As the Federal Government of Nigeria (FGN) continues to take steps towards addressing the adverse effect of the Covid-19 pandemic on the Nigerian economy, it cannot be overemphasized that it is paramount for the FGN to reduce the reliance on crude oil revenues but develop other sectors in the quest towards sustainable development and growth of Nigeria. Clearly, the fixation on crude oil revenues has contributed to the disregard of other sectors of the economy and given the well documented negative impacts of the Covid-19 pandemic on the global crude oil market and Nigeria’s oil and gas industry, there is need for the FGN to strengthen the other sectors of the Nigerian economy, including the solid minerals sector.
It is estimated that there are 44 different minerals found in commercial quantities in 450 locations across Nigeria, including coal, gold, uranium and iron ore. The responsibility of unlocking the massive potentials of the Nigerian mining industry (the “Industry”) is placed on the Ministry of Mines and Steel Development (the “Ministry”). The mission of the Ministry is to exploit the mineral endowment spread across the nation and establish a vibrant metal industry for wealth creation, employment generation, poverty reduction, promotion of rural economy and significant contribution to the GDP of Nigeria.
To actualise this laudable mission, the FGN must revamp the Industry in order to attract both foreign and local investments into the Industry. In this regard, there appears to be increased focus by the FGN in respect of tapping the huge potentials of the Industry. The Minister of State for Mines and Steel Development recently noted that the Ministry will implement policies and programmes aimed at revamping the Industry, given its critical role in the diversification of the Nigerian economy, and in alleviating poverty. Also, in March 2020, the FGN inaugurated a Ministerial Technical Committee with the responsibility of formulating a framework to ensure the sustainable development and growth of the metals industry in Nigeria and in February 2020, the Presidential Artisanal Gold Mining Development Initiative (PAGMI) was flagged-off in Kebbi State to support small scale and artisanal miners. These initiatives buttress the FGN’s increased focused on mining operations and the Industry.
In this post, we highlight certain investment incentives applicable to companies and enterprises engaged in mining operations as a means of attracting and retaining investments in the Industry.
In an effort to incentivize mining operations in Nigeria, the holders of mineral titles enjoy the following incentives as provided in the Nigerian Minerals and Mining Act 2007 - the key legislation regulating mining operations in Nigeria:
· Exemption from customs and import duties on approved plants and machinery, equipment and accessories imported specifically and exclusively for mining operations;
· Capital allowance of 95% of qualifying capital expenditure incurred on exploration, development and processing expenditure and all infrastructure costs;
· A tax holiday for the first 3 years of operation, which may be extended for a further 2 years by the Minister of Mines and Steel Development;
· Deduction of losses as far as is possible from the assessable profits of the first year of assessment after the year in which the loss occurred;
· A tax deductible reserve for environmental protection, mine rehabilitation, reclamation and mine closure costs;
· A tax deductible amount established in accordance with the applicable rate set out in the Pension Reform Act toward the payment of pensions to each employee;
· Free transferability through the Central Bank of Nigeria of dividends or profits payments in respect of servicing a foreign loan and foreign capital in the event of sale or liquidation of mining operations in any convertible currency;
· Tax free personal remittance quota for expatriate personnel for the transfer of currency out of Nigeria;
· Freedom from expropriation, nationalization or acquisition by any local or federal government in the country except such act is in the national interest or for a public purpose under a law that makes provision for fair and adequate compensation and a right of access to the courts for the determination of the investors’ interest or right and the quantum of compensation to which he or she is entitled; and
· Possibility of the Minister deferring payment of royalty on any minerals for a specific period on the approval of the Federal Executive Council.
Given the renewed interest in the sustainable development of the Industry and the Ministry’s position of implementing policies and programmes aimed at revamping the Industry, potential investors are encouraged to strongly consider taking advantage of the huge opportunities in the Industry, including the investment incentives provided in the Nigerian Minerals and Mining Act 2007.
 Section 25, Nigerian Minerals and Mining Act 2007.
 Section 24, Nigerian Mineral and Mining Act 2007.
 Section 28, Nigerian Minerals and Mining Act 2007.
 Section 24(2) Nigerian Mineral and Mining Act 2007.
 Section 30, Nigerian Minerals and Mining Act 2007.
 Section 31, Nigerian Minerals and Mining Act 2007.
 Section 27, Nigerian Minerals and Mining Act 2007.
 Section 25, Nigerian Minerals and Mining Act 2007.
 Section 25, Nigerian Investments Promotion Commissions Act, Cap N117, Laws of Federation of Nigeria, 2004.
 Section 33, Nigerian Minerals and Mining Act 2007.
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