Nigeria has signed a $1.3 billion investment agreement with the African Finance Corporation (AFC) to build a large-scale alumina refinery and accelerate mineral exploration nationwide. This is one of the country’s largest private sector mining investments and an important step in the country’s push to diversify beyond oil.
The memorandum of understanding, signed through the government’s Solid Minerals Development Fund (SMDF) and announced over the weekend, includes three core initiatives: the development of an alumina refinery, a comprehensive national geoscience mapping program, and the creation of a strategic investment vehicle to expedite exploration and production of major mineral assets.
The flagship alumina refinery is designed to process approximately 1 million tonnes of bauxite ore per year using the latest Bayer process flowsheet. The site will incorporate a gas-fired cogeneration plant to provide steam and electricity, improving operational efficiency. Over its expected 20-year life at 95% utilization, the facility is expected to produce approximately 19 million tons of alumina.
Officials explained that the project will be a catalyst for the industrialization of Nigeria’s mining sector. “This MOU is the culmination of negotiations to co-finance the construction of a $1.3 billion alumina refinery,” a statement from the Ministry of Solid Minerals Development said. This initiative is expected to create new jobs, attract further investment and strengthen local value addition in the solid minerals sector.
SMDF Executive Director Hajiya Fatima Shinkafi praised the partnership, saying, “We are very proud and honored to facilitate this incredible milestone. This is a $1.3 billion capital expenditure project and SMDF has reached the age to enter into this agreement with AFC.”
Strategic importance and global market position
The agreement comes as Nigeria steps up efforts to reduce its heavy dependence on crude oil exports. The mining sector is gaining strategic importance as the government targets bauxite and other critical minerals to boost downstream industries such as aluminum production.
Alumina refined at the new refinery will serve as a key feedstock for aluminum smelters around the world, positioning Nigeria to take advantage of growing demand for electric vehicles, renewable energy infrastructure, construction and more.
AFC is a leading pan-African multilateral development finance institution, providing both capital and expertise. AFC Vice-Chairman and Head of Metals and Mining, Mr. Franklin Edsey, witnessed the signing along with the Minister of Solid Minerals Development, Mr. Dele Arake.
Analysts see the project as a blueprint for public-private cooperation in resource development in Africa. The partnership aims to de-risk future mining projects and unlock Nigeria’s untapped mineral potential across multiple states by combining government-backed exploration mapping with private investment vehicles.
Although the announcement did not detail full financial projections, government officials suggested the refinery and related efforts could deliver significant economic benefits through export revenues, local processing benefits, and job and infrastructure synergies. The agreement is also consistent with the broader continental objective under the African Continental Free Trade Area to create integrated value chains for critical minerals.
The refinery’s construction schedule and exact location have not yet been made public, but SMDF is expected to provide further updates as the project progresses from planning to implementation.
For Nigeria, the $1.3 billion commitment is more than a single infrastructure victory, demonstrating growing international confidence in the country’s mining reform and ambition to become a regional player in the global aluminum supply chain. A deal of this scale could set a precedent for similar partnerships across the continent as African countries compete to capture greater value from their natural resources.
