Mining Operation in Nigeria

Mining Operation in Nigeria

With plans to revise the Nigeria Minerals and Mining Act (NMMA), the Nigerian government has taken the first step towards restoring its mining sector to its former glory and beyond.

A little history

The Nigerian land is blessed with outstanding mineral reserves. Until 1967, the country was a major exporter of coal and tin. However, the instability of the 1967-1970 period and the following oil boom of the1970s dwarfed the mining sector to the extent that it only makes up 0.3% of the GDP today – In comparison, the oil sector contributes 7.5% of the GDP.

In 2007, the country deregulated solid mineral mining to increase private sector investment. The former plan also incentivized multinational mining companies with tenure security and similar benefits.

However, the biggest hurdle for the sector has remained illegal mining. It is estimated that 80% of mining in northern Nigeria’s reserves is illegal. The unlawful system stands to imperil the region’s stability and damage the environment. The federal government, despite efforts, has remained unsuccessful in tackling the problem.

The New Plan

The new plan intends to devolve responsibility from the federal to state governments. This means that ownership of mineral rights and the attached responsibilities of dealing with illegal mining are now headaches for state governments.

This move will incentivize state governments and the local communities to ensure legal practices in the mining sector.

New Possibilities?

Though a step towards positive change, it’s dependent on a lot of crucial variables to make a noticeable difference.

According to African Business, firstly, the behemoth of an oil sector in Nigeria attracts the most attention from both investors and governments—thereby hindering growth and regulation in the mining sector.

Secondly, the Nigerian mining sector lacks the necessary transport infrastructure to connect export markets – internal and external.

Thirdly, the power-intensive mining sector comes at a huge cost and demands infrastructural development.

And finally, the reason behind the proposed change in the mining law entails security problems for the sector, especially in the Northern regions.

Despite all the challenges above, the ground reality is that the world is going through an energy transition. Nigerian policymakers, who are influenced mainly by the oil sector, realize that the need for economic diversification is imminent. Hence, the mining sector must be tended to, especially since mere gold mining of Nigeria can shield the economy against the ups and downs of the oil market.