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Minerals and Mining Act 2007

Legal Risk Rating
Score: 59
Moderate Risk
The Nigerian mining law is the offspring of a well-intentioned draftsperson having sufficient industry experience to craft a reasonable path to production, but having insufficient knowledge to avoid a couple of embedded errors that will likely require amendment if it is to operate in practice.

Regulatory Corruption Risk

Low Corruption Potential

Corruption Exposure Risk

Moderate Corruption Risk

Legal Risk Rating

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Mining Overview Commentary plus sign



Nigeria is located in West Africa; the country is comprised of 36 states and the Federal Capital Territory where the country’s capital city, Abuja is located. It is bordered by Benin, Chad, Cameroon and Niger. Nigeria became independent from Great Britain in 1960 and retains English as its functional and commercial language. Nigeria is the most populous country in Africa and, in 2014, its economy became the largest in Africa. The country has successfully navigated through more than one democratically induced change of government, reflecting well on the country and its relative political stability. The country features a highly educated middle and upper class, many of whom have been educated outside of Nigeria in the UK, America, or elsewhere. Whilst this political class is not large, it is influential and a major stabilising force within the country.

Nigeria has a wide range of unexploited mineral resources, however, not all minerals are available in commercial quantities and little modern exploration has taken place; this is largely due to the dominance of the oil sector in attracting available risk capital, as well as government policy focus. According to the World Bank the mining of minerals in Nigeria currently accounts for just 0.3% of the country’s GDP. That said, the government revamped its mining law in 2007 and, again in 2011, with the aim of diversifying its economic and the Ministry of Mines and Steel Development has designated seven strategic minerals for priority development, namely, coal, bitumen, limestone, iron ore, barites, gold and lead/zinc.


The Mineral and Mining Act (2007) (Mining Act) is the principal legislation that regulates the Nigerian mining sector. Article 1 of the Mining Act states that “The entire property and control of all Mineral Resources […] is and shall be vested in the Government of the Federation for and on behalf the people of Nigeria”. In 2011, the Minerals and Mining Regulation was enacted in order to complete the regulatory framework for governing the sector. The Ministry of Mines and Steel Development (MMSD) is responsible for the administration of the mining industry. The Ministry is composed for the Mines Inspectorate Department, the Mines Environment and Compliance Department, the Mining Cadastre Office and the Artisanal and Small-scale Mining Department. The Mining Cadastre Office is competent for issuing, suspending and revoking mining rights.


According to Sections 8 and 9, the principle of first come / first served applies, save for reserved areas where tendering is contemplated (e.g., known resources). Individuals, co-operatives and Nigerian legal entities may obtain the right to explore for mineral resources, while only Nigerian companies may obtain mining leases (see ss. 47 et seq.). The Mineral and Mining Act provides for the following mineral rights:

  • Reconnaissance Permit: This grants a non-exclusive right over the area for a period of one year, and may be renewed annually (s. 57). The permit is non-transferrable.


  • Exploration Licence: This licence is exclusive and may not be granted over an area where another licence, lease or permit already exists (s. 59(2)). The permit grants an exclusive right over an area that shall not exceed 200 km2 for an initial period of three years; the licence may be renewed for two further terms of two years each, provided the title holder has complied with legal requirements of the MMA (ss. 59, 60 and 62). The duration of the licence including all renewals may not exceed seven years (Art. 37, Reg.). The licensee shall give notice to the landowner prior the start of the activities (Art. 61(1)(c)). The holder of the exploration licence has the exclusive right to apply for a mining lease, as well as a small-scale mining lease and a quarry lease.


  • Mining Lease (ML): May be acquired by a body corporate that has demonstrated that minerals in commercial quantities exist within the area subject to the application. Applications for mining leases must include the details of the exploration licence, the desired mining lease area, the mineral resources to be developed and a “pre-feasibility” study (s. 57(3)(h)(iii), Reg.; note that the MMA, itself, refers to a “feasibility” study in s. 67). A ML grants the holder an exclusive right to mine and has a duration of 25 years; it is readily renewable if the holder has complied with work obligations and the requirements stated by law.


  • Small-scale Mining Lease: An individual, entity or co-operative may acquire a small-scale ML. The area shall not be less than 5 acres and shall not exceed 3 km2. The products recovered under a small scale mining lease shall be sold to a licensed Mineral Procurement Centre. The licence is granted for a period of five years, and may be renewed for further periods that shall not exceed 5 years each (s. 50, Reg.).


A mineral title (except for reconnaissance permits) may be transferred with the prior consent of the Minister, except for transfers to affiliates (which do not require such consent), and should be registered with the Mining Cadastre Office. Mineral rights may be wholly or partially assigned, sub leased, pledged, mortgaged, charged or subject to any security interest (s. 147, MMA).


