Nigeria, Africa’s largest crude producer, is looking to diversify its economy by tapping into its vast mineral wealth. The country has announced plans to tighten rules on exporting raw minerals and encourage the shipment of processed products, a move aimed at creating jobs and boosting the value of its exports.
The new regulations will require foreign companies to add value to the minerals they extract in Nigeria, such as lithium, gold, bitumen, and iron ore. “You can’t take our minerals away without adding value locally,” Dele Alake, the minister for solid minerals, said in an interview. “Which means you must start a factory to produce something associated with the mineral you are taking out.”
The government hopes to emulate the success of countries like Indonesia, which saw its nickel exports surge tenfold in five years after it forced buyers to set up refineries. Nigeria also wants to increase the contribution of mining and quarrying to its gross domestic product, which was only 0.2% last year, according to PwC.
However, the country faces many challenges in developing its mineral sector, such as an unreliable electricity supply, weak domestic demand, illegal mining, and insecurity. Northern Nigeria has been plagued by armed gangs that have carried out mass abductions and killings. Alake said that gangs have also displaced local communities, making way for illegal mining.
To address these issues, the government has signed an agreement with Australian authorities to train locals on the technicalities of the mining industry. Alake said better regulation and more efficient exploration of the country’s solid minerals should be ensured.
The government also intends to revoke licenses that are not used within 18 months and crack down on smuggling. The new rules are expected to take effect by the end of the year.
Nigeria’s decision to curb raw mineral exports comes when global demand for metals rises due to the transition to green energy and electric vehicles. The country hopes to position itself as a key supplier of processed minerals that can fetch higher prices and generate more revenue.
Nigeria also aims to create more jobs and opportunities for its young and growing population by adding value to its minerals locally. According to the National Bureau of Statistics, the country has one of the highest unemployment rates in the world, at 33.3% as of March 2023.
Nigeria’s bold move to boost local processing of minerals could be a game-changer for its economy and society if it can overcome the obstacles and harness its potential.
Source: Bloomberg
