Nigeria has advanced its economic diversification drive with the signing of a $1.3bn investment partnership between the African Finance Corporation and the Federal Government through the Solid Minerals Development Fund, aimed at transforming the country’s underperforming mining sector.
The agreement, sealed in Abuja, covers three key initiatives: the establishment of a large-scale alumina refinery, a nationwide geoscientific data programme, and the creation of a special investment platform to fast-track mineral exploration and production.
At the centre of the deal is a proposed $1.3bn alumina refinery expected to process about one million tonnes of bauxite annually. The plant will deploy a modern Bayer refining process and include a gas-fired cogeneration system to power operations. Designed to run for approximately two decades at near full capacity, the facility is projected to produce about 19 million tonnes of alumina over its operational life.
Officials estimate the project could contribute roughly $1.2bn annually to Nigeria’s Gross Domestic Product and generate more than $25bn in economic value over time, alongside $8bn in foreign exchange earnings.
Minister of Solid Minerals Development, Dele Alake, described the partnership as a strategic breakthrough that would strengthen value addition in the mining sector and reduce Nigeria’s reliance on crude oil exports.
He said the project reflects the Federal Government’s determination to reposition solid minerals as a critical pillar of national growth, adding that feasibility studies conducted by AFC and SMDF confirmed the refinery’s commercial viability.
In addition to the refinery, the agreement provides for a comprehensive geoscience mapping initiative to generate accurate and up-to-date data on Nigeria’s mineral deposits. The absence of reliable geological information has long been cited as a deterrent to foreign direct investment in the sector.
By producing detailed mineral data, the mapping exercise is expected to lower exploration risks, improve transparency and enhance investor confidence.
The partners also agreed to establish a joint investment vehicle to mobilise capital for promising mining assets across the country. The vehicle will support projects from early-stage exploration to development and eventual production, ensuring that viable mineral resources are rapidly brought into commercial operation.
Executive Secretary of SMDF, Hajia Fatima Shinkafi, said the deal represents the largest transaction facilitated by the fund since its creation, signalling growing international confidence in Nigeria’s mining reforms.
The signing ceremony was attended by senior officials from both organisations, including AFC President and Chief Executive Officer Samaila Zubairu and Franklin Edochie, AFC’s Head of Metals and Mining.
Nigeria is richly endowed with minerals such as bauxite, lithium, gold, iron ore and rare earth elements, yet the sector contributes less than one per cent to GDP. Analysts attribute this gap to infrastructure deficits, regulatory challenges, illegal mining and limited investment.
The Federal Government has in recent years introduced reforms aimed at modernising licensing processes, tightening site security and promoting local value addition.
Stakeholders say the success of the AFC-backed projects could serve as a catalyst for broader investment inflows and determine whether Nigeria can effectively unlock the estimated $25bn economic potential embedded in its solid minerals sector.
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