Nigeria: An Overview Of The Nigerian Minerals And Mining Act 2007

Last Updated: 17 March 2010
Article by Adeoye Adefulu

The Nigerian Minerals and Mining Act 2007 ("the Act") was passed into law on March 16, 2007 to repeal the Minerals and Mining Act, No. 34 of 1999 for the purposes of regulating the exploration and exploitation of solid materials in Nigeria. This paper reviews the critical aspects of the Act.

MINERALS PROSPECTING MINING AND QUARRYING

1. Ownership and Control of Minerals

The Act vests control of all properties and minerals in Nigeria in the State and prohibits unauthorised exploration or exploitation of minerals.1. All lands in which minerals have been found in commercial quantities shall from the commencement of the Act be acquired by the Federal Government in accordance with the Land Use Act. Property in mineral resources shall pass from the Government to the person by whom the mineral resources are lawfully won, upon their recovery in accordance with provisions of the Act.

The Act further provides that the use of land for mining operations shall have a priority over other uses of land and be considered (for the purposes of access, use and occupation of land for mining operations) as constituting an overriding public interest within the meaning of the Land Use Act. In the event that a mining lease, a small scale mining lease or a quarry lease is granted over land subject to an existing and valid statutory or customary right of occupancy, the Governor of the state within which such rights are granted shall within sixty days of such grant or declaration revoke such right of occupancy in accordance with the provisions of section 28 of the Land Use Act.

2. Status of Holders of Mineral Titles granted under the Repealed Act

Any person who was the holder of a right or lease or license under the Repealed Act shall be deemed to have become, on the appointed date, the holder of an interim right, lease or license. During the interim period, the holder of an interim right, lease or license is authorized to carry on the operations which he was authorized to carry on immediately before the appointed date under the right, lease or license of which he was the holder and shall enjoy the same rights and be subject to the same liabilities as if the Repealed Act were still in force.2

3. The Administration of the Act

The Minister, amongst other things, is charged with the responsibility of ensuring the orderly and sustainable development of Nigerian's mineral resources, creating an enabling environment for private investors, both foreign and domestic by providing adequate infrastructure for mining activities and also identifying areas where Government intervention is desirable in achieving policy goals in mineral resources development. The Act also provides for the establishment of the Mining Cadastre Office (MCO). which shall be responsible for the administration of mineral titles and the maintenance of the cadastral registers.

The Minister is empowered by the Act to by regulation determine areas eligible for the grant of an exploration or mining lease based on a competitive bidding process. The MCO shall collect a fee for processing of applications for mineral titles and an annual service fee established at a fixed rate per square cadastral unit for administrative and management services rendered by the Cadastre. A mineral title shall become liable to revocation where the holder fails to pay the prescribed fees.

Other departments in the Ministry of Mines and Steel Development (MMSD) established by the Minister for the proper administration of the Act include the Mines Inspectorate Department(MID) and the Mines Environmental Compliance Department (MECD) .The Minister may also by notification in the Gazette, delegate to any department or officer of the Ministry the exercise or performance of any function conferred on him under the Act with the exception of his function to make regulations.

4. Mineral Titles

4.1 The right to search for or exploit Mineral Resources is obtained through one of the following underlisted mineral titles and engaging in any of these activities without the requisite mineral title or authority is an offence under the Act.

a) A Reconnaissance Permit:

This is a non exclusive Permit granted for a period of one year renewable annually upon compliance with relevant provisions of the Act. It permits its holder to search for Mineral Resources and obtain and remove surface samples in small quantities over any land which is not already subject to an exploration lease, small scale mining lease, mining lease or water use permit.

b) An Exploration License:

This License is granted for the duration of three years renewable for further two periods of two years each provided that the holder has complied with his minimum work obligation commitments and other relevant provisions of the Act. It is granted over land area not exceeding 200 square kilometers which is not already subject to an existing exploration license, mining lease, small scale mining lease or quarry lease and provides an exclusive right to its holder to conduct exploration activities upon the land within the area of his license including but not limited to the right to explore for all mineral resources and to carry out the operations and work necessary for the achievement of this objective, to take specimens and samples within specified limits for the purpose of analysis and conducting bulk sampling and trial processing for determining mining potential. The holder of an exploration license has the exclusive right to apply for, and to be granted subject to the Act, one or more Small Scale Mining Leases, Mining Leases or Quarry Leases in respect of any part (s) of the exploration area, upon due compliance with its Exploration obligations under the Act. The holder of an exploration license who sells any Mineral Resources as provided for in the Act shall be subject to the payment of royalty as if the Mineral Resources sold were obtained under a mining lease.

