In 2019 the government made the decision to revise the Nigeria Minerals and Mining Act (NMMA), the law that has governed the sector since it came into force in 2007. However, as a result of the disruption caused by the Covid-19 pandemic, as well as other international and domestic challenges, the passage of the revised law was delayed. In November 2021 the government announced plans to move forward with the reforms, and sector players and investors hope that 2023 will see an updated NMMA on Nigeria’s statute books.
The new NMMA is expected to address a number of key issues within the sector, from overall governance to local content. It is hoped that the updated legislation will help formalise the sector, incorporating many of the country’s unregistered miners, while also improving relations with local communities. “There are three planks and aims of the act,” Kwadwo Sarkodie, partner in the construction and engineering team at law firm Mayer Brown, told OBG. “They all signal further support and more effective regulation of the sector.”
In a sign that the government has prioritised moving forward with the reform, in April 2023 the Federal Executive Council approved the proposed bill, sending it to the National Assembly for debate and approval.
Three Planks
The first planks of the amended act is the consolidation of federal level functions within the sector under a new Minerals and Mining Commission. The commission will serve as a one-stop shop for existing and prospective mining companies and investors, and bring together powers that are currently dispersed across several different ministries and agencies.
The second plank, meanwhile, will involve the devolution of some responsibilities from the federal government to the state government. In particular, the amendment seeks to address complaints from some state capitals that mining investors may obtain a licence to mine in their state without consultation with the state itself. Indeed, once receiving a licence from Abuja, the only requirement then is for the mining company to make a community development agreement (CDA) with residents living close to the mine.
The new act should therefore see some of the powers of the Nigeria Mining Cadastre Office devolved to the state level. This, advocates argue, will give the local authorities more of a stake in the sector’s success, as revenue from mining will no longer be concentrated at the federal level. State authorities will also play a larger role in administering the revised act, ensuring that mining activity in their respective regions meets regulatory and legal requirements. Being on the ground should also improve the effectiveness of the authorities when dealing with illegal mining, environmental pollution and smuggling. With many of these problems occurring among artisanal and small-scale miners rather than large national or multinational companies, state governments may be better placed to tackle these issues.
The third plank focuses on local content – the proportion of procurement and recruitment that a mine must source from local companies and personnel. Unlike the oil and gas industry, minerals extraction has typically lacked clear local content regulations. The new act aims to address this by ensuring that mines are connected with local communities and the benefits of mining activity are more widely shared.
Next Steps
The draft amendments are not without their concerns, however. Some states have more experience and more developed administrative and regulatory mechanisms than others, leading to questions about the capacity of some local authorities to take on responsibilities that were previously managed at the federal level. Another potential challenge is ensuring that a uniform approach to mining regulation is taken across the country’s 36 states. Nevertheless, the proposed measures should help address some of the issues that have limited the sector’s expansion. The amendments mark a clear intention to reform the industry, and provide an incentive for surrounding communities and state authorities to support its development.
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