Nigeria: Nigeria's Solid Minerals As A Source Of Economic Development - Tapping A Latent Resource?

Last Updated: 9 November 2018
Article by Olasupo Shasore

PROTOCOLS

Appropriate management of solid minerals should translate or some say return Nigeria from just a minerals country to a mining country. Any industry that can generate high economic yield, income, technology and massive employment at the same time -even at the risk of price fluctuation and exhaustibility - is source of economic development.

I must disclose my bias immediately, as a lawyer a less than dispassionate appraisal has led me to the conclusion that the law is all important.

Is the Solid Minerals Sector a source of economic development? Is it a latent source? Why? What can be done about the sector?

We shall cover Solid minerals as a source of Economic Development in four broad sections:

  1. Solid Minerals Legal Regime
  2. Challenges in the sector
  3. Reforms and Road map development for the sector
  4. Opportunities & Expectations - the value chain

At the end we shall see that Solid Minerals sector optimal performance is an imperative source for Nigeria's economic development.

INTRODUCTION

The vastness of Nigeria's minerals resources cannot and should not be over emphasised. We began to explore and exploit her natural mineral resources in 1902 and in its prime, the solid minerals sector was one of the largest producers of tin and coal, as well as a producer of a considerable 1.4 tons of gold annually.

The history is now well known due to ill-effected policy changes and lack of proper attention, the sector saw a steady decline and today, mining and solid minerals only account for about 0.3% of the gross domestic product of Nigeria.

The Nigerian oil and gas sector has played a central role in the Nigerian economy. The revenue realized from the Nigerian petroleum industry has been the country's fiscal mainstay and remains a major revenue source. The reality of the recent downward trend of oil prices and its impact on the revenue and foreign reserves of the country however means that it has never been more vital for Nigeria to protect herself by diversifying her revenue streams.

Nigeria is enriched with over forty (40) types of minerals including marble, gypsum, lithium, silver, granite, gold, gemstones, bentonite, iron ore and talc. The mining and solid mineral sector of the extractive industry in Nigeria has always been a viable greenfield and is now getting the attention it deserves, having been earmarked as a key source of economic development and diversification of the revenue streams of the country.

It is however incontrovertible that the sector is under-performing and plagued with issues ranging from inadequate infrastructure to illegal artesian mining and community challenges. These issues stifle potential by deterring potential investors whose resources are essential to the revitalisation of the sector.

I. SOLID MINERALS LEGAL REGIME

Relevant Policy /Statutes

  1. Minerals and Mining Act No. 20 of 2007 (the MMA): The Act is the principal legislation that regulates the Nigerian mining sector. The Act vests the control, regulation and ownership of all mineral resources in the Federal Government of Nigeria (FGN).
  2. The National Minerals and Metals Policy1
  3. Nigerian Minerals and Mining Regulations 2011 (the 'Regulations')2: The Federal Ministry of Mines and Steel Development (the 'Ministry') recently issued new mining regulations titled the Nigerian Minerals and Mining Regulations 2011 (the 'Regulations') which is intended to establish a more coordinated and accountable solid minerals sector in the country and to stamp out the discretionary grant of mineral titles. The Regulations were issued for the purpose of setting out the rules, procedures and processes for the acquisition of mineral titles, and to give effect to the Minerals and Mining Act No. 20 of 2007 (the MMA)
  4. Company and Allied Matters Act ("CAMA") Cap 20, Laws of the Federation of Nigeria (LFN) (2004) ("CAMA"): This is the law that regulates company formation and operation in Nigeria, no foreign company may carry on business in Nigeria unless it incorporates a local subsidiary in the country. The MMA also states that no person shall be qualified for the grant of any mining title unless the person is a body corporate duly incorporated under CAMA.
  5. Various Tax Legislation

Public Authorities

a. The Minister

The administration of the mining industry is vested in the Minister of Mines and Steel Development. The functions of the Minister include amongst other things, ensuring the orderly and sustainable development of Nigeria's mineral resources, creating an enabling environment for private investors, both foreign and domestic by providing adequate infrastructure for mining activities e.t.c. The Minister is also empowered within his ministry to establish the following departments:

