States miss jobs, revenue from $700bn mineral wealth

Nigeria’s 36 states and the Federal Capital Territory are sitting on vast deposits of solid minerals estimated at more than $700bn, yet most states have done little to turn the resources within their territories into significant sources of investment, jobs and Internally Generated Revenue.

The country has at least 44 solid minerals in commercial quantities across more than 500 locations, including gold, iron ore, lead, zinc, tin, columbite, copper, lithium, limestone, marble, dolomite, baryte, kaolin, clay and gypsum.

Minister of Solid Minerals Development, Dele Alake, put the estimated value of Nigeria’s mineral deposits at more than $700bn in 2023, noting that the figure could rise as further exploration uncovers additional deposits.

Despite this, the size of the resource base has barely translated into economic output.

The solid minerals sector contributed only 1.8 per cent to Nigeria’s gross domestic product in the second quarter of 2026, according to GDP data, leaving the country well behind South Africa’s mining sector’s average contribution of 6.2 per cent and Botswana’s mining industry share of 30 per cent to 38 per cent of GDP.

The disparity highlights the scale of the opportunity being missed by Nigeria’s states and the Federal Government. Though revenue generated from Nigeria’s solid minerals sector has increased by more than 337 per cent in two years, the Federal Government is targeting a 25-fold expansion of the mining industry to about N30tn.

This implies that Nigeria’s revenue from solid minerals in two years is merely N1.2tn, less than $1bn, far lower than the $68bn earned by South Africa from minerals in two years. Nigeria accounts for about 3.5 per cent of total external trade, generating about N70bn in federation revenue.

Nigeria’s solid minerals also account for only a small proportion of the country’s external trade. In Q2 2026, non-oil exports stood at N3.73tn, while solid minerals accounted for N146.91bn, or about four per cent.

For states heavily dependent on allocations from the Federation Account, mining represents a potentially significant but largely underdeveloped alternative source of economic activity and revenue.

States can participate

The constitutional control of mines and minerals rests with the Federal Government. But that does not prevent states from becoming active participants in the mining value chain.

States can partner with federal agencies and licensed mining companies, establish investment vehicles or special purpose vehicles, provide infrastructure and facilitate processing and beneficiation projects.

They can also support the development of roads, power, water, logistics and industrial clusters around mineral-producing areas, while partnering with investors to develop processing facilities.

“A state can partner with the Federal Government on exploration and development of identified deposits. It can establish a state-owned investment company or SPV that partners with federal entities and private investors.

“It can provide land, infrastructure, roads, power, water and security for mining projects. It may also invest in processing and beneficiation, or partner with licensed mining companies, subject to the federal licensing regime,” said a mining expert, Ejiro Ighure.

According to Ighure, some states have begun to explore this approach, but the participation remains limited.

“Kaduna has a mining company that recently signed $500m agreements with the Africa Finance Corporation. Zamfara has a $200m lithium plant. But these are not enough because states are still largely dependent on Abuja for FAAC allocations and other federal transfers,” he said.

The emerging model suggests that states do not necessarily have to challenge federal ownership of mineral resources to benefit from them. Instead, they can become investors, infrastructure providers and partners in the development of mines and processing facilities, allowing them to capture more economic value from resources located within their territories.

Investment pipeline

Fresh investments indicate that Nigeria’s mining industry is beginning to attract greater international and domestic capital. In March 2026, Nigeria signed a $1.3bn investment agreement with the Africa Finance Corporation for an alumina refinery and nationwide mineral exploration.

Other projects include a $600m lithium processing plant under development in Nasarawa State, a $200m lithium plant near Abuja and the $50m ASBA lithium plant in the Federal Capital Territory.

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Indigenous operator, Romulus Mining, has also announced plans to increase its portfolio investment from $50m to $150m over three years, targeting gold and lithium.

New discoveries, including a polymetallic mineral province in Kaduna and significant lithium reserves around Abuja, have further increased investor interest, with Chinese companies including Jiuling Lithium and Canmax Technologies involved in the emerging lithium value chain.

The challenge, however, is ensuring that the expansion of mining translates into local processing, industrialisation, employment and public revenue rather than simply increasing the volume of raw minerals extracted and exported.

Illegal mining

While legitimate investment in the sector is increasing, illegal mining continues to undermine the industry and deprive governments and communities of economic benefits.

Illegal mining has become particularly entrenched in parts of the North-West, with Zamfara among the states most affected.

Researchers, Profs Sanusi Sama’ila Moyi, D.O. Alabi and B.E. Bature have identified illegal mining as one of the factors contributing to insecurity in the region.

Good Governance Africa has also reported concerns that illegally mined gold is being moved out of Zamfara, with proceeds allegedly linked to arms trafficking and other criminal activities.

Gold remains a major target, but other valuable minerals, including lithium, copper, zinc and monazite, are also being extracted illegally in the region.

Illegal mining is not limited to the North-West. In May 2024, security forces raided a remote mining market in Kishi, Oyo State, arresting 32 people, including two Chinese nationals.

Authorities have also uncovered operations involving foreign nationals and local collaborators targeting minerals such as lithium, mica, lepidolite and marble in states including Ogun, Kaduna and Zamfara.

The continued expansion of illegal mining means states are losing more than potential royalties or taxes. They are also losing opportunities to develop formal businesses, processing industries, jobs and infrastructure around their mineral resources.

Mineral economies

For Nigeria’s states, the bigger question is no longer whether they have mineral resources. It is whether they can build the institutional and investment capacity to turn those resources into productive assets.

Rather than waiting for higher FAAC allocations, states with commercially viable deposits can work with the Federal Government, investors and development-finance institutions to build mines, processing plants and mineral-based industrial clusters.

The strategy would shift the focus from simply extracting ore to developing the entire value chain: from exploration and mining to processing, manufacturing and exports.

An economist and investment strategist, Dr Patrick Ejumedia, said on Arise TV on Friday: “Until we begin to process these solid minerals, we will continue to have these low numbers. We need to see how we can produce industrialised goods if we want to become part of the global trade.”

Professor of International Trade, Jonathan Aremu, told The PUNCH that foreigners are free to mine Nigeria’s minerals as long as they are licensed. He, however, frowned at illegal licensing and export of solid minerals in raw form.

“For the mining sector to make any significant contribution to the economy, the minerals must undergo processing. That is why the value chain is not contributing substantially to the economy.

“If the government can ensure that some of these mining activities are processed. The government should provide the enabling environment that will ensure the integration of the mining sector and the possibility of processing these minerals so that they can command higher prices.”