Nigerian govt, AFC seal $1.3bn mining investment pact

THE Nigerian government, working through the Solid Minerals Development Fund (SMDF), has formalised a $1.3bn investment partnership with the African Finance Corporation (AFC) to drive three major initiatives aimed at transforming the mining industry.

The agreement, executed in Abuja after months of negotiations, covers the development of a $1.3bn alumina refinery, a nationwide geoscience data mapping programme, and the creation of a joint investment vehicle to fast-track exploration and production activities. The deal is seen as a strong signal of investor confidence in the government’s ongoing reforms in the solid minerals sector.

A statement issued by the Special Assistant on Media to the Minister of Solid Minerals Development, Mr Segun Tomori, said the refinery project is designed to process approximately one million tonnes of bauxite annually. The plant will utilise a modern Bayer-process flowsheet and will be supported by an on-site gas-fired cogeneration facility to generate both steam and power.

According to the ministry, the memorandum of understanding represents the culmination of detailed discussions between AFC and SMDF to jointly finance the construction of what is expected to become Nigeria’s largest private-sector mining investment. The refinery is projected to operate for about 20 years at 95 percent capacity utilisation, with total alumina output estimated at 19 million tonnes over its lifespan.

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Government projections indicate the project could add roughly $1.2 billion to Nigeria’s gross domestic product (GDP) each year, generate more than $25bn in economic value across its lifecycle, and deliver about $8 billion in foreign exchange earnings. Feasibility assessments carried out by both AFC and SMDF reportedly confirmed the project’s commercial viability and its competitiveness in the global market.

Speaking at the signing ceremony, the Minister of Solid Minerals Development, Mr Dele Alake, described the agreement as a watershed moment for the sector. He said the investment would accelerate value addition, create employment opportunities, and significantly increase mining’s contribution to GDP.

Mr Alake added that the initiative aligns with the ministry’s strategy to generate comprehensive mineral data, reduce exploration risks for international investors, and unlock the country’s vast resource potential.

The Executive Secretary of SMDF, Fatima Shinkafi, characterised the agreement as the largest project undertaken by the fund since its establishment. She noted that the $1.3bn capital expenditure demonstrates the fund’s growing capacity to attract and structure large-scale investments in partnership with reputable institutions like AFC.

Beyond the refinery, the two parties also agreed to carry out a comprehensive geoscience mapping exercise to produce reliable and up-to-date data on Nigeria’s mineral deposits. Industry experts have long cited the lack of credible geological data as a major obstacle to large-scale mining investment. The mapping initiative is expected to enhance transparency, support exploration, and position Nigeria more competitively on the global mining stage.

In addition, AFC and SMDF will establish a joint strategic investment vehicle to accelerate the development of exploration assets nationwide. The vehicle will focus on advancing selected mining leases from exploration through to development and eventual production once exploration campaigns are completed.

To demonstrate the government’s commitment to fast-tracking the projects, Mr Alake confirmed that all necessary approvals have been granted. He said relevant agencies under the ministry have been directed to ensure the seamless processing of permits, titles, and regulatory clearances, stressing that bureaucratic delays would not be tolerated.

‘Evidence of reforms’

The Permanent Secretary in the ministry, Mr Farouk Yabo, described the partnership as evidence that reforms in the mining sector are beginning to yield tangible results. He said the initiative could firmly place Nigeria on the global mining map and attract substantial private capital.

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The development comes as the Federal Government intensifies efforts to diversify the economy away from crude oil by strengthening the solid minerals sector. Despite Nigeria’s significant deposits of bauxite, lithium, gold, iron ore, and rare earth minerals, mining contributes less than one percent to GDP due to infrastructure gaps, illegal mining activities, and weak investment flows.

Recent reforms have included modernising licensing systems, tightening security at mining sites, and promoting value addition. If successfully implemented, the AFC partnership could serve as a template for future large-scale investments in Nigeria’s mining industry.

Observers say the success of the projects will be critical in determining whether Nigeria’s mining reforms can translate into sustained foreign direct investment and long-term economic diversification.