  1. Mines Inspectorate Department;
  2. Mines Environment and Compliance; and
  3. Such other departments as he deems fit3

b. Cadastre Office

The Act creates the Mining Cadastre Office. Its headquarters is located in Abuja, with a number of Zonal Offices for administrative convenience.4 It is a body corporate with perpetual succession and a common seal and is saddled with the responsibility of the administration of Mineral titles and the maintenance of the cadastral registers.5 These registers include a register of Reconnaissance Permits; Exploration Licenses; Mining Leases; Small-Scale Mining Leases; Water Use Permits; and Quarry Leases.6 The Cadastre office considers applications for mineral titles and permits, issue, suspend and upon the written approval of the Minister revoke mineral titles.7 It is also required to grant property rights on the basis of priority where there are competing applications for the same exclusive area.8

Minerals

Minerals mean any substance whether in solid, liquid, or gaseous form occurring in or on the earth, formed by or subjected to geological processes including occurrences or deposits of rocks, coal, coal bed gases, bituminous shales, tar sands, any substances that may be extracted from coal, shale or tar sands, mineral water, and mineral components in tailings, and with waste piles but with the exclusion of Petroleum and waters without mineral content.9

a. Mineral Operations

The operation and works carried out in the course of mineral exploration, inclusive of the search for and exploration of minerals, beneficiation, processing and contract mining all qualify as mineral operations.10 Legislation deals with matters incidental to the exploration of minerals such as the proprietary titles for exploration11 and their respective durations,12 qualifications for obtaining such titles,13 rights and obligations of title holders,14 limits to such rights15 persons disqualified from having exploration titles,16 discovery of radioactive materials in mining areas17 as well as discovery of minerals not specified in licenses18 and the duty of non-disclosure of confidential information by officers or former officers with respect to exploration.19

Excluded however from exploration purposes are certain lands including lands set apart for military purposes except with the approval of the President, lands within 50mtres of oil pipeline license areas issued under the Oil Pipeline Act and lands over which mineral titles which are still subsisting had previously been granted by the Cadastre office etc.

b. The Minerals and Mining Regime20

Under this, the property titles available include Mineral Titles and Licenses. Part V of chapter 1 of MMA prohibits any person from prospecting for minerals except with a Prospecting or Exclusive Prospecting License granted by the Minister.21

To read this article in full, please click here.

Originally published December 2016

Footnotes

1. After the Nigerian Minerals and Mining Act was enacted in 2007, by the National Assembly, it was followed with the launching of the National Minerals and Metals Policy by the Ministry of Mines and Steel Development (MMSD), in January 2008.

2. The Ministry of Mines and Steel Development announced the commencement of the Regulations on 24th May 2011, when he delivered a presentation of Nigeria's Minerals and Mining Regulations to investors, stakeholders and members of the public in Abuja. The May 2011 event marked the completion of Nigerian Mining programme geared towards the provision of the required regulatory framework for mining in Nigeria. The Minister stated that the Regulations were aimed at meeting the yearnings and aspirations of all stakeholders, prospective indigenous and foreign investors since their inputs were taken into consideration in the formulation of the document.

3. Section 16- 18 MMA 2007

4. Section 6 MMA 2007

5. Section 5(2) MMA 2007

6. Section 7 MMA 2007

7. Section 5(5) MMA 2007 See also Section 10 and 11 for grounds of revocation.

8. Section 8 MMA 2007

9. Section 164 MMA 2007

10. Ibid.

11. Section 46 MMA 2007

12. Sections 57, 62, 66 MMA 2007

13. Section 47- 52 MMA 2007

14. Section 60, 61, 66, 68, 70, 74, 78 MMA 2007

15. Section 69 MMA 2007

16. Section 53 MMA 2007

17. Section 44 of the MMA 2007 makes radioactive materials under the operation of the Nuclear Safety and Radioactive Act Cap N19 LFN 2004

18. Section 64 of MMA 2007.

19. Section 45 of MMA 2007.

20. See Section 46 of MMA 2007.

21. Section 26(1) of MMA. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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