Nigeria Cracks Down On Dormant Mining Titles To Stop 'License Racketeering'

Nigeria has taken a significant step to revitalize its mining sector by revoking over 900 dormant mining titles.

What Happened: A sweeping measure will target titles that have remained inactive for extended periods. The aim is to curb illicit practices and attract new investors to Nigeria’s mining industry, given recent positive trends.

"By creating a secondary black market to pawn mineral licenses, the unsuspecting and unwary investor is misled into believing that he can only obtain a license by patronizing the black market. This discourages investment, " mining Minister Dele Alake stated, as reported by Reuters.

Alake clarified that the revocation of these titles could create a fair and transparent process and curb "license racketeering."

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Why It Matters: Nigeria’s mining industry has long been overshadowed by its oil sector despite being rich in various minerals like gold, lithium, and limestone across more than 500 identified sites. The iron ore reserves alone are estimated at 2 billion tons. Yet, the mining sector accounted for only 0.45% of the country's GDP in 2020.

Nigeria’s heavy reliance on oil exports makes its economy vulnerable to fluctuating oil prices, in contrast to neighboring African countries that have successfully leveraged their mining sectors to diversify their economies. PwC's recent study suggests the mining sector could contribute significantly to Nigeria’s GDP, creating jobs and boosting local manufacturing.

To change this situation, the government offers incentives to attract investors, such as tax waivers, full repatriation of profits, and a “first come, first served” system for acquiring new licenses. Additionally, the government is strengthening local processing to ensure that mined resources contribute directly to the country’s economy by granting licenses only to companies that process the minerals locally.

While these steps are promising, the mining sector still faces challenges. Infrastructure deficits, such as inadequate transportation and power supply, which also plague some of the largest African mining markets like Zambia, have become a source of unnecessary costs. Security concerns also play a role, with some mining regions experiencing illegal mining activities and community conflicts.

Nigeria needs a coordinated approach to unlock the sector’s potential. Streamlining regulations, improving infrastructure, and ensuring security in mining areas are crucial. Additionally, formalizing artisanal mining and fostering better engagement with local communities will minimize disruptions and create a more stable operating environment.

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