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Introduction

Mining is the process of extracting valuable or geological materials such as metals, bitumen, iron ore coal, gemstones, gold, limestone, tin as well as some other valuable minerals from the earth.

Nigeria is blessed with an abundance of various minerals which has drawn the interest of a lot of investors into the mining sector. To carry on mining activities, a mining license is required and one of the top players in the mining sector is Segilola Resources Operating Limited which mines gold.

In this article, we would look at all that is required to start a mining business with regards to legal compliance in Nigeria.

What Agency is responsible for issuing mining licenses in Nigeria

Nigerian Mining Cadastre (NMCO)

This is the body that regulates mining businesses in Nigeria by reviewing mining applications, issue, revoke, suspend and renew licenses, oversee mining areas, maintain record of mining license holders organize mining conferences and regulate operations in the mining sector.

Which locations in Nigeria can you find minerals for mining

Nigeria is blessed with a lot of mineral resources and according to Nigeria mineral exchange the minerals and their locations are in the table below:

S/N	MINERAL	LOCATION (STATE)
1.	Amethyst	Bauchi, Kaduna, Nasarawa, and Kaduna
2.	Antimony Ore	Bauchi, Yobe, Zamfara, and Gombe
3.	Aquamarine	Bauchi, Kaduna, Nasarawa, and Oyo
4.	Barytes	Nasarawa, Benue and Plateau
5.	Bauxite	Ekiti and Ondo
6.	Bentonite	Borno and Edo
7.	Bismuth	Plateau
8.	Bitumen/Tar Sand	Southern part of Nigeria especially Ondo
9.	Clay	All states-
10	Coal	Enugu, Kogi, Benue and Nasarawa
11.	Columbite	Plateau and Kaduna State
12	Copper Ore	Bauchi, Niger, Nasarawa, and Gombe
13.	Corundum	Bauchi Kaduna, and Kano states
14.	Crystal Quartz	Kogi and Nasarawa
15.	Diatomite	Yobe
16.	Dolomite	Nasarawa, Abuja, and Kogi.
17.	Emerald	Plateau, Nasarawa, and Kogi
18.	Feldspar	Kaduna, Nasarawa, and Borno
19	Garnet	Kaduna and Bauchi
20.	Gold	Osun, Niger, Nasarawa, Zamfara, and Kaduna
21.	Granite	Bauchi, Nasarawa, Kogi, Niger, Cross River and Ekiti
22.	Graphite	Kaduna and Bauchi
23.	Gypsum	Yobe and Sokoto
24.	Ilmenite	Ekiti Kaduna, Adamawa, Plateau, and Benue
25.	Industrial Quartz	Nasarawa, Kaduna, Kwara, and Niger
26.	Iron Ore	Kogi, Enugu, and Niger
27.	Kaolin	Katsina and Borno
28.	Laterite	Northern and southern part of Nigeria
29.	Lead/Zinc	Ebonyi, Plateau, Nasarawa, and Benue
30.	Limestone	Kogi, Ogun, and Cross River
31.	Lithium	Nasarawa, Kwara, Niger, Kogi, and FCT
32.	Magnesite	Kebbi
33.	Marble	Ekiti and Kogi
34.	Manganese	Kebbi
35.	Mica	Kogi, Nasarawa, Kaduna, Bauchi, and Niger
36.	Molybdenum	Plateau
37.	Phosphate	Sokoto
38.	Pyrite/Chalcopyrite	Nasarawa and Benue
39.	Ruby	Jos and Zamfara
40.	Rutile	Kaduna
41.	Salt	Ebonyi
42.	Sand	Nationwide
43.	Sapphire	Bauchi, Gombe, Kaduna and Taraba
44.	Shale	Niger and Anambra
45.	Silica Sand	Bauchi
46.	Soda Ash/Trona	Yobe
47.	Talc	Kogi and Niger
48.	Tantalite	Nasarawa, Kaduna, and Plateau
49.	Tin	Plateau and Bauchi, and Nasarawa
50.	Topaz	Nasarawa and Plateau
51.	Tourmaline	Oyo, Ekiti, Nasarawa, Kaduna, Bauchi, Niger, Taraba, and Ogun
52.	Wolframite	Plateau and Nasarawa
53.	Zircon	Kaduna, Ogun, and Borno

What are the types of mining licenses in Nigeria?

