Nigeria has signed a US$1.3 billion investment agreement with the Africa Finance Corporation (AFC) to develop its solid minerals sector, in what officials describe as the largest private mining investment in the country’s history.
The deal, signed on Sunday, is aimed at accelerating the transformation of a sector that currently contributes just about one percent to gross domestic product, despite Nigeria’s vast deposits of gold, lithium, iron ore, bauxite and other strategic minerals.
At the heart of the agreement is the construction of an alumina refinery designed to operate for approximately 20 years at a 95 percent utilisation rate. According to official projections, the refinery is expected to produce about 19 million tonnes of alumina over its lifespan, positioning Nigeria to move up the value chain in mineral processing rather than continue exporting raw materials.
The project also includes a nationwide geoscientific mapping programme intended to generate reliable geological data and de-risk mining investments. In addition, the government and AFC will establish a strategic investment vehicle to accelerate the development of identified mineral assets across the country.
Authorities estimate the investment could add US$1.2 billion annually to GDP and generate more than $25 billion in economic value over the life of the project. It is also projected to bring in about $8 billion in foreign exchange earnings a significant boost for Africa’s largest economy, which has faced periodic dollar shortages and currency pressures in recent years.
Nigeria’s mining industry has historically underperformed relative to its potential. Data from the Extractive Industries Transparency Initiative (EITI) show that the sector contributes roughly one percent to national output. The weak performance has been attributed to widespread unregulated artisanal mining, outdated regulatory frameworks, limited geological data, infrastructure deficits and security challenges in certain mining regions.
However, the administration of President Bola Tinubu has made the revitalisation of the solid minerals sector a central pillar of its economic diversification strategy since taking office in 2023.
The government has introduced reforms including revised licensing procedures, stricter enforcement against illegal mining operations and the launch of a digital mining cadastre system aimed at improving transparency and investor confidence. Authorities have also prioritised policies that encourage domestic processing and beneficiation of minerals, rather than the export of raw ores.
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Officials say these reforms are beginning to yield results. Sector revenues reportedly increased from 8.6 billion naira (about US$15.3 million) in 2023 to more than 38 billion naira in 2024, reflecting improved compliance and renewed investor interest.
Analysts say the alumina refinery component of the AFC-backed project is particularly significant because it signals a shift toward downstream industrialisation. Alumina, refined from bauxite, is a key input in aluminium production, widely used in construction, transportation and packaging. By processing bauxite domestically, Nigeria could capture more value within its borders, create jobs and stimulate related industries.
The national geoscientific mapping initiative is also expected to reduce investment risk by providing more accurate data on mineral reserves, a long-standing barrier to large-scale mining development in the country.
If successfully executed, the agreement could mark a turning point for Nigeria’s mining sector, strengthening its contribution to GDP, boosting foreign exchange earnings and supporting broader efforts to reduce reliance on oil exports.
For a country seeking sustainable growth and economic resilience, the US$1.3 billion partnership with AFC represents a major step toward unlocking the full potential of its mineral wealth.
Nigeria’s solid minerals sector has long been overshadowed by the country’s dominant oil and gas industry, despite the presence of commercially viable deposits of gold, lithium, iron ore, coal, limestone and bauxite across several states.
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For decades, hydrocarbons have accounted for the bulk of export earnings and government revenue, leaving mining marginalised in policy focus and investment flows. As a result, the sector contributes only about one percent to Nigeria’s gross domestic product, according to data from the Extractive Industries Transparency Initiative (EITI).
Industry experts attribute the sector’s weak performance to a mix of structural challenges, including outdated geological data, limited exploration, regulatory bottlenecks, insecurity in some mining areas and the dominance of informal and artisanal operators. Illegal mining has been particularly pervasive in gold-rich regions, leading to revenue leakages and environmental degradation.
The lack of reliable geoscientific data has also deterred large-scale investors, who typically require comprehensive reserve estimates and bankable feasibility studies before committing capital. Much of Nigeria’s geological mapping has historically been incomplete or outdated, raising risk perceptions for potential investors.
In response, successive administrations have sought to reposition mining as a pillar of economic diversification, especially in the face of oil price volatility and declining crude production. Since assuming office in 2023, President Bola Tinubu has prioritised reforms aimed at modernising the sector and attracting private capital.
Key measures introduced under his administration include revised licensing processes to streamline approvals, the deployment of a digital mining cadastre system to improve transparency in mineral title management, and stronger enforcement against illegal mining activities. Authorities have also promoted policies encouraging local processing of minerals to increase domestic value addition rather than exporting raw ores.
These reforms form part of a broader economic strategy to expand non-oil revenue sources, strengthen foreign exchange inflows and stimulate industrialisation.
The involvement of the Africa Finance Corporation (AFC) reflects growing interest from development finance institutions in supporting Africa’s critical minerals value chains. AFC has previously backed large-scale infrastructure, energy and natural resource projects across the continent, positioning itself as a key financier of industrial development initiatives.
Against this backdrop, the $1.3 billion agreement for an alumina refinery, national geoscientific mapping programme and strategic investment vehicle is seen as a landmark step in Nigeria’s effort to unlock its mineral wealth and reduce overdependence on oil exports.
