TerraLex Cross-Border Guide to Cross-Border Guide to Mining Rights

Section 44 (3) of the Nigerian Constitution 1999 (as amended) states that the “property in and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria or in, under or upon the territorial waters and the Exclusive Economic Zone of Nigeria shall vest in the Government of the Federation.” According to its powers in this regard, the federal government regulates mining activity in Nigeria under the provisions of the Nigerian Minerals and Mining Act of 2007 and the Nigerian Minerals and Mining Regulations of 2011. There are other complementary laws at both the federal and state level that create rules for environmental and safety standards. These include:

1. Constitution of the Federal Republic of Nigeria (CFRN) (as amended), 1999
2. Nigerian Investment Promotion Commission Act, 2004
3. Environmental Impact Assessment Act, 2004
4. National Environmental (Mining and Processing of Coal, Ores, and Industrial Minerals) Regulations, 2009
5. National Environmental (Permitting and Licensing System) Regulations, 2009
6. National Environmental (Noise Standards and Control) Regulations, 2009
7. National Environmental Standards and Regulation Enforcement Agency (Establishment) Act, 2007
8. Land Use Act (LUA), 2004
9. Explosives Act, 2004
10. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 2004
11. Companies and Allied Matters Act (CAMA), 2020
12. Labour Act, 2004
13. Employees Compensation Act, 2010
14. Immigration Act, 2015
15. Nuclear Safety and Radiation Protection Act, 2004
16. Mines and Quarries (Control of Building, etc.) Act, 2004
17. Company Income Tax Act, 2004
18. Personal Income Tax Act, 2007
19. Schedule to the Taxes and Levies (Approved List for Collection) Act (Amendment) Order, 2015
20. Water Resources Act, 2004; Mineral and Metal Policy, 2008

The Ministry of Mines and Steel Development is the primary authority involved in the regulation of the mining industry. There are four principal departments within the Ministry: - Mining Cadastre Office

• Mines Environmental Compliance Department
• Mines Inspectorate Department
• Artisanal and Small-Scale Mining Department

Additionally, there are other agencies involved in the regulations:

• Nigerian Geological Survey Agency
• Nigerian Nuclear Regulatory Authority
• Federal and State Ministries of Land
• Nigerian Export Promotion Council

To receive mining concessions: - Company Registration at the corporate affairs commission

• Apply for mineral title at the Mining Cadastre Office (MCO)
• Due diligence investigation will be done by the MCO
• If the application is successful, applicant will be required to pay the necessary fees
• The applicant will then execute a mineral agreement with the ministry of mines and steel development
• The company will then have to obtain an environmental permit
• The company can then commence mining activities

The process for a mining application is handled by the Federal Ministry of Mines and Steel Development. The application must strictly comply with the provisions of the Nigerian Minerals and Mining Act of 2007 (the Act) and the Minerals and Mining Regulation of 2011. Section 57 of the Act provides the requirements and procedure for a grant of mining lease. The process includes:

• The prospective Company (the Company) applies to the minister in charge of the Ministry of Mines and Steel Development for a Certificate of Entry into the Nigerian Mining Industry. The prerequisites necessary for obtaining the certificate include:

1. Payment of the prescribed fees,
2. Submission of the Company’s Certificate of Registration,
3. Evidence of technical competence and
4. Evidence of financial capability.

• The Company then applies for and obtains a Prospecting Right (PR), which will enable it to carry out general and scientific prospecting for the categories of minerals within the granted prospecting right.
• The Company applies for an Exclusive Prospecting Licence (EPL) in the Mines Office of the state where the mineral is located. (This is an exploration licence for a specific mineral over a particular land, which by law should not exceed 22 square kilometres.) The requirements include:

1. An exploration licence
2. A certified true copy of the company certificate and other incorporation documents
3. Completed application forms
4. A pre-feasibility report
5. A prospecting plan
6. Payment of the processing fee
7. Evidence of financial capability
8. Evidence of technical competence
9. Irrevocable consent from the landowner(s) and/or occupier(s) to the applicant
10. An attestation of non-conviction of criminal offences under the Act by a lawyer

An exploration licence application shall be submitted, in triplicate, to the Mining Cadastre Office, for application, registration and processing. - An exploration licence titleholder shall meet the minimum annual work obligations as may be established under the Act and these Regulations from time to time.