c) A Small Scale Mining Lease:

A Small Scale Mining Lease covers an area not exceeding 3 square kilometers and requires its holders to carry out effective rehabilitation of the mined out areas to the satisfaction of the MECD and pay prescribed fees. The Government through the Ministry shall provide certain extension services to duly registered and performing mining co-operatives of small scale artisinal miners to include amongst other services prospecting and exploration services to determine the geological setting, structure, nature of occurrence, quantity and quality of minerals being mined, provision of environmental impact assessment report and detailed guidelines on waste and tailing disposal and holding regular workshops to update miners knowledge on legal, marketing, business skills and infrastructural support.3

d) A Mining Lease:

This is an exclusive permit granted in respect of an area not exceeding fifty (50) square kilometers which is not within an Exploration License Area or a Small Scale Mining Area except to the holder of the Exploration License or Small Scale Mining Lease covering such area. It is granted for a period of twenty five (25) years renewable every twenty four (24) years provided the holder has complied with his minimum work obligation commitments and all other obligations and requirements of the Act. The Lease confers upon the holder the right to among other things, use, occupy and carry out Mineral Exploitation within the Mining Lease Area, and market, sell, export or otherwise dispose of the mineral products resulting from the Mining Operations. Subject to the provisions of the Act and any other enactment, the exclusivity of the Mining Lease does not derogate from the right of the lawful occupier of a licensed area to retain the right to graze livestock upon or to cultivate the surface of the land in so far as the grazing or cultivation does not interfere with the Mining Operations in such Area.4

Pre-Conditions for Commencement of Development on Mining Lease Area:The holder of a mining lease shall not commence any development work or extraction of Mineral Resources on the Mining Lease Area until after-

  1. the submission and approval by the Mines Environmental Compliance Department of all Environmental Impact Assessment Studies and mitigation plans required under applicable environmental laws and regulations;
  2. the submission and approval by the Mines Inspectorate Department of the details of the work which the applicant is prepared to undertake or a programme for carrying out any minimum work obligations imposed by the Mines Inspectorate Department;
  3. the conclusion of a Community Development Agreement approved by the Mines Environmental Compliance Department; and
  4. the holder has duly notified, compensated or offered compensation to all users of land within the Mining Lease Areas as provided for under this Act or in the event of a dispute, after the matter has been resolved by Arbitration.

The holder of a mining lease, except a mining lease for mineral water exploitation, is required to have resolved the matters specified in subsections (a) and (b) above, within three (3) years from the issue of the Mining Lease, failing which the Mining Lease may be temporarily suspended without affecting the rental payments that shall continue and without prejudice to the transfer right of the title Holder under the provisions of the Act. In addition, the holder of a Mining Lease for Mineral Water Exploitation is required to have complied with the conditions specified in subsections (a) and (b) above, within two years from the issue of the Mining Lease for Mineral Water, failing which the Mining Lease may be suspended.

Technical Expertise Qualification Requirement: By virtue of this requirement, a Mining Lease is only granted by the Minister to companies who have employed a person with adequate professional qualification and experience in mining, the Minister being further satisfied that such expert shall be retained by the company during the currency of the lease. The subsistence of a mining lease upon grant and the carrying out of mining operations is predicated on the retention of a qualified and experienced mining professional in the company's employ who shall supervise personally the mining operations being undertaken by the company during the period of the lease.

