Nigeria has signed a $1.3bn agreement to build what officials say will be the country’s largest mining-sector private investment, in a renewed attempt to diversify Africa’s biggest economy away from crude oil.
The deal, struck in Abuja between the African Finance Corporation and the federal government through the Solid Minerals Development Fund (SMDF), will jointly finance three strategic projects: a large-scale alumina refinery, a nationwide geoscience mapping programme and a dedicated investment vehicle to accelerate mineral exploration.
Announcing the agreement on Sunday, the minister of solid minerals development, Dele Alake, described it as a “landmark deal” that could reshape a sector long overshadowed by oil.
“This is a landmark deal, poised to transform the mining sector and increase its contribution to the nation’s Gross Domestic Product,” Alake said at the signing ceremony.
At the heart of the agreement is a proposed alumina refinery expected to process about one million tonnes of bauxite annually using a modern Bayer-process flowsheet. The plant will be supported by an on-site gas-fired cogeneration facility designed to generate both steam and power.
Officials project that the refinery, built for an estimated 20-year lifespan at 95% utilisation, could produce around 19m tonnes of alumina over its lifetime. Government estimates suggest it could contribute $1.2bn annually to GDP, generate more than $25bn in economic value and earn about $8bn in foreign exchange.
The SMDF’s executive secretary, Fatima Shinkafi, called it the largest project undertaken by the fund since its creation. “It is a $1.3bn capital expenditure project,” she said. “SMDF has come of age to be able to sit here and sign this deal.”
The partnership also commits both institutions to a comprehensive geoscience mapping exercise aimed at producing reliable, modern data on Nigeria’s mineral deposits — a longstanding weakness that has deterred large-scale foreign investment. Industry analysts have repeatedly cited the absence of credible geological data as a structural barrier to growth in the sector.
In addition, the parties will establish a joint strategic investment vehicle to fast-track exploration and development of selected mining assets, moving them more quickly from licence to production once exploration campaigns are completed.
Alake said all necessary approvals had been granted to expedite the projects, adding that relevant agencies had been directed to avoid bureaucratic delays. “We are determined to ensure that investors do not face unnecessary delays. The era of bottlenecks is over,” he said.
The agreement was signed on behalf of the AFC by Franklin Edochie, head of metals and mining, in the presence of the corporation’s president and chief executive, Samaila Zubairu.
The move comes as Nigeria intensifies efforts to broaden its economic base. Despite holding significant deposits of bauxite, lithium, gold, iron ore and rare earth minerals, mining contributes less than 1% to GDP, hampered by weak infrastructure, illegal extraction and regulatory uncertainty.
Recent reforms have sought to modernise licensing, tighten site security and promote domestic value addition rather than the export of raw ore. Supporters argue that if successfully executed, the AFC-backed projects could serve as a template for large-scale private capital entering Nigeria’s mining industry.
Whether the refinery and mapping programme deliver on their ambitious projections may prove a litmus test for the government’s wider diversification drive — and for its ability to convert mineral wealth into sustained economic growth.