• An exploration licence shall not be granted over any land that is subject to an existing exploration licence, mining lease, small-scale mining lease or quarry lease.
• The exploration licence shall be issued initially for a term of three years and may be renewed for two further periods of two years each; all renewals of the exploration licence shall not exceed seven years; conduct exploration activities in a safe, friendly, skillful, efficient and workmanlike manner in accordance with the regulations; conduct exploration activities in an environmentally and socially responsible manner.
• If intending to explore on land subject to a right of occupancy, give notice to the chairman of the affected Local Government Area and the holder of the right of occupancy or the user or occupier of the land before commencing exploration activities on the land; where the mineral title area is within more than one Local Government Area, the mineral titleholder shall give notice to the respective chairmen of the Local Government Areas concerned and the holders of rights of occupancy or the users and occupiers of land affected accordingly.
• Where in the course of the exercise of his rights under this Act, the holder of a mining lease, small-scale mining lease or quarry lease discovers any mineral not specified in his lease, he shall, within 30 days of the discovery, notify the Mining Cadastre Office in writing.

A mining lease is an exclusive permit granted in respect of an area not exceeding fifty (50) square kilometres which is not within an Exploration License Area or a Small-Scale Mining Area except to the holder of the Exploration License or Small-Scale Mining Lease covering such area.

The Lease confers upon the holder the right to use, occupy and carry out Mineral Exploitation within the Mining Lease Area, and market, sell, export, or otherwise dispose of the mineral products resulting from the Mining Operations. Every holder of a mining lease is required to:

1. Commence mine development within eighteen months for a Mining Lease for Mineral Resources and twelve months for a Mining Lease for Mineral Water unless an extension of the period is granted.
2. Commence production no later than thirty-six months for a Mining Lease for Mineral Resources and twelve months for a Mining Lease for Mineral Water unless an extension of the period is granted.

Pre-Conditions for Commencement of Development on Mining Lease Area:

The holder of a mining lease shall not commence any development work or extraction of Mineral Resources on the Mining Lease Area until after:

• The submission and approval by the Mines Environmental Compliance Department of all Environmental Impact Assessment Studies and mitigation plans required under applicable environmental laws and regulations.
• The submission and approval by the Mines Inspectorate Department of the details of the work which the applicant is prepared to undertake or a programme for carrying out any minimum work obligations imposed by the Mines Inspectorate Department.
• The conclusion of a Community Development Agreement approved by the Mines Environmental Compliance Department.
• The holder has duly notified, compensated, or offered compensation to all users of land within the Mining Lease Areas as provided for under this Act or in the event of a dispute, after the matter has been resolved by Arbitration.

It should be noted that the holder of an exploration license who sells any Mineral Resources will be subject to the payment of royalty as if the Mineral Resources sold were obtained under a mining lease.

Each state has a Mineral Resources and Environmental Management Committee that advises the Minister on environmental concerns related to mining exploitation and compensation. The Nigerian Minerals and Mining Act 2007 provides for compensation by mineral title holders to landowners and lawful occupiers in various scenarios such as,

• Damage to land and property resulting from reconnaissance activities.
• Damage to land and property resulting from activities in the exploration area.
• Revocation of their rights to use the land as a result of a mining lease.
• Damages to land or interest in land as well as pollution caused by such activities.

The Act prohibits mineral exploration in certain areas decided by the Mining Cadastre Office on the recommendation of the Mineral Resources Committee of the State concerned. A licensee or lessee who causes injury or damage to any area, tree or thing will be required to pay fair and adequate compensation to the persons or communities affected by injury or damage.

There is also compensation available to a holder of Certificate of Occupancy whose right has been revoked. This compensation is paid by the Governor to the holder of the Certificate of Occupancy who will then be reimbursed by the mining lessee.

