Nigeria’s Mining Sector Has the Geology. Can It Convert It?

Nigeria holds gold, lithium, iron ore, tin and gemstones, yet nobody can agree on how small its mining sector actually is. Estimates of mining’s share of GDP range from roughly 0.7% to 1.8%, depending on which official source you trust. For a country with this much geology, even the baseline is contested.

That gap shaped the 11th Nigeria Mining Week, which closed yesterday, 14 October 2026, in Abuja. Under a theme built around investment and growth through partnerships, more than 3,000 expected participants gathered for three days.

The real question in the room was not discovery. It was conversion: how to turn known deposits into production and keep more of the resulting value inside Nigeria.

This analysis sets out which barriers are structural, where value retention looks realistic, and what you should test as an Australian investor before committing capital to the Nigeria mining sector.

Why has Nigeria’s geology not become production?

Resource scarcity is the easy explanation, and it is wrong. Every independent diagnosis presented around Mining Week pointed to institutions, not geology.

The World Bank identifies four binding constraints: thin geological data, overlapping regulation with weak enforcement, a large informal sector, and fragility combined with environmental and social risk. PwC Nigeria lists illegal mining, weak value addition, low mechanisation, inadequate funding, insecurity and poor coordination between federal, state and local government. At the event, PwC Nigeria’s Cyril Azobu pressed for projects that attract serious capital and retain more value at home.

The two lists converge on the same pattern. Mining rights are granted by Abuja, but land access comes from states or communities, so a developer can hold a valid licence and still be unable to reach the ground.

Even the headline numbers show the confusion. A Q2 2025 figure of 4.61% circulated as mining’s GDP share, but NEITI data suggest it is better read as sector growth; a 2025 ministerial statement put the share near 1.8%, while the Nigeria Extractive Industries Transparency Initiative (NEITI) data indicate about 0.72-0.75% for 2023. Mining Cadastre collections reached N30.23 billion in 2025, yet NEITI has flagged unpaid fees and royalties and mismatches between production and export volumes.

Mismatches between production and export volumes point to a wider leakage problem, and Nigeria’s illegal mineral trade shows how weak enforcement lets value leave the formal economy before royalties and taxes are ever captured.

Operators echo the diagnosis. Oba Ayandele Ayanleke, president of the Miners Association of Nigeria, called for regulatory certainty, while Prof. Olusegun Ige, director-general of the Nigerian Geological Survey Agency, argued that better national geological information would cut exploration risk.

Proof of concept, with conditions Austin Menegbo of Segilola Resources Operating Limited argued that commercial mining is achievable when financing, technical expertise, regulatory engagement and community relations are handled properly, together.

Thor Explorations’ Segilola mine, listed on the TSX/TSXV, produced 91,910 oz of gold in 2025. That shows industrial production can work in Nigeria. One mine does not make a diversified formal industry.

The power and logistics cost layer

Unreliable electricity, gas supply, roads and rail recurred in almost every Mining Week session. They raise mining and processing costs directly and erode competitiveness against jurisdictions with dependable grids.

Security and the informal sector

The World Bank points to banditry and informal checkpoints along haulage corridors. PwC estimates artisanal and small-scale mining (ASM) at about 70% of activity, and the World Bank says informal operators run more than 90% of production sites; the denominators differ, but both explain why output statistics trail potential.

For you as an investor, the risk sits in execution and institutions rather than in the ground. Weight title, approvals and logistics at least as heavily as resource grade.

What is beneficiation, and can Nigeria force it?

Beneficiation means processing raw ore into a higher-value product, such as refined metal, separated minerals, steel or cut gemstones, before it leaves the country. Nigeria’s long-standing problem is exporting ore cheaply and importing metals and manufactured goods expensively.

The government’s stated direction is “no raw material export”. New licences are expected to include domestic-processing plans, and a proposed bill would require at least 30% local value addition before export, though it is not yet law. Only licensed operators may export, applying through the Nigerian Export Promotion Council and declaring the state of origin; finalised Solid Minerals Export Guidelines exist, but their full text and effective date have not been verified.

Where forced processing helps

Done well, processing keeps refining margins, jobs, supplier contracts and tax receipts onshore. It can also cushion exposure to volatile concentrate prices and make community benefit visible, which improves a project’s political durability.

Where it backfires

The same mandate can repel capital. The five most material risks are:

• unreliable power, gas, roads and water
• ore bodies too small or remote to support a refinery
• currency depreciation that makes imported equipment unaffordable
• uncertainty over dividend conversion and profit repatriation
• local-content rules applied with discretion rather than transparency

The worst sequencing error is banning raw exports before viable plants exist. No fully sourced 2024-26 comparison applied to Nigeria was found, so the lessons below come from the established structure of each case.

