CAPE TOWN – Nigeria expects its mining sector to grow to 3% of gross domestic product (GDP) within the next five years from just 0.3% currently as the government seeks to diversify the economy away from oil, the minister for mines and steel development said on Wednesday.
Nigeria has been trying to boost the sector as part of efforts to diversify its economy. Gold, lead, zinc, limestone and coal are among seven strategic minerals Nigeria has identified for investment.
"We've seen steady growth ... and we're now poised for exponential growth as investments start crystallising," Olamilekan Adegbite told Reuters on the sidelines of the Investing in African Mining Indaba in Cape Town.
But insufficient geospatial data, weak infrastructure and limited enforcement of regulations have held the industry back.
The government’s aim is unrealistic, said Alexandre Raymakers, senior Africa analyst at risk consultancy Verisk Maplecroft.
"Nigeria’s national infrastructure network is currently ill-equipped to sustain major industrial mining operations that would be needed to raise mining’s GDP contribution to that extent," he said.
Most mining of gold, tin and zinc in Africa's largest economy is carried out on an artisanal basis.
Gold in the northwestern state of Zamfara is routinely smuggled to neighbouring Niger and Togo. The government banned mining in Zamfara last April due to banditry, but aims to lift the ban by end-March.
Foreign miners investing in the country include Australia's Symbol Mining, developing lead and zinc projects in the Benue Trough region, and Toronto-listed Thor Explorations which owns the Segilola gold project north of Lagos.
Drumming up enthusiasm for the country at the conference, Adegbite emphasised companies operating in Nigeria can wholly own their projects, unlike in other African countries where the state must hold a stake.
He said he expects 50 active mines by the end of his tenure, in 2023.
Adegbite said the government would require mining companies to sign agreements with local communities, who remain unhappy with a perceived lack of development and benefits, before investing.
"We've learnt our lessons from the oil industry and we're not repeating that mistake, so one of the major fundamental requirements before you can do anything in Nigeria is local community agreements," he said.