LONDON – Nigeria will lift a ban on mining in Zamfara state by the end of March after the government deployed a surveillance team to stifle illegal activity in the northwestern region, the minister of mines and steel development said.

The government suspended operations in April on concerns that illegal mining was connected to a surge in banditry in the state that was the worst hit by a wave of violence that killed dozens of people and displaced thousands.

"The ban is about to be lifted because a lot of genuine investors who want to come (to invest) into Zamfara state," minister Olamilekan Adegbite told Reuters during a visit to London, adding this would happen "within the first quarter".

"When the ban came into effect there were a lot of investors who were already putting in money had to stop ... they are anxious to realise their investments." Adegbite said the government had deployed a "surveillance team" to quell unrest and "discourage illegal activity".

But the United Nation's refugee agency said in September that worsening violence caused by organised armed groups had displaced about 40 000 people since the beginning of 2019.

In June, an armed group killed at least 34 people in attacks on villages.

Nigeria has largely untapped deposits of minerals including gold, nickel, tin and zinc. Some 80% of mining in Nigeria is carried out on an artisanal basis and gold in Zamfara is routinely smuggled out of the country illegally to neighbouring Niger and Togo.

About 500 kg of gold per month is illegally smuggled out of Nigeria, Adegbite said. At current prices, this is worth about $25-million and implies millions in lost tax revenue and unpaid royalties.

A Reuters analysis published in April found that billions of dollars' worth of gold is being smuggled out of Africa every year through the United Arab Emirates, a gateway to other markets.

The government has granted refining licences to local firms Kian Smith Trade & Co and Dukia Gold, which will have a combined capacity of 37 t/y, said Adegbite. Nigeria's central bank would purchase some of the gold.