By: Ecofin agency

The Federal Government of Nigeria and the Africa Finance Corporation (AFC) signed a $1.3 billion investment agreement on Sunday, March 1, aimed at transforming the country’s solid minerals sector.

The project includes the development of an alumina refinery and a national geoscientific mapping program, as well as the creation of a strategic investment vehicle to accelerate the exploitation of identified mineral resources nationwide.

Designed to operate for about 20 years at a 95% utilization rate, the refinery is expected to produce 19 million tons of alumina over its lifetime. According to an official statement, the project is expected to be the largest private investment in Nigeria’s mining sector and a landmark foreign direct investment. It is projected to add $1.2 billion annually to GDP, generate more than $25 billion for the economy over its lifetime, and bring in $8 billion in foreign exchange earnings.

Nigeria’s mining sector accounts for only a marginal share of the economy. According to the Extractive Industries Transparency Initiative (EITI), it contributes about 1% of GDP. This weak performance is largely due to unregulated artisanal mining, outdated legal frameworks and security challenges in some mining areas.

Since 2023, President Bola Tinubu’s administration has introduced structural reforms to revive the sector, including revised licensing procedures, the launch of a digital mining cadastre to improve transparency, and policies promoting local processing instead of raw exports.

Sector revenues rose from 8.6 billion naira ($15.3 million) in 2023 to more than 38 billion naira in 2024.