Written by Adedapo Adesanya
The Federal Government, through the Solid Minerals Development Fund (SMDF), has entered into an investment agreement with the African Finance Corporation (AFC) to jointly finance three major mining projects, including a $1.3 billion alumina refining project.
Alumina is a compound extracted from bauxite. It is made up of two elements: oxygen and aluminum. It has a wide range of applications across metallurgy, ceramics, electronics, and chemical processing.
The agreement also includes a comprehensive geoscience mapping exercise and the establishment of a joint strategic investment vehicle to drive exploration and development across the sector.
According to a statement on Sunday by Segun Tomori, Special Assistant on Media to the Minister of Solid Minerals Development, the refinery will utilize the latest Bayer Process flowsheet and will have an on-site gas-fired cogeneration plant for steam and power generation.
The ministry said the agreement is the culmination of talks between AFC and SMDF to co-finance the construction of a $1.3 billion alumina refinery that will process approximately 1 million tonnes of bauxite ore per year.
“The facility is designed to operate at 95 percent utilization for approximately 20 years, and total alumina production over its lifetime is projected to be 19 million tons,” the statement said.
Speaking at the signing ceremony, the Minister of Solid Minerals Development, Dele Arake, said it was a landmark deal that would transform the mining sector and increase its contribution to Nigeria’s Gross Domestic Product (GDP).
Arake said the agreement is in line with the ministry’s reform agenda, noting that efforts to modernize the regulatory framework and strengthen the mineral licensing system are beginning to attract significant private capital.
The Minister demonstrated the Federal Government’s commitment to expediting the investment and said all necessary approvals had been obtained to accelerate implementation of the agreement.
It directed relevant agencies under the ministry to ensure seamless processing of permits, titles and regulatory approvals.
SMDF Executive Director Fatima Shinkafi said the deal was the agency’s largest funding project since its inception.
“We are extremely proud and honored to facilitate this incredible milestone, which is unprecedented since the founding of SMDF,” said Shinkafi.
“This is a $1.3 billion capital investment. SMDF has matured so we can sit here and sign this agreement with AFC. I would like to thank AFC for working with us to strengthen the value-add policy of my boss, Dele Arake.”
Permanent Secretary of the ministry, Mr. Farouk Yabo, said the development has the potential to place Nigeria more prominently on the world mining map.
The ministry further said that the project is expected to be the largest private investment in Nigeria’s mining sector, “contributing approximately $1.2 billion to the annual GDP, injecting more than $25 billion into the national economy over its life cycle and generating foreign exchange earnings of $8 billion.”
The statement said the initial feasibility study conducted by AFC and SMDF confirmed the competitiveness and commercial viability of the project, reinforcing efforts to position Nigeria as a globally competitive mineral destination.
“As part of the agreement, the parties will undertake comprehensive geoscience mapping work aimed at generating mineral data, reducing exploration risks for investors, and maximizing the potential of the field,” the statement further reads.
“AFC and SMDF have also agreed to establish a joint strategic investment vehicle to accelerate the development of identified exploration assets across Nigeria and drive rapid exploration, development and production of selected exploration leases following successful exploration campaigns.”
Mr. Shinkafi signed the agreement on behalf of the Federal Government, while AFC Deputy Director-General and Head of Metals and Mining, Mr. Franklin Edochie, signed on behalf of the companies.
The statement added that AFC Chairman and Chief Executive Officer Mrs. Samaira Zubair witnessed the ceremony along with the Minister.
