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BEING A PAPER ON REGULATORY
POLICY DEVELOPMENT: REFORM
PROCESS AND THE MINERALS
AND MINING ACT 2007
Presented By
Okolo Benjamin Ogu
Legal Adviser
Ministry of Mines & Steel Development, Abuja, Nigeria.
At a Two (2), day Workshop on Investment Opportunities in the
Nigerian Mining Sector, January 30th 2012 at Shehu Musa
Yar’dua Conference Centre, Abuja.
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Before, I go into the main topic I will like to look at
the constitution of the Federal Republic of Nigeria to
see the Constitutional provisions as it relates to
“Minerals”.
This is important because as we all know the
Constitution is the Supreme Law of the land and all
Laws derive their strength from it:
Constitutional Provisions
a. The Constitution of the Federal Republic of Nigeria
places total ownership and Control of all Minerals with
the Federal Government.
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b. The mineral resources naturally occurring on
and under the earth’s surface and in natural water
courses in Nigeria are the property of the Federal
Government.
The Federal Government as the
owner of Mineral Resources in Nigeria is vested
with the power to grant exploration and Mining
Licenses through the Ministry of Mines & Steel
Development in accordance with the terms and
conditions of the enabling law. The Combined
provisions of Sections 4 and 44 (3) of 1999
Constitution are, that only the Federal Government
of Nigeria is vested with jurisdiction to deal on
Minerals.
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c. Section 4 of the Constitution of the Federal Republic
of Nigeria, stipulates that the National Assembly shall
have power to make law with respect to any matter
included in the Exclusive Legislative List set out in part
1 of the 2nd Schedule to the Constitution and minerals
is listed under item 39 on the Exclusive Legislative List.
d. Section 44 (3) of the 1999 constitution states:
“Notwithstanding the foregoing provisions of this section,
the entire property in the control of all minerals, mineral
oils and natural gas in, under or upon any land in Nigeria
or in, under or upon the territorial waters and the
Exclusive Economic zone of Nigeria shall vest in the
government of the Federation and shall be managed in
such manner as may be prescribed by the National
Assembly”.
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Furthermore, Section 1 (1) of the Nigerian Minerals
and Mining Act, of 2007 which is the extant legislation
on minerals and mining re-affirmed the above
constitutional provisions thus:
“The entire property in and control of all minerals, in
under or upon any land in Nigeria, its contiguous
continental shelf
and of all rivers, streams and
watercourses throughout Nigeria, any area covered by
territorial waters or constituency, the Exclusive
Economic Zone is and shall be vested in the
Government of the Federation for and on behalf of the
people of Nigeria”.
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Period before the Reform
Before, the reform there existed the Nigerian Minerals
& Mining Act No. 34 of 1999. But the Act was regarded
as in sufficient for the desired reform in the sector. The
determination of Government to reform the sector
came as a result of the national desire to find another
source of revenue for the nation & diversification of the
Nigerian Economy away from the monopolistic oil
based economy, provide job opportunities, and reduce
poverty Inter-alia. To do this, it became imperative to
reform the sector in line with International best
practices. To kick start the reform process, in 1995, a
dedicated Ministry of Solid Minerals Development was
established.
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As a matter of fact Solid Minerals Sector was identified
in the National Economic Empowerment Development
Strategy (NEEDS) document as one of the six priority
sectors crucial for diversification of the economy away
from oil dependence.
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Period of Reform
The reform in the Mineral Sector took place between
2005 – 2007. The reform Process constitute the
regulatory policy development in the sector, and it was to
ensure that the practice in our mining Industry conforms
with the world’s best practices.
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Reform from 2005
The reform embarked upon from 2005 include:
• Transformation of role of government from ‘owneroperator’ to ‘administrator-regulator’ of the Mining
sector;
•Create a unique role for the Private Sector as
operator/owner;
• Development of a National Policy with clear direction
for the sustainable growth of the industry;
• Development of the competitive regulator and fiscal
regime to attract investments;
•Revitalization of mining institutions necessary to
regulate the sector;
• Establishment of the Nigerian Geological Survey
Agency
(NGSA) to generate geological data for
investment decisions and national planning;
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•Establishment of the Mining Cadastre Office as the sole
agency responsible for the administration of mineral
titles in a transparent manner;
•Stem informal mining activities and encourage smallscale mining to promote sustainable exploitation within
artisanal mining communities;
• Privatized government owned mining companies and
corporations in cooperation with other relevant
government agencies;
• Promote and market investment opportunities in the
mining sector;
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Elements of the Reform
The elements of the reforms are similar to the broad
reforms categories adopted by countries that have
experienced resurgence in mining activities in the
1990s. These include countries such as Tanzania, Mali,
Bolivia, Peru, Madagascar etc.
The Minerals & Mining Act 2007 (Product of
Reform)
In 2007, the Minerals and Mining Act was enacted by
the National Assembly and signed into law on 29 th
March, 2007.
Key Concepts of the Act
i) Access to minerals; title open to all investors; big or
small, foreign or local on a level and equitable playing
field; and on first come, first served basis;
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ii) Guaranteed security of mineral rights;
iii) The application of “use it or lose it” principle in
mineral title administration;
iv) Provision for sound environmental controls and
Community Development Agreement – Section 116 of
NMMA, 2007;
v) Involvement of other stakeholders through the
creation of states minerals Resources and Environmental
Management Committees to facilitate access to land;
vi) Commitment of Government to clear and transparent
principles which will regulate the sector;
vii) Provide a legislation that meets global best practices
and attract Foreign and Domestic investment capital
serve as a risk management tool for the investor and a
critical component of investment decisions;
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viii) Reformed Administrative/Institutional framework;
ix) Minimum work obligations for exploration and mining
phases;
x) Security of tenure and free transferability of Title(s);
xiv) Easy access to mining titles;
xv) Recognition of Artisanal & Small Scale Miners;
xvi) Diligent Environmental stewardship.
