EXPLAINER: What to know about mineral exploration licencing in Nigeria

In a bid to regulate all aspects of exploration and exploitation of solid minerals in the country, the Nigerian government in 2007 re-enacted the Nigerian Mineral and Mining Act.

The step was also aimed at fostering the growth and development of the sector.

The Act vested the ownership and control of all lands in which minerals are found in commercial quantities in the government of the federation and thereby prohibits unauthorised persons from exploration or exploitation of these mineral resources.

The right to explore or exploit minerals in Nigeria is evidenced by the grant of a mineral title.

Application for a mineral title in Nigeria can be done by a qualified applicant under the Act and in accordance with the Nigerian Minerals and Mining Regulations (NMMR) and the submission of an irrevocable consent form by land owners or occupiers.

Mining cadastre office

The Mining Cadastre Office (MCO), an agency under the supervision of the federal ministry of mines and steel development, is responsible for the administration and management of mineral titles and the maintenance of cadastral registers.

The agency issues, grants, suspends, and upon written approval of the minister, revokes any mineral title where a title holder fails to pay a prescribed fee such as the annual fee.

It also keeps a chronological record of all applications for mineral titles in a priority register, which ensures the agency treats all applications on a first come first served basis and equally applies the principle of ‘use it or lose it’ to mineral titles.

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However, an application for a mineral title may be refused where in the case of an individual is under the age of 18 years or is an undischarged bankrupt or otherwise declared bankrupt under any written law or has been convicted of a criminal offence under the act or regulations.

Also, it is noteworthy to know that no title can be revoked without giving a prior notice of 30 days to any defaulter, sent to a registered address.

Guidelines

Mineral titles are awarded in Nigeria by title applications or through a bidding process.

The processes involved in application include submission of an online application which is subject to review and evaluation.

The application may be successful or declined depending on the criteria met. Upon a successful application, the applicant is required to pay the necessary fees and the licence is issued thereafter.

For the bidding process, adverts are placed in national dailies for designated areas by the minister for exploration licence and mining lease only.

Interested investors are required to provide necessary information that would be reviewed by the committee set up for the bidding process. A winner emerges and is issued a licence after payment is made for the prescribed fees.

Mining rights

The right to search for or exploit any mineral in Nigeria is governed by different mineral titles. The titles obtainable in the country are the Reconnaissance Permit (RP), Exploration licence (EL), Small Scale Mining Lease (SSML), Mining Lease (ML) and Quarry Lease (QL) the Water Use Permit.

 

Reconnaissance Permit

This permit allows holders to search for mineral resources on a non-exclusive basis.

It gives the right to obtain access into, enter on or fly over any land within the territory of Nigeria, likewise the permission to obtain and remove surface samples in small quantities which must be conducted in an environmentally and socially responsible manner.

Upon the payment of a prescribed fee, the MCO is subjected to approve applications from qualified applicants within 30 days of receipt of application with a processing fee of N50,000 payable to MCO through remittal. However, excavation drilling and other subsurface activities are not permitted.

Reconnaissance Permit is non-transferable and it’s issued for only one year but renewable annually.

 

Exploration licence

The holder of an Exploration Licence (EL) has the exclusive right to conduct exploration upon the land within the area of his licence. The mining area for EL usually doesn’t exceed 200 square kilometres with a processing fee of N100,000 payable to MCO through remittal.

The MCO, under the law is obliged to approve the EL within 30 days of receipt of an application by a qualified applicant.

The holder is allowed to remove, conduct bulk sampling and testing, export and sell mineral resources not exceeding established limits. The licence is for a 3-year initial period but renewable two further periods of 2 years each. Each additional Cadastre Unit costs N1000.

Quarry Lease

This permit gives liability to exploit all naturally occurring minerals such as clay, marble, gypsum, limestone, gravel, sand, among others.

The lease is issued for five years and renewable every five years, provided the renewal application is made months before the lease expires. The sum of N100,000 is made for the processing fee payable to MCO through remittal for a land not exceeding 4 Cadastral Units. Each additional Cadastral Unit costs N50,000

The application is processed within 45 days of receipt of application.

Small Scale Mining Lease

The holder of the Small Scale Mining Lease has the exclusive right to carry out small-scale mining operations within a mining area greater than five acres but less than three kilometer square for a period of five years initial period but renewable for further period of five years only.

The lease is issued within 45 days of application with a processing fee of N50,000 payable to the MCO through remittal. Each additional Cadastre Unit costs N20,000.

However, when the level of operation of a SSML exceeds the defined area, the holder shall convert such a lease to a Mining lease by submitting a written application to the MCO.

Application Requirements for Exploration Licence, Quarry Lease and Small Scale Mining Lease

Mining Lease

The holder of this lease can exclusively use, occupy and exploit minerals within the lease area not exceeding 50 Kilometres Square.

The lease is granted within 45 days of receipt of application with a processing fee of N500,000. It is issued for a period of 25 years initial period and renewable every 24 years.

Water Use Permit

This is granted to the holders of Exploration Licence, Quarry Lease, Small Scale Mining Lease and Mining Lease who require the use of water for their operations.

Statistics

Nigerian Extractives Industries Transparency Initiatives (NEITI)‘s five year trend analysis report on the issuance of mining titles shows that a total of 6,360 licences and leases were issued between 2015 and 2019.

In 2015, 1,047 licences were issued; 1,153 licences were issued in 2016; 1,484 in 2017; 1,380 in 2018, and 1,296 licences were issued in 2019.

 

Of all the licences issued in the five-year period, exploration licence recorded the highest issuance, accounting for 43.51 per cent (2,763) while mining lease accounted for 1.98 per cent (126) to rank the least issued licence. Small Scale Mining Lease accounted for 35.79 per cent (2,276) while Quarry Lease accounted for 18.73 per cent (1,191).

Nigeria possesses vast mineral resources spread across the 36 states and the Federal Capital Territory (FCT) which are categorised as energy, industrial, metallic ores and precious stones.

The federal ministry of mines and steel development is an agency set up to unlock the economic potentials of the solid minerals sub-sector in Nigeria.