The MMA requires a ML holder to commence mine development within 18 months, and mine production within 36 months, "from the date the requirements of the Act have been met" (ss. 70(1)(a) and (b)). The 'requirements of the Act" include the need to obtain (a) environmental impact assessment (EIA) approval, (b) approval for its work programme by the Mines Inspectorate Department, (c) a Community Development Agreement and (d) a settlement on compensation for other land users and owners. (See also s. 118(2), Reg.) With respect to the concept of a Community Development Agreement, section 116 of the MMA simply states that prior to the commencement of any development activity, a lessee must conclude with the 'host community where the operations are to be conducted an agreement.... that will ensure the transfer of social and economic benefits to the community."

The Community Development Agreement must, inter alia, provide for educational, fiscal, commercial development, agricultural and environmental, socio-economic management and local government enhancement (s. 116, MMA). Since a failure to reach such an agreement would lead to a breach of the act, it is inevitable, we believe, that all such agreements on major investment projects will be referred to the minister for resolution, as provided in section 116(4) and the time required for this will seriously erode the remaining development time permitted. (See also s. 130, MMA; Reg. s. 193.) The Community Development Agreement shall be reviewed every five years.

When an application for a mineral title is made in respect of an occupied area under a state lease or right of occupancy, the applicant shall inform the landowner and obtain the consent prior the procurement of the licence. The holder of a mining lease shall pay a rent to the landowner determined by the Minister (s. 102, MMA). The rate of the surface rent shall be reviewed by the Minister every five years. Furthermore, a holder of a mineral title may pay to the landowner a fair compensation for any disturbance of the surface rights and any damages to the surface of the land (s. 107, MMA). This compensation is determined by the Mining Cadastre Office upon consultation of the State Minerals Resource, the Environmental Management Committee and a licensed appraiser. The non-payment of the compensation results in suspension of the mineral title, which also may be revoked if the payment is not made within 30 days after the suspension.

The Environmental Impact Assessment Act, Cap E12, LFN (2004) (hereinafter EIA Decree) outlines the procedures to be applied in respect of an EIA approval. It provides fairly clear tests as to what projects will and will not be permitted. For exploration activities, the holder of an exploration licence must "maintain and restore the land that is the subject of the licence to a safe state from any disturbance resulting from exploration activities, including but not limited to filling up any shafts, wells, holes or trenches made..." (s. 61(1)(d)). The holder of a mining, small-scale or quarry lease who intends to abandon or permanently cease the production shall submit a written notice to the relevant departments together with the reasons thereof and an abandonment plan.

A Water Use Permit may be required by a developer of a mine. Such a permit is necessary when altering the course of water, consuming water for mining operations or otherwise affecting its supply. It is responsibility of the holder of a water permit to reach an agreement with any affected water users (s. 130, MMA). When an agreement is not reached, the matter may be referred to the Minister, and ultimately, to Arbitration (s. 130, MMA). The permit shall be valid as long as the small-scale, mining lease, quarry lease or exploration licence remains in force. The holder of a mineral title shall submit a half yearly report of all exploration and or mining operations, a half-year report based on the progress of the Community Development Agreement, and an annual expenditure report on mining operations to the Mines Inspectorate Department (s. 18, Reg).


See Nigeria Environmental Overview Commentary.

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Nigeria is located in West Africa, bordered by Benin, Chad, Cameroon, Niger and the Gulf of Guinea. With a population of over 180 million, Nigeria is the most populous country in Africa. Nigeria has a tropical climate, with heavy rain in the southern region of the country; wet and dry seasons in the central and western regions; and a drier climate in the north of the country. Monsoons occur frequently in the wet seasons and during the dry season, which lasts from October to March (although seasons vary somewhat across the country), the Harmattan winds, which blow from the Sahara to the Gulf of Guinea, hit the region.  

Nigeria features one of the richest areas of biodiversity on the Africa continent. Its diversity of natural ecosystems ranges from semi-arid savanna to mountain forests, rich seasonal floodplain environments, rainforests, vast freshwater swamp forests and diverse coastal vegetation. Nigeria’s Niger Delta contains the largest tract of mangrove in Africa.

