Unlocking Nigeria's Mining Potential: Challenges and Opportunities

Nigeria is rich in valuable minerals including gold, lithium, iron ore, tin, and gemstones, yet there is significant ambiguity regarding the actual size of its mining sector. Estimates of mining’s contribution to the country’s GDP fluctuate between approximately 0.7% and 1.8%, indicating a lack of consensus on the industry’s true scale.

The recent 11th Nigeria Mining Week, held in Abuja from October 12-14, 2026, focused on investment and growth through partnerships, bringing together over 3,000 participants. The central question was how to transform known mineral deposits into actual production and ensure that more value stays within Nigeria.

Understanding the Barriers to Production

While some might attribute the sluggish development of the mining sector to a scarcity of resources, the consensus among experts is that the real barriers lie within institutional frameworks rather than geology. According to the World Bank, there are four main constraints: limited geological data, complex regulations with poor enforcement, a large informal mining sector, and socio-environmental risks. PwC Nigeria further identifies issues such as illegal mining, limited funding, lack of mechanization, and poor coordination between different levels of government.

The challenge amplifies when considering that mining rights are granted by the federal government, while access to land often requires negotiation with state or community authorities. This disjointed authority can hinder progress even when licenses are obtained.

Confusion also permeates the sector’s reported performance. For instance, a 2025 figure suggesting mining’s GDP contribution as 4.61% appears to reflect sector growth rather than accurate contributions. Reliable data from the Nigeria Extractive Industries Transparency Initiative (NEITI) indicates a lower estimate of around 0.72-0.75% for 2023. Further complicating matters, issues such as unpaid royalties and discrepancies between production and export figures reveal systemic weaknesses.

The Impact of Infrastructure and Security

Discussions at Mining Week repeatedly highlighted issues surrounding infrastructure, particularly the unreliability of electricity, gas supply, and transport networks. These factors drive up operational costs and hinder competitiveness against other jurisdictions with stable energy grids.

Security risks, including banditry and informal tolls along transport routes, also present significant challenges. PwC estimates that artisanal and small-scale mining accounts for around 70% of activity in Nigeria, with informal operators managing over 90% of production sites. This prevalence of informal activities leaves a considerable gap between potential output and actual production.

The Importance of Beneficiation

Beneficiation refers to the process of converting raw materials into higher-value products, such as refined metals or processed gemstones, before exporting them. Historically, Nigeria has struggled with exporting raw materials at low prices while relying on expensive imports of finished goods.

The government's ambition to enforce a “no raw material export” policy aims to compel local processing. New licenses may soon include mandates for domestic processing, with a proposed bill suggesting at least 30% local value addition before any export can occur.

Evaluating Investment Opportunities

For foreign investors eyeing Nigeria’s mining sector, certain commodities present clearer paths for value retention. Gold, for instance, shows promising potential for processing and refinement, as demonstrated by Thor Explorations' Segilola mine, which produced over 91,910 ounces of gold in 2025. Conversely, the gemstone industry and steel production remain less developed and carry higher risks.

A major area of concern is the historical failure of the Ajaokuta Steel Mill, which has consumed more than $8 billion over several decades without successfully producing steel. Current negotiations to rehabilitate this facility highlight both potential and ongoing frustrations regarding Nigeria's mining infrastructure.

Checklist for Potential Investors

• Title Security: Verify that federal licenses match state or community land access.
• Repatriation Mechanics: Understand how dividends can be converted and moved out of the country.
• Power and Logistics: Analyze the electricity and transportation realities, not just the theoretical plans.
• Security Measures: Evaluate risks along transport routes and at mining sites.
• Community Engagement: Establish agreements regarding land use, royalties, and environmental impact.
• Processing Capacity: Check for existing facilities that can process the targeted mineral.
• Traceability: Ensure proper documentation for material origin and custody.

As Nigeria’s mining landscape evolves, the changes necessary for institutional growth and productive output remain paramount. Investors must weigh the risks, seek transparent partnerships, and conduct thorough diligence before committing capital to this promising yet complex sector.