The Long-Neglected Mining Sector in Nigeria

I was chatting with a new friend who told me that as a mining specialist, he had spent some time investigating mining opportunities in Nigeria. We had just driven up and down the hair-raising Sani Pass from South Africa to Lesotho and back in his 4×4. A liquid refreshment or two and the conversation was flowing well.

He told me of a major tin deposit in the Jos Plateau in north-central Nigeria. He described it as one of the largest in the world. My interest was piqued.

Historical records tell us that alluvial tin was mined from the rivers of the Jos Plateau over a thousand years ago. However, large-scale tin mining only began in 1905 under British colonial rule. Tin production was an important source of revenue for the colonial administration. There was a tin boom in the 1930’s, and a number of multinational mining houses conducted lucrative tin mining operations in the area. The 320 square kilometre mining area of the Jos Plateau held not only tin but also niobium, tantalite, tungsten, kaolin, zircon and uranium.

In 1972, after independence, the Nigerian government nationalised the mining industry. The global tin price dropped sharply and tin mining in Jos was taken over by local interests and artisanal miners from the local communities.

Oil was first discovered in the Niger Delta in Nigeria’s south-eastern coastal area in 1956. Crude oil production has since blossomed to reach 1,6 million barrels per day in early 2024. The country’s oil reserves are estimated at 37 billion barrels, placing it at 10^th in the world. The big oil companies – Shell, Chevron,  and ExxonMobil, among others – have vast (mainly offshore) operations in Nigeria. These ‘super majors’ have been joined by service providers and mid-size oil companies who specialise in the oil and gas sectors. The Nigerian National Petroleum Corporation (NNPC) was recently transformed from a state-owned entity to a limited liability company. It partners with the foreign oil operators for the extraction of crude. A more recent development has been the emergence of indigenous independent oil companies such as Oando and Consolidated Oil.  

During my many business missions to Nigeria, I have tried in vain to secure meetings with these independents. It is clearly difficult for an outsider to break in to what seems to be a tight business circle. I have, however, succeeded in meeting with Shell Nigeria, in their well-maintained and secure estates in Port Harcourt.

The 1956 advent of oil as a dominant source of hard currency led to a major general obsession with the oil sector. This was to the detriment of the agriculture and mining sectors. According to a study by PWC, mining only contributed 0,17% to Nigeria’s GDP between 2018 and 2022, compared to 4% to 5% in the 1960’s and 1970’s. The oil sector registered almost 5,34% of total real GDP in the second quarter of 2023. Nigeria recorded a total crude oil export revenue of US$ 20,6 billion in 2023. 

Nigeria became obsessed with oil. As former president of Nigeria and proud farmer, Olusegun Obasanjo once told me: “We simply forgot how to farm.”

The tin mining in the Jos Plateau, once the country’s main mining operation, dwindled down into mainly artisanal mining activity. The country’s wealth in gold, silver, nickel, iron ore, bauxite, diamonds and precious stones was largely ignored.

There is frequent reference in Nigeria to “solid minerals” to distinguish mining more clearly from oil and gas as natural resources. The Ministry of Solid Minerals Development is tasked with encouraging the development of the country’s mining sector. The Nigerian mining authorities are granting new mining licenses exclusively to investors who include plans for local mineral processing and beneficiation. 

A key mining project started in 1979, is the Ajaokuta steel mill in Kogi State. The iron ore feedstock is supplied from local mines. The project had been dubbed as “bedrock of Nigeria’s industrialisation”, but the mill has been stuttering along producing only iron rods from the light mills in the project complex. The government is launching a new concession programme to attract investment to the project.

News of recent mining projects has been encouraging. Baryte is a strategic mineral which is receiving considerable attention because it is linked to the oil industry. It has several industrial applications, but in Nigeria, it is used as a fluid for oil drilling. The government views baryte as a forerunner for the growth of the mining sector. Bitumen is another valuable commodity produced through the distillation of crude oil.

New mining projects include Zuma Coal, the Segilola gold mine and processing plant, iron ore mines in Kaduna and Bauchi states, and several lead and zinc mining operations. The strategic battery mineral, lithium, was recently discovered, and authorities are placing much hope in the future of lithium mining. Investments in lithium operations have begun. There is ample limestone in Nigeria to feed the lucrative cement production industry.

The arrival in Nigeria of a major mining house would be a positive signal for the global mining investment community. The CEO of the large mining and trading conglomerate, Glencore, recently visited Nigeria and announced that his company could invest in the country – if the government can ensure a stable business climate.

There have been some important attempts by the Nigerian government to revitalise its mining sector, the value of which it estimates at US$ 700 billion. It has established the Nigerian Solid Minerals Corporation to promote mining investments. In 2023, the Africa Finance Corporation entered into a partnership with the Nigerian Sovereign Wealth Fund for the creation of the Solid Minerals Development Fund.

But Nigeria’s mining sector is bedevilled by factors such as inadequate funding, illegal mining, smuggling, shortage of mining skills, and lack of mining mechanisation and laboratories. Another challenge is the country’s inadequate transport system. Bulk mining production should be transported by rail rather than road. The rail system has improved a little of late, but getting product to the ports for export remains a major difficulty.

Nigeria has a federal system comprising 36 states, and the need to harmonise mining policies and regulations is a priority. The federal government has begun legal, regulatory and fiscal mining sector reforms. It is reviewing its Minerals and Mining Act of 2007. A Mining Roadmap was drawn up in 2016 to promote mining development. A licensing platform was set up to assist investors by managing investment titles.

Special attention needs to be paid to the designation and prioritisation of strategic minerals such as lithium. Junior mining for exploration has to be encouraged. Much of the country’s mining reserves need to be geologically surveyed. Junior exploration companies are capable of discovering tier 1 and 2 deposits which may draw the attention and investment from the deep-pocketed majors.

Mining in Nigeria is centuries old. The vacuum created by the dropping of the formal mining sector for new oil wealth, has been filled by large-scale influxes of artisanal miners. Uncontrolled mining has led to major environmental degradation. This is particularly visible in the Jos Plateau tin mining area with its increasing problems of soil deterioration and erosion, land scarcity and food insecurity, dangerous man-made gorges and mining lakes, and child labour. There are numerous reports and alerts by environmental NGOs on this unfortunate situation. The government and any new mining investors will have to deal effectively with the major issue of social and environmental impact.