the evolution of the following
roadmap, with a view to transforming the minerals and metals sector into a strategic
catalyst of growth..."
President of the Federal Republic of Nigeria - His Excellency Goodluck Ebele Jonathan,
GCFR1
The above statement sums up the commitment of the Government of Nigeria to the
development of Nigerian minerals and metals as further evidenced by the Roadmap for the
Development of Solid Minerals and Metals Sector, highlights of which include - increasing
the sector's contribution to GDP from 0.4% to at least 5% by 2015 and 10% by 2020; creating
about 3 million direct/indirect jobs by 2015 and producing geological maps on a scale of
1:100,000 covering the entire nation by 20202.
The industry is overseen by the Minister for Mines and Steel Development (the "Minister")
who heads the Ministry of Mines and Steel Development which is responsible for
formulating policies and regulating operations in the sector (“Ministry”). The Mining
Cadastre Office is the agency exclusively responsible for the administration of mineral titles
including the consideration of applications for mineral titles and permits and the issuance,
suspension and revocation (upon the written approval of the Minister) of mineral titles.
Ownership of solid mineral resources is vested in the Nigerian government3 which grants the
following titles to explore, mine and sell mineral resources: (i) the Reconnaissance Permit;
(ii) the Exploration Licence; (iii) the Mining Lease; (iv) the Small Scale Mining Lease; (v)
the Quarrying Lease; and (vi) the Water Use Permit. Property in mineral resources shall pass
from the Government to the person by whom the mineral resources are lawfully won in
accordance with the law. The use of land for mining operations is given priority over other
uses of land, and is considered (for the purposes of access, use and occupation of land for
mining operations) to constitute an overriding public interest within the context of the
Nigerian Land Use Act.
Companies engaged in mining activities are liable to companies income tax at the rate of 30%
of chargeable profits, and education tax at the rate of 2% on assessable profits. A value
added tax of 5% is to be imposed on the gross value of vatable goods and services. Royalty,
annual fees and rentals are also payable.
1 Ministry of Mines and Steel Development Road Map for the Development of Solid Minerals and Metals Section April,
2012 - Publication of the Ministry 2 ibid 3 Nigerian Minerals and Mining Act 2007 "Act"
Incentives on mining activities include: (i) a three to five years tax holiday for new mining
companies and a system of deferred royalty payment determined by the investment level and
nature of the project; (ii) a 95% capital allowance on qualifying capital expenditure incurred
on exploration, development and processing; (iii) an annual indexation of unclaimed balance
of capital expenditure by 5% (only applicable to mines that commence production within five
years of enactment of the Act); (iv) the carrying forward of losses for a period of 4 years; (v)
exemption from customs and import duties on approved plants and machinery, equipment
and accessories – imported specifically and exclusively for mining operations; (iv) a tax
deductible reserve for environmental protection, mine rehabilitation, reclamation and mine
closure costs; (vii) interest income tax relief on foreign loans.
Significant evidence shows that Nigeria has over 34 different solid minerals distributed in the
country’s richly endowed geology. Some of the known minerals include; gold, coal, bitumen,
iron-ore, tantalite/columbite, lead/zinc, sulphides, barytes, cassiterite, limestones, talc,
feldspar and marble.
To further evidence the commitment of the government to the development of the solid
minerals sector, the Ministry has prioritised the development of seven strategic minerals
(‘7SM’) – coal, bitumen, limestone, iron ore, barytes, gold and lead/zinc. These have been
carefully chosen for development in view of their strategic importance to Nigeria’s economy,
and the sufficient quantities that are available to sustain mining operations for years to come.
Estimated probable reserves of bitumen and heavy oil within Ondo State stands at 42 billion
barrels4, inferred resource estimate for barytes in Benue, Cross River, Nassarawa and Taraba
states is 21.1 million metric tonnes5. Iron ore is estimated at over 882 million tonnes6 in
aggregate from various locations in the federation. Coal stands at 1,487 million tonnes7
representing defined coal resource for areas studied within Nigeria whilst gold is at 800,000
ounces in one of the states in Nigeria8.
Nigeria’s solid minerals wealth is rumoured to exceed her oil wealth. The favourable fiscal
regime put in place makes Nigeria an attractive investment destination for those wishing to
exploit her solid minerals potential.
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Qualifications
The contents herein are meant for the general information of our clients and friends and do not
amount to legal advice. Adepetun Caxton-Martins Agbor & Segun accepts no responsibility for any
loss or damage that may arise from reliance on information contained in this publication. All
enquiries may be made to Taiwo Afonja at [email protected].
Adepetun Caxton-Martins Agbor & Segun by telephone (+234 1 462 2094), fax (+234 01 461
3140) Copyright© 2013 Adepetun Caxton-Martins Agbor & Segun
4 Tarsands & Bitumen Exploration Opportunities in Nigeria - Publication of the Ministry 5 Barytes Exploration Opportunities in Nigeria - Publication of the Ministry 6 Iron Ore Exploration Opportunities in Nigeria - Publication of the Ministry 7 Coal Exploration and Power Generating Opportunities in Nigeria - Publication of the Ministry 8 Investment Opportunities in Nigeria Gold - publication of the Ministry