Rights of Lessee to remove fixtures: The lessee of a mining lease who has paid all rents, royalties and other payments due to be made by it under the Act or under the terms of its lease, is permitted within three (3) months, in the case of alluvial lease and six (6) months in the case of lode lease, after the expiration or other determination of his lease, to remove all or any of the plants, building or other property of the lessee. Provided that such property shall become the property of the Federal Government and may be dealt with and disposed of in lieu of the rent, royalty or other payments, as the case may be where on the expiration or determination of the lease, a lessee is in default in the payment of any rent, royalty or other payments or a lessee has failed to remove its property within the term specified above or within such further period, if any, as the Mines Inspectorate may allow the plant, building and property of the lessee on the land.

e) A Quarrying Lease :

This part of the Act applies in relation to all naturally occurring quarriable minerals such as asbestos, china clay, fuller's earth, gypsum, marble, limestone, mica, pipe clay, slate, sand, stone, late rite, gravel, which may also be lawfully extracted under Mining Leases and prohibits every operation for the purpose of extracting any quarriable mineral from a quarry including sand dredging in the navigable water ways or else for industrial use without the grant of a lease or license by the Minister under the Act.

A Quarrying Lease is granted in respect of any area of land not exceeding 5 hectares and unless previously revoked or otherwise determined, remains in force for a period of five years or less from the date of the grant of the lease and shall then expire unless renewed. The holder is authorized to amongst other things, carry out quarry operations on the land within the area of the lease, remove and dispose of any quarriable minerals specified in the lease and do all such things as specified in the Act which may be necessary or convenient for the carrying out of its quarrying operations.

The MCO shall require the area specified in an application for a lease to be surveyed before granting a lease.

f) A Water Use Permit:

A Water Use Permit confers on its holder, the right to obtain and use water for its exploration and mining operations.

Qualified Applicants

4.2.1 A qualified applicant for a Reconnaissance Permit, an Exploration Lease, a Small Scale Mining Lease and a Quarry Lease shall be-

  1. A citizen of Nigeria with legal capacity and who has not been convicted of a criminal offence; or
  2. A body corporate duly incorporated under the Companies and Allied Matters Act; or
  3. A Mining Co-operative.5

Provided that:

For an Exploration Lease Applicant, such applicant could also be theholder of a Reconnaissance Permit granted in respect of the area subject to the application, who has fulfilled all the conditions attached to the Reconnaissance Permit.6

ii. For a Small Scale Mining Lease -such applicant could be the holder of an Exploration Lease granted in respect of the area subject to the application, who has fulfilled all the conditions attached to the Exploration.7

iii. For a Quarry Lease Applicant, such applicant could also be a person extracting construction materials for the construction of roads, railway lines, dams and other engineering works or structures of public interest.8

4.2.2 For a Mining Lease, a qualified applicant must be a body corporate duly incorporated under the Companies and Allied Matters Act or other legal entity that-

  1. Has demonstrated under conditions stated in the regulations that a commercial quantity of mineral resources exists in the area in respect of which the application is made; and
  2. Has fulfilled all the conditions attached to the Exploration License in respect of the area subject to the application.9

4.2.3 A qualified applicant for a Water Use Permit is –

The Holder of an Exploration Lease, Mining Lease or Quarry Lease subsisting at the time the water right granted will be used, or an applicant for a Mining Lease, Small Scale Mining Lease or Quarry Lease for which the water right will be required to be used.10

4.3 The Mining Cadastre Office shall not grant a mineral title under the Act to an applicant if it is shown that within a period of five years before the date of the application a shareholder holding a controlling share of the applicant has been convicted of an offence under the Act. Furthermore, an applicant for mineral title must satisfy the MCO among other things that it has sufficient working capital for the exploration or mining of the area applied for and possesses technical competence to carry on the proposed operation as prescribed in the Regulations under the Act.

5. Mining Incentives

Any company or enterprise engaged in mining operations shall be entitled in determining its total profits, to deduct from its assessable profits a capital allowance of ninety-five per cent of Qualifying Capital Expenditure incurred in the year in which the investment is incurred. All operators in the mining industry shall be granted the following benefits: exemption from payment of customs and import duties in respect of plant, machinery, equipment and accessories imported specifically and exclusively for mining operations subject to their inspection and approval by the Mines Inspectorate Director; expatriate quota and residence permit in respect of the approved expatriate personnel; and personal remittance quota for expatriate personnel, free from any tax imposed by any enactment for the transfer of external currency out of Nigeria.11 A holder of a mineral title may be permitted by the Central Bank of Nigeria to enjoy free transferability of funds and retain in a foreign exchange domiciliary account a portion of his foreign exchange earnings for use in acquiring spare parts and other inputs required for the mining operations which would otherwise not be readily available without the use of such earnings. Any company granted mineral title under the Act shall enjoy a three year tax relief period commencing on the date of operation which may be extended by the Minister for one further period of two years under certain circumstances.

