The African Finance Corporation and the Federal Government, through the Solid Minerals Development Fund, have signed an investment agreement to jointly finance three strategic projects, including a $1.3bn alumina refinery, a nationwide geoscience mapping exercise, and a special investment vehicle to unlock Nigeria’s minerals potential.
The agreement, signed in Abuja, marks the climax of months of negotiations between both parties and signals growing investor confidence in ongoing reforms in the country’s mining sector.
According to a statement issued on Sunday by the Special Assistant on Media to the Minister of Solid Minerals Development, Segun Tomori, the alumina refinery is expected to process about one million tonnes of bauxite annually using a modern Bayer-process flowsheet, supported by an on-site gas-fired cogeneration plant to generate steam and power.
The statement read, “The Africa Finance Corporation and the Federal Government, through the Solid Minerals Development Fund, have signed an investment agreement to jointly fund three projects: a $1.3bn alumina project, a comprehensive geoscience mapping exercise, and an investment vehicle to realise the goals.
“The MOU is the climax of talks between AFC and SMDF to jointly fund the construction of a $1.3bn alumina refinery, estimated to generate 1 million tonnes of bauxite ore per annum, utilising a modern Bayer-process flowsheet with an on-site gas-fired cogeneration plant for steam and power.”
Speaking at the signing ceremony, the Minister of Solid Minerals Development, Dele Alake, described the deal as a landmark that would accelerate value addition, create jobs, and significantly increase the sector’s contribution to Nigeria’s Gross Domestic Product.
“This is a landmark deal, poised to transform the mining sector and increase its contribution to the nation’s Gross Domestic Product,” Alake said.
The facility is designed for about 20 years of operation at 95 per cent utilisation, with total alumina output projected at 19 million tonnes over the project’s lifespan.
Government projections indicate that the project could contribute about $1.2bn annually to GDP, generate over $25bn in economic value throughout its lifecycle, and deliver about $8bn in foreign exchange earnings.
Officials said feasibility studies conducted by both AFC and SMDF confirmed the commercial viability and global competitiveness of the investment.
“Expected to be Nigeria’s largest mining-sector private investment and a landmark foreign direct investment, the project will contribute $1.2bn to GDP annually, over $25bn to the national economy across its lifecycle, and generate $8bn in foreign exchange earnings. Initial feasibility studies conducted by AFC and SMDF have confirmed the project’s competitiveness and commercial viability, validating the Ministry’s efforts to position Nigeria as a globally competitive minerals destination.
“This initiative delivers on the Ministry’s priority of generating big data on specific minerals, de-risking exploration for international investors, and unlocking the full potential of Nigeria’s minerals.”
The Executive Secretary of SMDF, Hajia Fatima Shinkafi, said the agreement represents the biggest project undertaken by the fund since its establishment.
“We are very proud and honoured to facilitate this phenomenal milestone, which is quite unprecedented since the inception of SMDF. It is a $1.3bn capital expenditure project,” Shinkafi said. “SMDF has come of age to be able to sit here and sign this deal with AFC. I thank AFC for collaborating with us to boost the value addition policy of my boss, Dele Alake.”
Beyond the refinery, both organisations also agreed to undertake a comprehensive geoscience mapping exercise to generate reliable data on Nigeria’s mineral resources.
Experts say the absence of credible geological data has been a major barrier to large-scale investment in the sector. The initiative is expected to support exploration, improve transparency, and position Nigeria as a globally competitive mining destination.
“This initiative delivers on our priority of generating big data on specific minerals, de-risking exploration for international investors, and unlocking the full potential of Nigeria’s resources,” the minister noted.
The partners also agreed to establish a joint strategic investment vehicle to accelerate the development of exploration assets across the country. The vehicle will support rapid exploration, development, and production of selected mining leases once exploration campaigns are completed.
Demonstrating the Federal Government’s resolve to accelerate mining development, Alake confirmed that all necessary approvals had been granted to fast-track the AFC–SMDF investments.
“I have directed all relevant agencies under the ministry to ensure seamless processing and grant of all required permits, titles, and regulatory clearances,” he said. “We are determined to ensure that investors do not face unnecessary delays. The era of bottlenecks is over.”
The Permanent Secretary in the ministry, Farouk Yabo, described the agreement as a testament to ongoing reforms in the sector. “This initiative has the potential to put Nigeria on the global mining map. It reflects the transformative leadership that is repositioning the sector and attracting serious private capital,” Yabo said.
The development comes as the Federal Government intensifies efforts to diversify the economy away from crude oil by developing the solid minerals sector. Nigeria holds significant deposits of bauxite, lithium, gold, iron ore, and rare earth minerals, but the sector contributes less than one per cent to GDP due to poor infrastructure, illegal mining, and weak investment.
Recent reforms by the ministry include modernising licensing processes, tightening security around mining sites, and promoting value addition. The AFC partnership could become a model for large-scale investments in Nigeria’s mining sector if successfully implemented.
While Shinkafi signed the agreement on behalf of the Federal Government, Franklin Edochie, Deputy Director and Head of Metals and Mining at AFC, signed on behalf of the corporation. The ceremony was witnessed by the AFC President and Chief Executive Officer, Samaila Zubairu, alongside senior government officials.
The success of the project could determine whether Nigeria’s mining reforms translate into sustained foreign investment and long-term economic diversification.
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