Global audit, tax, and business advisory firm, KPMG, has stated that to fully attract Foreign Direct Investment (FDI) into Nigeria’s over 44 solid minerals scattered in over 500 locations nationwide, the country, through its agencies, must sign up for relevant international mining organisations.

In its June report on the country’s solid minerals sector, KPMG stated that based on its mineral wealth, Nigeria should naturally be a preferred mining destination for many multinationals.

The firm listed Nigeria’s mineral deposits to include, but not limited to, gold, barite, bentonite, limestone, coal, bitumen, iron ore, tantalite/columbite, lead/zinc, gemstones, granite, marble, gypsum, talc, iron ore, lead, lithium, nickel, and silver.

It stated, however, that a myriad of challenges had plagued the sector, hindering its ability to attract and retain the much-needed foreign participation and investments.

The report stated, “Therefore, in addition to its continuing efforts to mitigate the identified domestic challenges and to improve the ease of doing business in Nigeria, the federal government (through the relevant ministries or key mining associations) should consider becoming a member of renowned international mining organisations.

They include: The Committee for Mineral Reserves International Reporting Standards (CRIRSCO), the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF), and the International Council of Mining and Metals (ICMM), amongst others.”

KPMG stated that membership and affiliations with such globally renowned mining organisations would confer several benefits to Nigeria and mining stakeholders, and had the potential to put the country in pole position to attract FDIs.

It said, “Some of the other benefits include the following: validating the veracity and existence of acclaimed mineral deposits, especially of critical metals, earning and maintaining global trust by promoting high standards of reporting of identified mineral estimates and strengthening the social and environmental performance of the mining sector, in view of the increasing ESG-investment considerations.”

It identified other benefits as, “Building recognition of the mining sector contribution to local communities and society at large and strengthening laws and policies to achieve short and long-term sustainable development goals.”

Given what it described as the recent strides and advancements recorded in the Nigerian mining sector, KPMG said

the country could maximise its potential by sending positive signals of readiness for business to the global community.

It said such signals would be energised by certifications obtained from membership of the appropriate organisations, which could strengthen investor confidence and make the country the preferred investment destination for mining majors.

As of May 2024, KPMG stated that a total of 7,182 companies and individuals were licensed to operate in the upstream subsector, including exploration, mining lease, quarrying lease and small scale mining licence.

It listed some of the challenges in the sector to include the lack of critical infrastructure, particularly adequate electricity supply and access roads to sites of mineral deposits, as well as limited geoscience data and information.

KPMG stated, “A major issue facing the sector is the apparent lack of adequate, accessible and reliable geological data on available mineral resources and their locations which affects the sector’s ability to attract investors.

“Every investor requires access to credible data to facilitate investment decision making. Most of the available geological/geoscience data are dated. This raises questions about the credibility of the resource information and impacts the bankability of mining projects.”

However, it said the federal government, in May 2024, through the office of the Nigerian Geological Survey Agency, introduced the Nigerian Mineral Resources Decision Support System (NMRDSS), a web-based application that provides read-only access to geo-scientific and geo-economic data of Nigeria.

KPMG said another issue hobbling the growth of the minerals sector in Nigeria was insecurity. It stressed that although a number of the mineral rich communities in the northern region of Nigeria had now been liberated from the occupation of terrorist groups, communal and religious conflicts occurred intermittently in the Middle Belt region, an area known to be rich in minerals and metals.

It said the recent operations of the Mines Surveillance Task Team to tackle the challenges of illegal mining and the recent inauguration of the Transport and Mining Marshals were a step in the right direction, as it could help to foster a more secure climate for operators.

The firm said, “Illegal mining activities in some of the regions pose attendant Health Safety & Environment (HSE) risks and community challenges. However, it is expected that with the strengthening of the nation’s security apparatus, it will help to contain and curtail the nefarious activities of illegal miners.”

KPMG identified project funding as a major challenge. It said Nigeria had continued to struggle to attract the necessary investments into the minerals sector due to a combination of factors, including insufficient bankable projects because of limited geoscience data about reserves, policy uncertainty, security concerns and global economic dynamics.

According to KPMG, the existing fiscal framework for investors in the mining sector is not attractive enough and does not consider the peculiar nature of the sector, particularly, its long gestation period.

“In addition, incentives for miners appear to be scattered in pieces of different and independent fiscal legislations, which urgently calls for harmonisation, to provide clarity to operators as to which should prevail,” the firm added.