The federal government, through the Solid Minerals Development Fund (SMDF), has signed an investment agreement with the Africa Finance Corporation (AFC) to jointly fund three major mining initiatives, including a $1.3 billion alumina refinery project.
Alumina is a chemical compound extracted from bauxite. It is composed of two elements: oxygen and aluminium. It has wide applications across metallurgy, ceramics, electronics, and chemical processing.
The agreement also covers 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 Mr Segun Tomori, the Special Assistant on media to the Minister of Solid Minerals Development, the refinery will utilise a modern Bayer-process flowsheet and feature an on-site gas-fired cogeneration plant for steam and power generation.
The ministry said the agreement is the culmination of discussions between AFC and SMDF to co-finance the construction of a $1.3 billion alumina refinery expected to process about one million tonnes of bauxite ore per annum.
“The facility is designed to operate for approximately 20 years at 95 per cent utilisation, with total alumina output projected at 19 million tonnes over its lifespan,” the statement reads.
Speaking at the signing ceremony, Mr Dele Alake, the Minister of Solid Minerals Development, described the deal as a landmark transaction that will transform the mining sector and increase its contribution to Nigeria’s gross domestic product (GDP).
Mr Alake said the deal aligns with the ministry’s reform agenda, noting that efforts to modernise the regulatory framework and strengthen the mineral licensing regime have begun attracting significant private capital.
Demonstrating the federal government’s commitment to fast-tracking the investments, the minister said all necessary approvals have been granted to accelerate implementation of the agreement.
He directed relevant agencies under the ministry to ensure seamless processing of permits, titles, and regulatory clearances.
On her part, Mrs Fatima Shinkafi, the Executive Secretary of the SMDF, said the transaction represents the agency’s largest funding project since inception.
“We are very proud and honoured to facilitate this phenomenal milestone, which is quite unprecedented since the inception of SMDF,” Mrs Shinkafi said.
“It is a $1.3 billion CAPEX. SMDF has come of age and can sit here and sign this deal with AFC. I thank the AFC for collaborating with us to boost the value addition policy of my boss, Dele Alake.”
On his part, Mr Farouk Yabo, permanent secretary of the ministry, said the development could position Nigeria more prominently on the global mining map.
The ministry further said the project is projected to be Nigeria’s largest private investment in the mining sector and will contribute about “$1.2 billion to GDP annually, inject over $25 billion into the national economy across its lifecycle, and generate $8 billion in foreign exchange earnings”.
The statement said initial feasibility studies conducted by the AFC and SMDF confirmed the project’s competitiveness and commercial viability, reinforcing efforts to position Nigeria as a globally competitive minerals destination.
“As part of the agreement, both parties will undertake a comprehensive geoscience mapping exercise aimed at generating mineral data, de-risking exploration for investors, and unlocking the sector’s full potential,” the statement further reads.
“AFC and SMDF also agreed to set up a joint strategic investment vehicle to accelerate the development of identified exploration assets across Nigeria, to drive rapid exploration, development, and production of selected exploration leases upon the execution of a successful exploration campaign.”
Mrs Shinkafi signed the deal on behalf of the federal government, while Mr Franklin Edochie, deputy director and head of metals and mining at AFC, signed for the corporation.
The statement added that Mrs Samaila Zubairu, president and chief executive officer of AFC, witnessed the ceremony alongside the minister.