In this post we will be looking at the provisions contained in the Nigerian minerals and mining Act, The Nigerian Opportunity and World Class Minerals. Plus Mining Industry licensing and requirements
INTRODUCTION
The Mining Industry is now a global industry with many countries competing for exploration funds. The fierce international competition suggests that mining companies and their investment funds would only go to those countries where the enabling environment would allow the private sector to flourish without hindrance. It is the realization of this fact that is driving the recent efforts of the Federal Government of Nigeria towards the creation of an orderly and sustainable development of Nigeria’s Minerals Resources.
The Nigerian government policy thrust on the mining sector is anchored on the need to develop a private sector led mining industry with Government restricting its role to that of an administrator / regulator. Going for Gold!!! But the future holds a lot more. Nigeria today is in a wave of market reforms in many segments of its economy including the privatization of government owned companies and mining assets. After years of dithering and being weighed down under squandered oil revenues and rising debt levels, the government finally demonstrated the political will to implement market friendly policies.
Read: MINING LICENSE/ PERMITS, COST & REQUIREMENTS
To this end, Nigeria over the past couple of years deregulated fuel prices, began a programme of fiscal and monetary management. More recently, among other reforms, the country has attempted to modernize and strengthen the banking system. Nigeria is also undergoing political transformation of enormous proportion. For the past nine years, the country has seen uninterrupted civilian rule which is the longest since independence. The April 2007 elections saw the first civilian-to-civilian transfer of power in the history of the country, making its attempts at economic recovery more meaningful.
PROVISIONS CONTAINED IN THE NIGERIAN MINERALS AND MINING ACT
The Federal Government of Nigeria is generally creating an enabling environment that will enable business to flourish. The enabling environment with respect to the mining sector includes the development of a new legislative framework.
The Act contains specific provisions that will enhance private sector leadership in the development of the mining industry in the country. Some of the salient provisions contained in the Act are as follows:
- Ownership and Control of Minerals: The Act vests entire property in and control of all Mineral Resources in, under, or upon any land in Nigeria, its contiguous continental shelf and all rivers, streams and water courses throughout Nigeria, any area covered by its territorial waters or constituency and the exclusive economic zone in the Federal Government of Nigeria. This provision essentially mirrors the Constitution of the Federal Republic of Nigeria.
- Transfer of Property in Mineral Resources: Section 1(3) of the Act however provides that property in mineral resources shall pass from the Government to the person by whom the mineral resources are lawfully won upon their recovery in accordance with the Act.
- The Administration of the Act: The Act provides that the Minister shall by regulation determine areas wherein an exploration license and a mining lease shall be granted based on competitive bidding. Pursuant to the Regulations that may be made by the Minister, the MCO shall consider competing bids through an open and transparent method and select the bid which will promote the expeditious and beneficial development of the Mineral Resources of the area.
- Mining Incentives: The Act provides for the following fiscal and tax incentives.
- In determining its total profits, a license holder is entitled to deduct from its assessable profits a Capital Allowance of 95% of Qualifying Capital Expenditure incurred in the year in which the investment was made on all certified exploration, development and processing expenditure including feasibility study and sample assaying cost. Infrastructure costs incurred regardless of ownership or replacement.
Read: How to Register/ Start a Company as a Foreigner
- The amount of any loss incurred by a license holder shall be deducted as far as is possible from the assessable profits of the first year of assessment after that in which the loss was incurred and in so far as it cannot be so made then from such amounts of such assessable profits of the next year of assessment and so on up to a limit of four years after which period any unregistered loss shall become lapse.
- The Central Bank of Nigeria (CBN) may permit a holder of a Mineral Title who earns foreign exchange from sale of his minerals to retain in a foreign exchange domiciliary account a portion of his earnings for use in acquiring spare parts and other inputs required for the mining operations which would otherwise not be readily available without the use of such earnings.
- A tax deductible amount established in accordance with the applicable rate set out in the Pension Reform Act shall be imposed on mining companies or enterprises, towards the payment of pensions to each employee.
Type of Licenses Granted under the Act
The right to search for or exploit Mineral Resources under the Act is obtained through one of the following mineral titles:
- Reconnaissance Permit
- Exploration License
- Small Scale Mining Lease
- Mining Lease
- Quarry Lease
- Water Use Permit
In general terms these licenses are granted to any of the following class of persons: a citizen of Nigeria, a corporate body (Business/ company registration) duly incorporated under the Companies and Allied Matters Act (CAMA), a mining Cooperative and where applicable a holder of the relevant prior license. However, in the case of a Mining Lease it appears the emphasis is on a body corporate duly incorporated under CAMA.