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Administrative/Institutional Framework and Roles
- S.4, NMMA 2007
The Minister
Minister’s Power:
-Supervision of administration of the Act
-Formulation and issuance of policies for orderly
Development of the sector.
-Functions of Minister – Section 4 of the Act.
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State Mineral resources and Environmental
Management Committee – S. 19, NMMA 2007
 A peaceable sector is key to the orderly development
of a vibrant mineral sector.
 Key component of the reform in administration and
management of the sector.
 Vehicle of cooperation between all tiers of Government
for effective governance of the sector.
 Central to resolution of conflicts.
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Compensation Issues – S. 107, NMMA 2007
• Compensation issues are pertinent in land and
natural resources exploitation.
• The right to receive just compensation for
expropriation of private rights is a constitutionally
guaranteed right.
•The Constitution provides for the payment of
prompt compensation to persons whose property are
compulsorily acquired.
• Law creates modalities of settling compensation
claims through negotiation, mediation.
• Modalities and institutions for assessment of
compensation are provided for under the law.
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Community Development Agreement (CDA) – S. 116,
NMMA 2007
- Provides for Community Development Agreement
between host community and mining companies;
- Community Development Agreement is one of the
international best practices provisions for addressing
social issues in host communities;
- Addresses issues such as educational scholarship,
infrastructural development, health, etc.;
- Agreement to be reviewed every 5 years;
- Minister is to monitor compliance;
-Failure in attempts to conclude Community
Development Agreement are referred to the Minister
for resolution.
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Departments of the Ministry (Another product of
the Reform
To give impetus to the reform agenda in the sector, the
then Ministry of Solid Minerals Development was
restructured bringing into existence three technical
departments and two (2) service departments. These
include;
•Mines Inspectorate;
•Artisanal and Small Scale Mining;
•Mines Environmental Compliance;
•Human Resources Management; and
•Finance and Accounts.
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The National Minerals & Metal Act 2008
Another, product of the reform after the enactment of
the NMMA 2007 was National Minerals & Metal Policy
which was the launched in January, 2008. The policy
has the following objectives:
•To take full advantage of the rising international
commodity prices and the global resurgence of
exploration activities with attendant huge investment in
the sector achieving substantial increase in GDP
contribution, Employment opportunities and poverty
reduction.
•Private sector to be the engine of growth with Government playing the role of Regulator-Administrator.
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•Ensuring a transparent licensing regime.
•To ensure an efficient and effective management of the
Nations Mineral Resources and promote technological
growth in the metals sub-sector.
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The Minerals & Mining Regulations 2011
Another product of the Reform based on Section
21 of the NMMA 2007.
The Section provides:
“The Minister shall subject to the provisions of this Act
make Regulations in respect of any matter required to be
prescribed by Regulations under this Act and generally for
giving full effect to the provisions of this Act, including
prescribing, amending or withdrawing any form that may
be required under this Act”.
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Going by the provision of S. 21 of the Act, the
Honourable Minister of Mines and Steel Development,
Arch. Musa Mohammed Sada, fnia, on 13 th day of
May, 2011 signed into law the Nigerian Minerals and
Mining Regulations (NMMA) 2011 which is fully
operational. The Regulations is to give full effect to the
NMMA, 2007.
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What Should Interest Investors:
The following sections of the NMMA 2007 should interest
investors:
Exceptions from customs duty & other benefits: - S.
25, NMMA 2007
Provides that all operators in the mining industry shall be
granted the following benefits:
(a)Exemption from payment of customs and import
duties in respect of plant, machinery, equipment and
accessories imported specifically and exclusively for
mining operations;
(b) Expatriate quota and resident permit in respect of the
approved expatriate personnel; and
(c) Personal remittance quota for expatriate personnel,
free from any tax imposed by any enactment for the
transfer of external currency out of Nigeria.
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Free Transferability of Funds: - S. 27, NMMA 2007
The section provides as follows: a holder of a mineral
title shall be guaranteed free transferability through the
Central Bank in convertible currency of:
(a) Payments in respect of loan servicing where a
certified foreign loan has been obtained by the
holder for his mining operations; and
(b)The remittance of foreign capital in the event of sale
or liquidation of the mining operations or any interest
therein attributable to foreign investments.
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NMMA Tax Relief: S. 28, NMMA 2007
The tax relief period of a company granted mineral title
under this Act shall commence on the date of operation
and subject to the provisions of this Act or any other
relevant financial enactment, the relief shall continue for
three years.
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In summary, the Legislative and Regulatory framework for
the mineral sector, Key governance of the sector are:
a.
Nigerian Minerals and Mining
Act (2007)
National Minerals and Metals
Policy (2008)
Nigerian Minerals & Mining
Regulations (2011)
b. Related Laws that have impact on mining
and environment include:
The Constitution of the Federal
Republic of Nigeria (1999)
Land Use Act (1978)
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c. Environmental Laws and regulations – National
and International e.g. E.I.A Act and Multilateral
Environment Agreements.
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Conclusion:
With Government regulatory policy Developments
resulting in the reform, I want to conclude as follows:
•The sector is already transformed with strong economic
activities coupled with Institutional, regulatory and
enforcement capacity;
•There is progress on diversification of the economy
and contribution to GDP.
•Legal and regulatory framework in the sector has put
Nigeria
on the global minerals map for wealth creation for the
nation.
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Thank you