Mining licenses are issued based on the scope and nature of activities to be carried out. These include:

1. Reconnaissance Permit: This permit is very important and it is the first phase of mining, it allows the holder carry out preliminary surveys and exploration of particular areas where the minerals are located.
2. Exploration License: This permit helps the holder to carry out detailed exploration activities over the particular area intended for mining. It also helps to know the amount and quality of minerals in the identified area.
3. Small-Scale Mining Lease: This is Issued for small scale mining activities where the applicant has limited capital and resources. According to the Nigerian Mineral Act, this is artisanal, alluvial and other forms of mining operations involving the use of low-level technology or application of methods not requiring substantial expenditure for the conduct of mining operations within a small scale
4. Mining Lease: This license is granted for large scale mining operations and it is suitable for a company intending to engage in a large-scale mining activity.
5. Quarry Lease: This license is used for the extraction of building materials like sand, granite, and gravel.
6. Possess & Purchase License: This license is required to enable the applicant buy, sell or export minerals. What this means is that those who want to trade in minerals can participate in the mining sector without necessarily engaging in mining activities.
7. Mineral Buying Centre license: This enables a company with a mining license to possess & purchase a property to store minerals in a particular location such as a warehouse.
8. Mineral Export Permit: This is issued to companies that intend to export minerals to other countries.

What are the requirements for obtaining a Mining License

This requirement applies to the various types of mining licenses.

1. Feasibility report (with Council of Mining Engineers and Geoscientist (COMEG) seal and signature)
2. Prospecting plan/reserve estimation
3. Mine plan/design
4. Exploration Licence
5. verifiable bank statement and bank reference letter showing evidence of financial capability with sufficient working capital
6. Evidence of technical competence/competent person(s) in the applicant’s employment who possess adequate qualifications and experience in exploration and exploitation of minerals and is registered with COMEG
7. Irrevocable consent from landowner(s)/occupier(s) with sworn affidavit in support of the consent by the applicant from a competent Court, attesting that the consent was duly obtained from the land owner(s)/occupiers(s)
8. Attestation of non-conviction of criminal offences under the Act
9. Certified true copy of the Incorporation documents
10. Details of Mineral(s) to be exploited
11. Survey plan of the area specified to be surveyed
12. Notice to landowner(s)/occupier (private or state land) with a response-indicating rate of surface rent to be paid to the landowner/occupier
13. A copy of current Tax Clearance Certificate of applicant.
14. Evidence of compliance with environmental standards, including the submission of an Environmental Impact Assessment (EIA) report.
15. Business permit for foreign owned businesses
16. Community development agreement from the host community where mining will be carried out
17. The reviewed Attestation of No Conviction of Criminal Offence or Offence under the Minerals and Mining Act, 2007
18. Fit and proper persons Form
19. Beneficial owner Form.
20. Evidence of registration with the Nigerian Investment Promotion Commission (NIPC)

Timeline for Obtaining the License

Upon submission of documents and payment of the prescribed fees, the application is usually approved and considered within 30 to 45 days.

Other Regulatory Bodies Involved

There are other regulatory agencies that oversee mining activities in Nigeria and they include:

1. Federal Ministry of Mines and Steel Development (FMMSD) which is in charge of policy formulation and regulation of the mining sector.
2. Federal Ministry of Environment which helps to ensure that mining businesses comply with environmental standards.
3. Nigerian Geological Survey Agency (NGSA) which provides geological data to support mining activities.

