Will Nigeria’s mining licenses revitalise local economies?

In a recent development, Nigerian President Bola Tinubu has issued a directive to the Federal Ministry of Solid Minerals Development, stipulating that mining licences will only be granted when tied to local value addition. This decision aims to ensure the active involvement of young Nigerians in economic activities, skill acquisition, and their overall contribution to the nation’s economic growth.

Commitment to Value Addition

During the inaugural session of the African Natural Resources & Energy Investment Summit, 2024, held at the State House Conference Centre in Abuja, President Tinubu, represented by Vice President Kashim Shettima, underscored the administration’s commitment to establishing a business environment that fosters value addition on solid minerals before export.

“By doing so, we aim to ensure that our teeming youth are actively engaged in economic activities, acquiring skills, and contributing to the nation’s foreign exchange earnings. Therefore, the Ministry will only issue mining licences if they are tied to local value addition,” the President was quoted by Leadership.

Engaging Youth and Boosting Foreign Exchange

The President acknowledged the need to alter the practice of exporting raw mineral commodities, with the primary objective being to engage young people in economic activities and skill acquisition and to augment the country’s foreign exchange earnings. Consequently, mining licences will be exclusively linked to local value addition, according to the President’s explanation.

Nigeria as a Leader in Critical Metals

President Tinubu also articulated his administration’s aspiration to position Nigeria as a frontrunner in critical metals within the solid minerals sector. He commended stakeholders for forming the African Minerals Strategy Group, with Nigeria serving as the inaugural chairman, and highlighted the government’s determination to establish new benchmarks in the mining industry.

Transition to Cleaner Energy

Additionally, in the transition to cleaner and more sustainable energy systems, the President acknowledged the pivotal role of natural gas. By leveraging opportunities in the renewable energy sector, Nigeria has “attracted over $2 billion in investments, making it a fast-growing sector in the economy”, the president highlighted. The administration is committed to sustaining this growth and attracting greater private sector participation, which includes local manufacturing of solar panels and batteries.

The Role of Oil and Gas

Recognising the petroleum industry’s significance as a cornerstone of the nation’s economy, the President underscored the necessity for discussions on the energy transition. While striving to embrace renewable and cleaner energy sources, the administration recognises the vital role of oil and gas in the nation’s energy and economic landscape.

Strategic Priorities for the Sector

Strategic priorities in the sector include attracting more investment in the oil and gas industry, increasing oil production to 2.1 million barrels a day by December 2024, enhancing investment in midstream and downstream infrastructure, combating theft, and ensuring adherence to the highest environmental standards.

Responsible Resource Management

The President also reiterated the administration’s commitment to responsibly managing resources, minimizing their ecological footprint, and maximising their benefits for the nation.

The Renewed Hope Agenda

The Minister of Solid Minerals Development, Dr. Dele Alake, further underscored the government’s strategy under the Renewed Hope Agenda to position Nigeria as a major player in the global minerals market. Emphasising the commitment to transforming Nigeria’s solid mineral sector, the government is implementing reforms to create a more appealing environment for investors, with a focus on enhancing transparency, regulatory clarity, and investor confidence.

Comprehensive Reforms

The reforms encompass policy changes, sustainable practices, infrastructure development, and human capital enhancement, all aimed at addressing longstanding challenges in the sector and unlocking Nigeria’s vast mineral resources’ full potential.