Onome Amuge
KPMG has highlighted the need for Nigeria to consider membership in key international mining organisations to improve its attractiveness as a destination for foreign direct investment in the mining sector.
The global audit, tax, and business advisory firm, in the 4th edition of its Nigerian Mining Sector Brief, released in June 2024, pointed out that Nigeria has immense mineral wealth, with over 44 types of minerals spread across 500 locations in all 36 states and the Federal Capital Territory (FCT). The firm noted that this natural endowment should make Nigeria a prime destination for multinational companies to invest in mining.
However, the report emphasised that Nigeria must tackle its domestic challenges, particularly the ease of doing business, in order to realize the full potential of its mineral wealth and attract the necessary foreign investment.
KPMG’s report outlined Nigeria’s extensive mineral reserves, listing gold, barite, bentonite, limestone, coal, bitumen, iron ore, tantalite, columbite, lead, zinc, barites, gemstones, granite, marble, gypsum, talc, iron ore, lead, lithium, nickel, and silver, among others. The report also recognised the government’s initiative to prioritise the development of seven strategic minerals, chosen for their commercial viability and potential to catalyse economic growth through industrial linkages.
The report partly read: “Based on the mineral wealth of Nigeria, the country should naturally be a preferred mining destination for many multinationals. However, considering the myriad of challenges plaguing the sector as described in Section 1, the country has not been very successful in attracting and retaining the much-needed foreign participation and/ or investments.
Therefore, in addition to its continuing efforts to mitigate the identified domestic challenges and to improve the ease of doing business in Nigeria, the FGN (through the relevant ministries or key mining associations) should consider becoming a member of renowned international Mining organizations such as the Committee for Mineral Reserves International Reporting Standards (CRIRSCO), the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF), and the International Council of Mining and Metals (ICMM) amongst others.”
According to KPMG, asides being in a pole position to attract FDIs, membership and affiliations with the globally renowned mining organisations confer several benefits to Nigeria and mining stakeholders and some of these benefits include:
-Validating the veracity and existence of acclaimed mineral deposits, especially of critical metals. earning and maintaining global trust by promoting high standards of reporting of identified mineral estimates.
-strengthening the social and environmental performance of the mining sector, in view of the increasing ESG-investment considerations.
-Building recognition of the mining sector contribution to local communities and society at large.
-strengthening laws and policies to achieve short and long-term sustainable development goals.
KPMG noted further that given the recent progress in the Nigerian mining sector, the country could further capitalise on its potential by conveying its readiness for business to the global community. To do so, KPMG suggested that Nigeria obtain certifications from and join relevant international mining organisations, which would demonstrate the country’s commitment to high standards and bolster investor confidence. This, in turn, would position Nigeria as a more attractive destination for mining investments from major multinational companies.
The report observed that as of May 2024, a total of 7,182 companies and individuals had been granted licences to operate in the upstream subsector of the Nigerian mining industry. This included licenses for exploration, mining, and quarrying.
However, despite these encouraging figures, the report identified several challenges hindering the sector’s growth,including the lack of critical infrastructure, particularly adequate electricity supply and access roads to sites of mineral deposits, as well as limited geoscience data and information.
The KPMG report also noted that the mining sector has been hindered by security concerns. Though the firm acknowledged that areas previously occupied by terrorist groups in the northern region had been liberated, it warned that communal and religious conflicts in the Middle Belt region, rich in minerals and metals, remained an issue.
KPMG stated further that inadequate project funding remained a persistent issue in Nigeria’s mining sector, pointing out that Nigeria has been unable to attract the necessary investments to tap into its vast mineral resources,largely due to a combination of factors,including: Insufficient bankable projects, which stem from limited geoscience data about reserves; policy uncertainty, which makes investors nervous about long-term commitments; security concerns, which deter potential financiers; and global economic dynamics, which can affect the availability of capital.
On a positive note, KPMG commended the federal government’s efforts to combat illegal mining through the creation of the Mines Surveillance Task Team and the Transport and Mining Marshals. These initiatives, according to the firm, are positive steps toward improving security for mining operators and creating a more stable environment for investment.
