By Biliyaminu Suraj
biliyasuraj247@yahoo.com
Introduction
Nigeria’s mineral wealth — highlighted by lithium, gold, tin, and rare earths — has the potential to diversify the economy beyond oil. Yet despite high-profile policy announcements and international investment pledges, the country’s mining sector remains mired in structural contradictions: rising foreign dominance, weak enforcement, and an increasingly hostile environment for domestic small-scale miners.
Under Minister Dele Alake’s tenure at the Ministry of Solid Minerals Development, policy reforms have been headline-grabbing and frequent, almost to the degree of weekly announcements. They are invariably framed as transformative but lack detail and wreak of a poor understanding of the mining industry. Critics argue the so-called policy reforms are reinforcing dependency on Chinese capital, penalising local miners through excessive regulation and fees and failing to stem a surge in illegal mining and attendant insecurity.
There are four critical fault-lines that define Nigeria’s current mining policy confusion.
1. Policy Failures Favouring Chinese Interests
Since 2023, the Nigerian government has aggressively courted Chinese investors in the mining and mineral-processing sector. During a recent visit to China, Minister Dele Alake announced that Chinese-backed companies have invested over US $1.3 billion in Nigeria’s lithium-processing industry since September 2023. According to Ministry-sourced reports, Nigeria was expected to commission four major Chinese-funded lithium-processing plants by 2025 representing a combined investment of about US $800 million.
While the investment figures are large in headline terms, the actual number of plants currently built and operating remains very limited. One facility in Nasarawa State has been commissioned — a Chinese-led plant processing lithium at “4,000 metric tonnes per day” capacity was inaugurated. Its likely capacity is closer to 3,000 tonnes per day if and when it reaches full production. At this point it is not in production.
But many of the other announced plants — such as the US$600 million facility near the Kaduna-Niger border and the US$200 million outside Abuja — are still described as “slated for commissioning this quarter” or “nearing completion”. To be clear, they are not yet in production and, if they are anything like the Chinese processing plants in Australia, may never come into economically viable production. Australia has been badly caught out by the promises of large-scale Chinese mineral processing facilities. Australian companies have invested billions of dollars in Chinese technology to process critical minerals only to now find that their investments may have to be written off.
In effect, Nigeria’s mineral governance model risks sliding into what analysts describe as neo-extractivism: the state aligning with foreign capital to extract rents, without building sustainable domestic capacity or transparent oversight. Meanwhile, local and small-scale operators continue to face bureaucratic hurdles. “We have seen preferential treatment for Chinese firms, while local miners struggle to get licences or financing,” said a member of the Miners Association of Nigeria.
2. Licence Revocations and the Expansion of Illegal Mining
The Alake-led ministry’s campaign to “sanitise” the sector through aggressive licence revocations has generated uncertainty. Hundreds of exploration and small-scale mining titles have been revoked on technicalities or administrative delays, often without due consultation. While the government insists this will curb speculative holding and non-compliance, the result has been the opposite: a vacuum in tenure security that has encouraged illegal mining and worsened insecurity in mineral-rich regions.
Displaced operators and unemployed artisanal miners are migrating into informal mining camps, some of which are now dominated by Chinese buyers and middlemen.
3. Inflated Chinese Lithium Investments and the Mirage of Local Value Addition
Nigeria’s lithium boom should be a strategic opportunity to enter the global electric-vehicle supply chain. However, the scale and structure of the Chinese-backed investments invite scrutiny.
The announced figures — US$800 million for four processing plants, plus the broader corporate claim of over US$1.3 billion invested by Chinese firms — are large. Yet comparators suggest that many of these plants are not yet fully built or operational. The publicly-known, functioning facility is the one in Nasarawa, and even that raises questions about transparency of terms, local-content obligations and community benefit.
Analysts at the Natural Resource Governance Institute (NRGI) warn that the Nigerian government has not published the contracts, environmental-impact assessments or local-content rules tied to these deals. Without such transparency, inflated valuations may conceal excessive profit repatriation or tax waivers favouring the investors.
The contradiction is stark: while the government revokes hundreds of local mining licences in the name of efficiency, it signs opaque, billion-dollar deals with foreign conglomerates that may offer minimal technology transfer or local capacity-building.
Nigeria risks falling into a pattern familiar across resource-rich African economies — outsourcing its industrial future to external partners while celebrating “investment” headlines that disguise long-term dependency. Worse still, history across Africa and Asian countries tells us that massive scale Chinese infrastructure development comes with massive repayment obligations which, when defaulted, see national assets under Chinese ownership.
4. Small-Scale Miners Punished by Escalating Tenement Fees
In mid-2024, the Ministry announced a sweeping revision of mining-licence fees and annual service charges hitting small and indigenous miners hardest. For example, the annual service fee for a Small-Scale Mining Licence (SSML) jumped to ₦260,000, while renewal fees rose to ₦420,000.
For artisanal and small-scale miners – who produce over 70 percent of Nigeria’s solid minerals – the impact has been devastating. Many operate on thin margins and lack access to formal finance. “These new rates are impossible for us,” said a gold miner from Niger State. “They want to push us out so the big companies can take over.”
Industry lawyers have also criticised the abrupt fee escalation, warning it could drive legitimate operators underground and worsen illegal mining. By making formalisation unaffordable, the policy undermines its own objective of bringing artisanal and small-scale miners into the regulated economy.
Meanwhile, Chinese-backed operations appear largely unaffected, as their capital base allows them to absorb or negotiate favourable terms. The asymmetry reinforces perceptions that Nigeria’s mining reforms are designed to privilege Chinese state-owned investors at the expense of Nigeria’s domestic enterprise.
Conclusion: Reform or Regression?
Nigeria stands at a crossroads. Mining reforms under Minister Alake have been long on rhetoric and short on delivery. The government’s mining policies, though couched in the rhetoric of reform and industrialisation, risk deepening structural inequities. The tilt toward Chinese capital — with announced investment amounts well into the billions but very few operational processing plants so far — is a key concern. Coupled with opaque licensing decisions and punitive costs for small miners, the reforms collectively undermine the stated goal of building a resilient, inclusive mining economy.
For Nigeria to truly benefit from its mineral wealth, three principles are essential: transparency, local empowerment, and institutional capacity. Contracts with foreign investors must be publicly disclosed; fee regimes must reflect economic realities, not bureaucratic revenue targets; and the state must strengthen regulatory oversight to curb illegal mining rather than punish small-scale operators. Without such shifts, the mining sector will remain a cautionary tale-–of a nation rich in minerals, yet poor in governance.