By Patience Chat Moses
In a significant move aimed at reshaping Nigeria’s mining landscape, the Federal Government through the Ministry of Solid Minerals, Steel and Mines Development has announced a comprehensive review of mining license rates.
The Minister of Solid Minerals Development, Dr. Dele Alake stated that the review underscores the Federal government’s commitment to increasing revenue from solid minerals to enhance service delivery and bolster mining’s contribution to economic development.
Speaking during a consultative meeting with stakeholders in the mining industry, the Minister of Solid Minerals Development, Dr. Dele Alake emphasized the imperative of the review to boost the capacity of government to effectively reposition the mining sector. Highlighting efforts to reposition the mining industry, the Minister revealed that aside from ongoing reforms, the federal government is sanitizing the mining environment through the newly unveiled mining marshals, which he affirmed has been conducting operations in parts of the country to protect legitimate miners and combat illegal mining. Soliciting the support of stakeholders for the impending increase in fees for mining licenses and other sundry fees, Alake stressed that this has become inevitable if the government is to effectively fulfill its obligations of providing an enabling environment for mining operations whilst also raising more revenue for the government. ” For us to continue to ensure that we secure the mining environment and keep putting in place measures that will ease the operational difficulties and challenges that confront miners, we need to review the rates of mining licenses and other sundry fees. We felt that we can’t just do this without letting you know because invariably, you are the players in the industry, “the Minister added.
In his submission, the Director-General of the Mining Cadastral Office, Engr. Obadiah Nkom, who also chaired the fees review committee, stated that the committee recommended new rates that are affordable and will enhance the competitiveness of the fiscal regime of the mining sector in comparison with regional and global standards. Speaking on behalf of the stakeholders, the President of the Miners Association of Nigeria (MAN), Dele Ayanleke commended the Minister for his efforts to put the mining sector on the global front burner, expressing support for ongoing reforms and plans to review fees payable by operators. He urged the minister to consider the challenges faced by miners and ensure the rates are affordable.
Stakeholders in attendance include President of Miners Association of Nigeria (MAN), Dele Ayanleke, Representatives of Women In Mining (WIM), Gemstone Miners Association (GMA), top officials of the ministry and a host of others.
Under the new regime, investors applying for a Mining Lease license will pay N3 million, while Small Scale Mining Lease (SSML) applicants will pay N300,000 for the first two cadastral units. The cost to obtain an Exploration Licence (EL) is N600,000 for the first 100 cadastral units. A Quarry lease now attracts N300,000, while a reconnaissance permit is N300,000.
The new regulations, introduced in consultation with industry stakeholders, aim to discourage speculation and address the paucity of funds, limiting the federal government’s capacity to improve the ease of doing business in the sector. The new rates, which affect 268 items in the industry, include an annual service fee of N31,500 for the first time, N260,000 for a Small Scale Mining License (SSML), N500,000 for a Quarry Lease, and N1,250,000 for firms operating with a Mining Lease. Following the renewal of licenses, the rates for the respective categories will be N42,000 for an Exploration Licence, N420,000 for a Small Scale Mining Lease (SSML), N1,500,000 for a Mining Lease, and N1,100,000 for a Quarry Lease. Other services affected by the new regulations include mineral title applications of the Mining Cadastral Office (MCO), alongside the transfer, enlargement, surrender, and consolidation of mineral titles.
According to Dr. Alake, the new regulations seek to maximize royalties from critical minerals like lithium and gold to boost the nation’s revenue base and contribute significantly to economic development. In the new rates regime, Lithium ore (Lepidolite) at the current market value of N600,000 per tonne attracts N18,000 royalties per tonne; lithium (Kunzite) with a current market value of N3 million per tonne attracts N90,000 royalties per tonne, while lithium ore (Spodumene) with a current market value of N316,667 per tonne attracts N9,500 royalties per tonne.
The rates review also affects services rendered by the Mining Cadastral Office (MCO) and the Nigeria Geological Survey Agency (NGSA). Comprehensive details of the new rates regime will be posted on the Ministry’s website, www.msmd.gov.ng. The Minister affirmed that the new rates regime takes immediate effect.
Background of the Review
Earlier in May, the Federal Government, through the Ministry of Solid Minerals Development, had announced plans to review rates of mining licenses and other sundry fees payable by mining operators in the country. The review came following the recent revocation of dormant mining licenses, where the Minister noted that the government followed due process and extant laws guiding the action, emphasizing that a 30-day restitution window still exists for operators that were affected. It will be recalled that the Minister announced a restitution fee of N10m, 7.5m, 5m and 2.5m for Mining Leases, Small Scale Mining Licenses (SSML), Exploration License (EL) and Quarrying License respectively for revoked dormant licenses including those earlier revoked for default in payment of annual service fees.
Reactions from Stakeholders
This decision, although crucial, was not accepted by all as it has sparked a flurry of reactions from stakeholders across the sector, ranging from cautious optimism to outright concern. While a section of industry players has welcomed the move, seeing it as a necessary adjustment to modernize the sector, some stakeholders, particularly small-scale miners, have expressed concerns about the potential impact on their operations. Amongst some concerns are fears that higher licensing costs might push smaller players out of the market.
The Miners Association of Nigeria (MAN) has stated that the federal government’s hike in mining rates and royalties for solid minerals will push local miners out of business. The Group stated this through its National President, Dele Ayankele in its reaction to the increase. He stated that stakeholders were dissatisfied with the rates. Ayanleke pointed out that the announcement process was conducted without consultation and highlighted concerns about the sector’s overall condition, particularly the multiple taxation of operators by state governments. He urged the Federal Government to collaborate with state governments to address the widespread illegality in the sector’s regulatory and governance framework, which is frustrating mining operators. According to him, once the situation is resolved, stakeholders should be involved in determining the best ways to optimize revenue generation and harness the sector’s wealth-creation potential.
Similarly, the President of the Nigerian Mining and Geosciences Society (NMGS), Prof. Akinade Olatunji, expressed that the issue was not with the review itself but with the process leading to it. He mentioned that the ministry had determined the fixed rates based on the current selling prices of minerals.
Olatunji noted that this decision was made unilaterally without sufficient consultation with relevant stakeholders. He explained that various factors govern royalty rates and pointed out that operators were already struggling with high costs due to prevailing economic challenges, which could drive many out of business. He suggested that the government should strengthen the Mines Inspectorate Division with more qualified personnel, provide them with mobility and running costs, and allow them to perform their duties effectively.
Also, not long after the FG announced the mining license rates review stakeholders in the sector called for the payment of ten percent benefits to host communities as part of measures to build a peaceful environment for coexistence between miners and indigenes. This is just as they proposed a ten-year renewable mining lease instead of the twenty-five years as captured in Section 66 of the Solid Minerals Mining Act 2007. The call was part of the demands tabled for deliberations at a public hearing organized by the House of Representatives Committee on Solid Minerals.
The Federal Government’s decision to review mining license rates comes as part of a broader strategy to revitalize the mining sector, diversify the economy, and increase non-oil revenue streams. Historically, Nigeria’s mining industry has been underutilized, contributing a mere fraction to the national GDP. The government believes that updating the licensing rates is a crucial step towards attracting serious investors, ensuring sustainable development, and generating higher revenue.