The provisions of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act12 and the Nigerian Investment Promotion Commission Act13 also apply to any investment in foreign currency made in respect of any mineral title granted under the Act. Companies engaged in the exploitation of mineral resources shall establish a tax deductible reserve for environmental protection, mine rehabilitation, reclamation and mine closure costs. However, the appropriateness of the reserve must be certified by an independent qualified person taking into account the determination made under the provisions of the Act.14

6. POSSESSION AND PURCHASE OF MINERALS

With the exception of bona fide specimens of mineralogical, geological or educational interest or the receipt by an employer of minerals from his tributers, unless mineral is won from a mineral title area of which a person is the holder or is permitted to possess or purchase such mineral and also entitled to explore and exploit the minerals, no person other than an officer of the Ministry authorized in that behalf by the Minister and acting in the execution of his duty shall possess any Mineral. In addition, no person shall purchase any mineral unless he holds a license to purchase minerals issued under the Act.

This chapter also provides for the establishment of a Minerals Buying Centre also for the purpose of receiving proceeds recovered under a small scale mining Lease and issue valid sales receipts.

7. ENVIRONMENTAL CONSIDERATIONS AND RIGHTS OF HOST COMMUNITIES

This chapter provides for the winning of materials [such as salt, soda, potash or galena] by host communities in relation to areas covered by mining leases; prohibition of mineral exploration in certain areas; reservation of rights of owner or occupier; payment of surface rents; assessment of various compensations and payment of same; restoration of mines land; reclamation; Community Development Agreements; Environmental obligations to include preparation and submission of environmental impact assessment statements and participation in the environmental protection and rehabilitation program.15

The Minister shall establish an Environmental Protection and Rehabilitation Fund for the purpose of guaranteeing the environmental obligations of Holders of Mineral titles as provided under the Act. The trustees appointed by the Minister shall operate the fund in accordance with the provisions of the Trustees Investment Act or amendments thereof.16

This section prohibits pollution of water course, alterations in water supply and provides that everyone who uses water in connection with mining operation shall ensure that the water in use does not contain injurious substances in quantities likely to prove detrimental to animal or vegetable life. Also, no person shall, in the course of Exploration or mining, carry out operations, in or under any area held to be sacred or permit injury or destruction of any tree or other thing which is the object of veneration.

8. OFFENCES AND PENALTIES

This chapter provides for penalties to offences including [illegal mining, false and misleading statements in applications for mineral title, false or non-declaration of important information, smuggling of minerals, use of false or fraudulent scales, misrepresentation and unlawful interference or obstruction].

Regarding dispute resolution, any dispute arising between the holder of a mineral title and the Government in respect of the interpretation and application of the Act, its regulations and the terms and conditions of mineral titles shall be resolved, in the first instance, on an amicable basis. Where the dispute is in the nature of a bona fide investment dispute, and such dispute is not amicably settled as stated above, it shall be resolved in accordance with the provisions of the Nigerian Investment Promotions Act. Any other dispute not settled within these parameters and any offence under the Act and regulations shall be resolved and tried in the Federal High Court.

9. CONCLUDING REMARKS

The Minerals and Mining Act 2007, provides a useful framework for the exploration and exploitation of minerals in Nigeria. The robust provisions in relation to local community relationships, should also serve as a useful framework for the oil and gas sector, which has over the years witnessed a fraught relationship between the local community and the oil and gas companies.

Footnotes

1. Section 2 of the Act

2. Section 163 of the Act

3. Section 91 of the Act

4. Section 72 of the Act

5. Section 47 of the Act

6. Section 48 of the Act

7. Section 49 of the Act

8. Section 51 of the Act

9. Section 50 of the Act

10. Section 52 of the Act

11. Section 25 of the Act

12. Cap F34 of the Laws of the Federation 2004

13. Cap N117 Laws of the Federation of Nigeria 2004

14. Section 30 of the Act

15. Sections 97 to 120 of the Act

16. Section 121 of the Act

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Adeoye Adefulu
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Law Practice Management
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.