Nigeria Tightens Laws to Limit Exports of Raw Minerals

Nigeria is considering tightening its laws to limit exports of raw minerals and encourage the shipping of locally manufactured products, a move aimed at creating jobs and boosting the value of its exports.

“You cannot extract our minerals and take them away without adding value in the country,” Dele Alake, Minister of Solid Minerals, said in an interview to Bloomberg. “It means you have to set up a factory to produce a commodity linked to the mineral you are extracting.”

Africa's largest crude producing country is counting on its mineral reserves to provide an alternative source of income amid a decline in oil production. The country has deposits of lithium, gold, bitumen and iron ore and is determined to emulate countries like Indonesia in moving up the commodity value chain and boosting employment opportunities. The value of Indonesia's nickel exports has risen tenfold in five years after the government forced buyers to set up refineries in the country.

Previous Nigerian governments have tried unsuccessfully to revive the mining and quarrying industry. A decade ago, the administration of then-President Jonathan set a goal of increasing mining's contribution to GDP to 3% by 2015. The sector accounted for just 0.2% of production last year, according to PricewaterhouseCoopers (PwC).

Encouraging foreign companies to refine minerals within the country remains a challenge. Investors have to deal with troubled electricity supplies and weak domestic demand, while most minerals are extracted by illegal mining companies.

Northern Nigeria has long been plagued by insecurity, with armed gangs carrying out mass kidnappings and killings. Alake noted that gangs have also displaced local communities, making way for illegal mining.

Last month, the administration of President Bola Tinubu announced the introduction of new regulations aimed at cracking down on smuggling and better monitoring the industry. It also intends to cancel licenses that have not been used for 18 months.

The government signed an agreement with Australian authorities last month to train local residents in the technical aspects of the mining industry. Alake said this should ensure better regulation and more efficient exploration of solid minerals in the country.