Duration and Renewal of Mining Licenses

Mining licenses in Nigeria have various validity period and renewal timeline as considered below:

	Type of Mining License	Validity Period	Timeline for Renewal of License
1.	Reconnaissance Permit	1 year	Renewable annually
2.	Exploration License	3 years	Renewable twice for 2 years each
3.	Quarry Lease	5 years	Renewable
4.	Small scale mining lease	5 years	Renewable
5.	Mining lease	25 years	Renewal every 24 years
6.	Purchase & Possess License	1 year	Renewal
7.	Mineral Export Permit	Valid per shipment	New application for each export required

Cost of Obtaining Mining Licenses

The cost of obtaining a mining license varies depending on the type of license as stated below:

S/N	Type of Mining License/Nature of fee	License Fee (NGN)	Renewal Fee (NGN)	Late Renewal Fee (NGN)	Annual Service Fee (NGN)
1.	Reconnaissance Permit	300,000	300,000	600,000
2.	Exploration License	500,000for first 100 Cadastral Unit (CU), any additional CU – 500,000	700,000	1,500,000	1st -20,000 2nd– 30,000 3rd -70,000
3.	Quarry Lease	First 2CU – 600,000any additional CU -250,000	1,000,000	1,500,000	1st-400,000 2nd-700,00
4.	Small scale mining lease	300,000 any additional CU – 200,000	500,000	1,500,000	1st -200,000 2nd-400,000
5.	Mining lease	3,000,000	3,000,000	3,000,000	1st-500,000
6.	Cadastral unit	31,500	NIL	NIL	NIL
7.	License to purchase and possess minerals	100,000	NIL	NIL	NIL
8.	License to purchase gold & precious stones	200,000	NIL	NIL	NIL
9.	Permit to export minerals for commercial purpose	100,000	NIL	NIL	NIL
10.	Gold refinery License	5,000,000	NIL	NIL	NIL
11.	Water use permit	300,000	NIL	NIL	NIL

Other Compliance and Reporting Obligations Expected from Mining License Holders

1. Submission of periodic operational reports.
2. Payment of royalties and taxes.
3. Adherence to safety and environmental standards.
4. Employment of local labour and adherence to community development agreements (CDAs).
5. Engaging with host communities through consultations, community development agreements, and CSR initiatives in other to help foster goodwill and mitigate potential conflicts with these communities.

Frequently Asked Questions about Mining in Nigeria

1. Who can apply for mining license?

Individuals and corporate entities

1. How can I identify specific areas where minerals are located?

Visit the site of interest, take the coordinate of the area, and present the coordinates to any NMCO nearest to you. The details will be entered into the NMCO data base to confirm if the area is free or not

1. What is a cadastral unit?

According to NMCO it is the smallest unit or cell in Mining Cadastre concession area. Its size is 20.25 Hectares approximately 450 metres by 450 metres square.

Can foreigners apply for a mining license in Nigeria?

Yes, a foreigner can apply for a mining license. Additionally, it is important to register the company with the prescribed share capital for foreign companies (100 million) and do the following.

1. Have a Nigeria director
2. Obtain a business permit & expatriate quota
3. Obtain a work and residence permit for foreign employees
4. Register with the Nigerian Investment Promotion Commission (NIPC

What minerals require a license?

A license is required to be able to mine, export and sell all minerals.

Can a mining license be transferred?

Yes, a mineral license can be transferred but such transfer must be registered with the ministry. Please note that a reconnaissance permit is not transferable.

Is artisanal mining legal in Nigeria?

Yes, it is but the appropriate license must be obtained which is the small-scale license.

Conclusion

Obtaining a mining license in Nigeria is a structured process and applicants are expected to meet the required guidelines in other to obtain the license. From a glance, it might seem like the process of obtaining this license is rigorous but it is necessary to protect the environment, host communities and encourage fair practices.

It is important that mining license holders comply with the guidelines surrounding the specific license they hold as failure to comply with these obligations can result in penalties, suspension, or revocation of the license. If you are looking to secure a mining license, you can reach out to us to guide you through the process.

For additional insights on operating in regulated sectors, you may also like our article on Regulatory compliance for manufacturing businesses in Nigeria, as well as our guide for Restaurant compliance in Nigeria