Forced beneficiation policies elsewhere in Africa, including South Africa’s chrome debate, show the same tension between retaining value and deterring capital that Nigeria now faces with its proposed processing mandate.

The practical test is to tie obligations to mineral type, project scale, available power and proven domestic capacity. A processing mandate is a risk to price in, not a headline benefit, so ask whether transitional or conditional export rules apply to the commodity you are assessing.

Gold, gemstones and steel: where could value actually be retained?

Readiness varies sharply by commodity, and gold sits at the strong end. The Mining Week Gold Forum focused on linking production to refining, responsible sourcing, formal trading and finance, and Segilola provides a working formal chain with a 99% Nigerian workforce.

Even here the evidence is thin. Verified public data on national refining capacity, refined output, formalisation totals and Central Bank of Nigeria gold-purchase volumes is limited, and estimating them would be guesswork.

Gemstones sit further back. The final-day session traced a chain running from miners to cutters, polishers, jewellery makers and international buyers, but much of that chain begins in informal pits.

Ajaokuta and the cost of delay

The Ajaokuta record More than $8 billion has been spent on the Ajaokuta Steel Mill over five decades without the plant rolling a single coil of steel.

The main furnaces remain dormant, and a modular facility produces only limited items such as manhole covers, utility poles and rail components. On 15 October 2026, BusinessDay reported negotiations on a proposed $2 billion Chinese-backed rehabilitation and production-sharing plan.

The near-term aim is restarting the existing 1.3 million-tonne rolling mill, with a long-term ambition of up to 10 million tonnes a year, supported by a gas agreement of up to 50 million standard cubic feet per day. Technical assessments reportedly suggest furnaces could restart in six or seven months and other facilities in two or three years. Financing still needs approval and terms are under negotiation, so no timeline should be treated as firm.

For you, gold offers the nearest investable formal chain, gemstones are an earlier-stage, diligence-heavy play, and steel is a long-dated political and financing bet.

Partnerships, traceability and what Australian investors should test

Policy is only half the gate. Buyers now ask whether a seller can prove where material came from, not merely whether it can deliver.

OECD minimum traceability information (2025) Origin, geographical route, chain of custody and physical transformation.

Refiners and buyers increasingly prefer licensed mines, documented custody and geospatial, customs, assay and ownership records, while rejecting conflict-linked material. An auditable operation such as Segilola clears that bar more easily than ASM gold or gemstone chains, which face heavier compliance costs. Investors entering those chains must budget for cooperative formalisation, community agreements, secure transport, anti-money-laundering controls and independent audits.

Artisanal gold formalisation is the step that decides whether informal output can enter refiners’ supply chains, since cooperatives, documented custody and secure transport are what buyers now demand.

Partnership talk at the event was real. Sweden’s ambassador to Nigeria, Anna Westerholm, pointed to cooperation in technology, expertise and business development, and PwC called for harmonised federal, state and local regulation.

For Australian readers, access is the catch. No Australian-headquartered or ASX-listed company with a verified Nigerian mining project was identified, so your exposure today is indirect, through offshore-listed names or direct private investment.

A due diligence checklist for foreign investors

1. Title security: confirm federal licences and state or community land access align.
2. Repatriation mechanics: test how dividends convert and leave the country.
3. Power and logistics: cost the grid, gas, road and rail realities, not the plan.
4. Security: assess site and haulage corridor exposure.
5. Community consent: verify agreements on land, royalties and environment.
6. Processing capacity: check whether domestic plants exist for the commodity.
7. Traceability record: confirm buyers will accept the documentation.

A credible mine plan is no longer enough. The project also needs a defensible domestic value-chain plan and a buyer-acceptable traceability record.

What the week settles, and what still depends on delivery

Mining Week confirmed broad agreement on the diagnosis: Nigeria’s constraint is conversion, driven by institutions, infrastructure and informality. It did not deliver proof that the fixes are working.

Four signals will show whether that changes:

• enactment of the 30% value-addition bill
• publication and an effective date for the export guidelines
• approval of financing for the Ajaokuta rehabilitation
• progress on harmonising federal and state licensing

Treat each as a gating item before committing capital. Until they move, the opportunity remains largely geological, and the risk largely institutional.

Past performance does not guarantee future results. Forward-looking statements are speculative and subject to change based on policy and market developments.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.