With reference to a recent article published in The Miners online Newspaper of December 27, 2025, titled “APC Chieftain Seeks Inclusion of Mining in FG’s Tax Reform Outlook,” it is important to clarify certain issues and present a balanced perspective on taxation and sustainable growth within Nigeria’s solid minerals sector.
Nigeria is endowed with vast solid mineral resources that are distributed across all 36 states of the federation. The notion that these resources are predominantly concentrated in the northern part of the country is inaccurate and should be discarded. Solid minerals exist nationwide, and their development requires a holistic national strategy rather than a regionally skewed narrative.
Current Tax Burden in the Mining Sector
In recent years, the mining sector has experienced a notable increase in various forms of taxation and statutory payments.
Annual Service Fees
Annual service fees are compulsory payments made by all holders of mineral titles across Nigeria and are administered by the Mining Cadastre Office (MCO). In 2025, the mining sector recorded its highest contribution in history under this category. According to Business News Nigeria, the Nigeria Mining Cadastre Office generated ₦30.23 billion in 2025, compared to ₦6.07 billion in 2024 and ₦12.58 billion in 2023. This sharp increase raises legitimate questions about the necessity of additional tax burdens on the sector.
Royalties from the Solid Minerals Sector
Royalties constitute another major form of taxation payable to the Ministry of Mines and Steel Development. As of late 2025, monthly royalty collections showed strong performance, with ₦5.248 billion recorded in September, ₦2.806 billion in August, and ₦2.806 billion in July. Cumulatively, year-to-date revenue from January to October 2025 reached ₦58.64 billion, a significant rise from the ₦38 billion recorded in 2024.
These figures clearly demonstrate that the mining sector is already contributing substantially to government revenue.
Risks of Excessive Taxation
Excessive taxation poses a serious threat to investment in the mining industry. Mining is a capital-intensive venture that requires substantial upfront investment in exploration, equipment, and infrastructure. High and unpredictable taxes reduce potential returns, discourage both local and foreign investors, and ultimately slow sectoral growth.
An overburdened tax regime can lead to reduced exploration activity, delayed production timelines, loss of technological transfer, and missed employment opportunities. In contrast, a stable and predictable fiscal framework encourages long-term investment, promotes formalization, and ultimately increases government revenue without stifling growth.
Beyond Taxation: What the Sector Truly Needs
Rather than focusing solely on increasing taxes, it is important to recognize that sustainable growth in the mining sector depends on broader structural reforms.
To stabilize the sector and potentially double the total revenue recorded in 2025 by 2026, the following measures should be considered:
Adopt alternative approaches to security challenges instead of blanket mining bans, particularly in Northern Nigeria. Insecurity is a broader national issue and should be addressed independently. Legal and regulated mining operations can, in fact, enhance security through formal oversight and accountability.
Provide loans and grants to small-scale indigenous miners. Financial support will boost productivity, encourage formalization, and reduce illegal mining activities.
Deliberately build capacity within Nigeria’s mining sector, including support for underground mining operations, while recognizing that mining is a capital-intensive business. Discouraging investment through excessive taxation limits revenue potential, slows job creation, and undermines efforts to strengthen the sector.
The Role of the Honourable Minister and the NMMA 2007
The solution to many of the challenges facing the solid minerals industry lies within the framework of the Nigeria Minerals and Mining Act, 2007 (NMMA), under the leadership of the Honourable Minister of Solid Minerals Development, Dr. Dele Alake.
Key strategies include:
Enhancing security and enforcement: Strengthening initiatives such as the Mine Marshals to combat illegal mining and secure legitimate mining sites.
Promoting local value addition (beneficiation): Encouraging domestic processing and refining of minerals to create jobs, support industrial growth, and increase economic value.
Formalizing artisanal and small-scale mining (ASM): Integrating artisanal miners into cooperatives and regulated systems through technical support and safer operational standards.
Improving geoscience data generation and accessibility: Strengthening institutions like the Nigerian Geological Survey Agency (NGSA) to provide reliable, investment-ready data that de-risks the sector.
Ensuring environmental and social responsibility: Enforcing Community Development Agreements (CDAs) and environmental regulations to protect host communities and promote sustainable mining practices.
Streamlining and digitizing licensing processes: Enhancing transparency and efficiency at the Mining Cadastre Office to boost investor confidence.
Fostering a mining finance ecosystem: Operationalizing institutions such as the Solid Minerals Development Fund (SMDF) to mobilize public and private capital for exploration and development.
Advocating legal reforms: Supporting timely amendments to the NMMA to align Nigeria’s mining laws with global best practices and eliminate regulatory ambiguities.
Conclusion
While taxation remains an important tool for government revenue generation, excessive or poorly targeted taxes in the mining sector risk undermining investment, job creation, formalization, and long-term economic growth. Rather than penalizing miners, government policy should prioritize creating an enabling environment through access to finance, regulatory efficiency, security, and incentives for local value addition.
By supporting the mining sector instead of overburdening it, Nigeria can unlock the full potential of its vast mineral resources, enhance security in mining regions, and achieve sustainable revenue growth for generations to come.