A holder of mineral title is required pay to the occupier of land held under a State lease or the subject of right of occupancy- (a) reasonable compensation for any disturbance of the surface rights of the owner or occupier and any damage done to the surface of the land on which the exploration or mining, is being or has been carried; and (b) in addition pay to the owner of any crop, economic tree, building or work damaged, removed or destroyed by the holder of the mining title or by any of its agents or servants, compensation for the damage, removal or destruction of the crop, economic tree, building or work.

The amount of the compensation payable is to be determined by the Mining Cadastre Office after consultation with the State Minerals Resource and Environmental Management Committee and a Government licensed Valuer. Were the holder, six months after the grant of a mineral title, defaults in payment of the compensation, the Minister may suspend the mineral title until certain conditions are fulfilled.

However, it should be noted that there are some situations in which the Act provides compensation to a mineral title holder when he gives up the land that interferes with any way, work, building, or plant, or for the costs incurred in exploring the area needed for public purposes, and, in the case of a mining lease, for the loss or reasonable expectation of profits from proved minerals on the land needed for public purposes. The compensation payable is to be determined by either between parties or a court of law.

Except for reconnaissance permits, all of the mineral titles can be consolidated and transferred or assigned to a third party upon application to the Mining Cadastre Office, upon fulfilment of specified conditions and payment of all necessary fees. Notice of assignment, transfer, or change of a mining title is to be given to the Mining Cadastre Office within 30 days of the creation of the change or assignment.

No person shall, in the course of exploration or mining, carry out operations in or under any area held to be sacred or permit injury or destruction of any tree or other item which is the object of veneration. When any question arises as to whether an area is held to be sacred or a tree or item is the object of veneration, the question shall be decided by the Mining Cadastre Office on the recommendation of the Mineral Resources Committee of the state concerned.

List: - Submission of signed and approved Community Development Agreement before commencement of the operation.

• Submission of approved Environmental Impact Assessment Statement.
• Submission of approved Environmental Protection and Rehabilitation Program.
• Submission of approved Environmental Protection and Rehabilitation Fund Implementation Timetable.
• Submission of an approved mine design to the Mines Inspectorate Department with details of environmental concerns.

Mining projects in Nigeria are required to obtain an environmental license before they can begin operations. The environmental license is issued by the Federal Ministry of Environment.

Nigeria has enacted various safety policies regarding dams in mining. The most important policy is the Nigerian Minerals and Mining Act of 2007, which include conditions relating to safety, including the construction and maintenance of dams.

In addition to the Nigerian Minerals and Mining Act, there are several other regulations and policies that govern the safety of dams in mining. These include the National Water Resources Act of 2004, the Environmental Impact Assessment (EIA) Act of 1992, and the Nigerian Mining and Geosciences Society Act of 2010. The EIA Act requires that all mining projects undergo an environmental impact assessment, which includes an assessment of the potential impact of dams on the environment.

Furthermore, the Nigerian government has established several agencies to oversee the safety of dams in mining. These agencies include the Nigerian Mining Cadastre Office, the Nigerian Geological Survey Agency, and the Ministry of Mines and Steel Development. These agencies are responsible for regulating and enforcing safety standards in the mining industry, including the construction and maintenance of dams.

List: - Thor Explorations Ltd, a dual listed company on the Canadian and AIM Exchange, produced 98,006 ounces of gold in its first full year of mining (2022).

• Thor Explorations also made a further gold discovery, with visible gold being seen at another one of its sites 15km from its Segilola Gold Project. National Integrated Mineral Exploration Project (NIMEP): a government initiative to showcase to the world the mineral potential Nigeria as a country holds, including gold, base metals, and light elements.
• MSA Labs, an international accredited laboratory, had confidence in the Nigerian mining industry to open and expand their laboratory in Abuja.
• There are a lot of junior mining companies coming through.

List: - Thor Explorations will have completed drilling after finding visible gold at their secondary site.

• After the success of the Segilola Gold Project, we believe a significant amount of investment will be made in the sector.