Nigeria has around 900 species of birds, 274 types of mammals, 154 reptiles species, 53 species of amphibians and 4,715 species of plants. Notable animals include gorillas, gazelles, hyenas, hippopotamus, elephant, and leopard. Almost 70-80% of the country’s forest has disappeared due to agriculture, city expansion, building of industry and logging. This has had a detrimental impact on the country’s diverse array of wildlife and it is reported that many species are threatened, with the number of mammals in Nigeria greatly depleted. Nigeria has created a system of nature and game reserves and national parks, managed by the state, but these are often poorly controlled and subject to poaching. Oil spills in the Niger Delta and desertification are major environmental challenges. Extensive ‘bunkering’ (or oil theft) via pipeline penetration and vandalisation causes most of this damage.


Article 20 of the Constitution of the Republic of Nigeria provides that the State shall protect and improve the environment, as well as safeguard water, air, land, forest and wildlife of Nigeria. In furtherance of this obligation, projects or activities having a potential environmental impact are reviewed and regulated pursuant to the Environmental Impact Assessment Act, Cap E12, LFN (2004) (hereinafter EIA Decree). The National Environmental Standards and Regulation Enforcement Agency Act, 2007 (“NEA”) specifies that National Environmental Standards and Regulations Enforcement Agency (“Agency”) is the body having the power to enforce environmental standards and regulations. Pursuant to Section 3 of the NEA, a Governing Council is established within the Agency (“Council”), which consists of representatives from several government departments as well as external appointments.


The EIA Decree regulates an environmental impact assessment (EIA or mandatory study) in relation to all projects and activities that may have a significant environmental impact and in which the federal government plays a role, such leasing land for the project or promoting, financing, permitting or licencing the project or activity, including the renewal of any lease or licence (ss. 13 and 23). Certain projects and activities are subject to mandatory review pursuant to Section 12 (and the “mandatory study list” Schedule), including projects that involve:

  • Non-ferrous smelting of aluminium, copper and, if producing greater than 50 tonnes/day, other no-ferrous minerals;
  • Ÿmining, where the mining lease is greater than 250 hectares; and
  • ore processing, including the concentration of aluminium, copper, gold or tantalum.


The mandatory study list is somewhat curious in its specificity, inherent duplicity and failure in inclusivity, such as the listing of a limited number of minerals to the exclusion of all others (e.g., nickel, tin, zinc and silver). No doubt, this reflects the relative immaturity of the mining industry in Nigeria and the minerals that are considered to be of some import based on known mineralisation.

Pursuant to Section 3 of the EIA Decree “the relevant significant environmental issues shall be identified and studied before commencing or embarking on any project or activity convened by the provisions of this Act or covered by the Agency or likely to have serious environmental impact on the Nigerian environment”. The EIA Decree contemplates the following steps in seeking EIA approval:

      • Screening study (used where a project is neither on the mandatory list, nor the excluded list);
      • Mandatory study;
      • Assessment by a review panel; and
      • Follow-up program; (s. 15).


Every step must consider the environmental effects of the project, the significance and cumulative effects thereof, comments of the public and measures that are technical and economically feasible to mitigate such effects (s. 15).

Where a screening report has been conducted (for projects that are not on the mandatory study list) or a mandatory study has been completed, the Agency (in the former case) and the Council (in the latter case) is required to take one of the following courses of action:

  • where the project is not likely to cause significant adverse environmental effects or such effect can be mitigated, then the project shall be permitted;
  • Ÿwhere the project is likely to cause significant adverse environmental effects that may not be mitigated or public concerns warrant, the project shall be referred to the Council (in the case of a screening study) or to mediation or a review panel (in the case of a mandatory study); and
  • where the project is likely to cause significant adverse environmental effects that cannot be mitigated, the project shall be permitted; (ss. 21(1) and 25).

In either case (of a screening study or mandatory study), the public is permitted to examine and comment upon the report (ss. 21(3) and 24).

It should be noted that the Agency may refer a project to the Council at any time if it believes that the project may cause significant adverse environmental effects that may not be mitigable or the public has substantial concerns about the project (s. 26). Similarly, the Council may refer any such project to either mediation or a review panel. Mediation is only to be preferred where “(a) the parties who are directly affected by or have a direct interest in the project have been identified and are willing to participate in the mediation through representatives and (b) the mediation is likely to produce a result that is satisfactory to all of the parties” (s. 30). Where a project has been referred to a review panel, the Council in consultation with the Agency is to select panel members to sit on the panel (s. 35). The panel has the powers of a Federal High Court in compelling attendance of witnesses.

The report of the review panel or the mediator is required to be referred back to the Agency, which then acts to permit or prohibit the project depending upon whether or not the significant adverse effects have been determined to be mitigable (s. 39). In this sense, the report of the panel or mediator is in the nature of a recommendation, albeit the Agency is required to act in accordance with the recommendation. The Agency’s final step in the EIA process is to sign a certificate that states that an EIA has been completed, which then gets registered in a public registry in order to facilitate public access.

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