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Mining is an important part of the economy of many countries, including Nigeria. In addition to underground mining, its important part is opencast mining – in the event that the deposits are located relatively shallow. For this, modern technologies are used, many types of mining special equipment are used.

Over the past five years, there has been an urgent need to modernize the mining industry in Nigeria. The country's authorities are taking serious steps to improve and develop the mining sector in Nigeria. A plan for the industry development for years to come has been worked out and is being implemented. The new administration that recently came to power in the country has expressed its readiness to stimulate the growth of the mining sector, which is a positive signal for those planning to open a mining business in Nigeria.

Regarding the legislation governing mining in Nigeria, the following legal acts are worth noting:

  • Fundamental Law is the Law on Extraction of Minerals and Mining.
  • Guidelines by the sectoral Ministry.
  • Companies Law, which regulates company registration in Nigeria.
  • Companies planning to obtain a mining license in Nigeria must be registered in accordance with this law.
  • The Transparency Law governing the disclosure of revenues from mining in Nigeria.

NOTE:

When considering registering a mining company in Nigeria, it is important to remember that English common law and equity law are also important sources.

If you are planning to obtain a permit to conduct mining activities in Nigeria, please note that it is the Mining Cadastre Administration that deals with this issue, including issues on the renewal of mining permits in Nigeria, as well as their cancellation.

Types of mining permits in Nigeria

The Ministry of Mining is the key state body administering the right to extract minerals.

We suggest that you familiarize yourself with the types of permits that  companies can obtain to carry out mining in Nigeria:

  • Mineral exploration in Nigeria. Gives the right to conduct exploration of rocks, but prohibits drilling and other similar work.
  • Exploration license. It is possible to obtain a license for exploration for minerals in Nigeria only after obtaining permission from the Office of the Mining Cadastre. This license will cover the entire territory in which activities are conducted, including small-scale works.
  • Lease of area for mining in Nigeria. Gives the right to gain access to the leased area for mining.
  • Rent a quarry for mining in Nigeria. It gives the right not only to extract minerals in the leased area, but also to extract and utilize the minerals specified in the contract.

Production of oil and gas in Nigeria

It is necessary not only to find deposits, but also to assess their volume, rock composition and depth to determine the feasibility of mining. Further, preliminary work is carried out at the site of future developments, which include drainage (sometimes watering) of the territory, laying of communications (access roads, electricity, communications, Internet), construction of administrative and auxiliary buildings. How much time passes from the moment of completion of geological exploration to the end of preliminary work, it is impossible to say unequivocally: it depends on investments in the future quarry, the nature of the terrain, climatic and weather factors.

If you are interested in registering a company for oil and gas production in Nigeria, there are several types of concessions for conducting this activity on the territory of the state. You can get the following licenses:

  • for exploration and study of oil.
  • for oil exploration in Nigeria – to search for oil products.
  • license for oil production in Nigeria – including for the processing of oil products.

Product sharing agreement

In the near future, Nigeria plans to commission new oil fields, which may increase oil production.

The local state-owned Petroleum Corporation involves contractors to carry out oil operations in those territories that are wholly owned by it. The contractor, in turn, assumes obligations for the mining activity and reimburses its costs in the event of the discovery and production of oil. This is the main essence of the agreement based on state policy to attract oil companies.

At the same time, the contractor is entitled only to that share of crude oil that is allocated to him at the cost of oil and shared oil (to guarantee the return on investment). In addition, it also has oil at its disposal to cover tax and royalty liabilities in agreement with the Corporation.

JV Agreement

This type of contract is the main agreement between the Corporation and the operators. Each party is required to share in the costs of conducting geological activities in Nigeria. Each partner can raise and separately dispose of their percentage of production, subject to the payment of income tax and royalties.

You can select and carry out transactions with exceptional risk. Technical issues are discussed and policy decisions are made in committees whose representation is organized on a participatory basis.

Please note that in order to obtain a permit for the oil and gas industry in Nigeria, including a permit for the exploration of oil and gas in Nigeria, you must submit an application to the Department of Petroleum Resources.

NOTE:

If a foreigner registers a mining company in Nigeria, then he is obliged to attract local companies through which the activity is carried out.

For a more detailed study of the issue, we suggest signing up for an individual consultation on how to start a mining business in Nigeria with the specialized lawyers of IQ Decision.

Benefits provided

Please note that persons engaged in mining activities in Nigeria are subject to preferential tax treatment. Namely, the mining license holder in Nigeria has the right to deduct from his taxable profit a capital surcharge on the corresponding capital expenditure incurred in the year in which the investment was made for all certified exploration, development and processing expenditure. 

Legal assistance

When deciding to register a mining business in Nigeria for a positive result, it is important to use the qualified assistance of experienced specialists, including for resolving legal issues. The IQ Decision UK specialized solicitors are ready to provide you with comprehensive advice on how to set up a mining business in Nigeria, and obtain a permit for mining in Nigeria.