PROCEDURES AND REQUIREMENTS FOR OBTAINING MINING LEASE/LICENCE IN NIGERIA

WHAT IS A MINING LEASE?

A mining lease is a legal contract for the right to work a mine and extract the mineral or other valuable deposits from it under the prescribed condition of time, price, rental or royalties. mining lease in Nigeria create proprietary interest over land and confers an exclusive right to explore, prospect, and mine mineral resources in  an area of land for a maximum of 25 years which is renewable for two times for a maximum period of 15 years each.

The Federal Ministry of Mines and Steel Development (MMSD) under the Mining Cadastre Office is saddled with the mandate to coordinate the granting of Mining Lease and approving same. It is also very important to note that applications for a mining lease in Nigeria has to strictly comply and conform with requirements and procedures under the laws that regulate the sector, which include the Nigerian Minerals and Mining Act, 2007 and the Minerals and Mining Regulation 2011.

By the provision of Section 56 of the Nigeria Mineral and Mining Act 2007, any qualified person may submit an application if same proceeds from an exploration License. Section 57 of the Act further to provide for the requirements and procedure for a grant of mining lease.  From the provision of the Act it is noteworthy that granting of a Mining License to a prospective company is subject to proof of economic reserve of the mineral commodity for which a concession is sought.

Mining rights

There are various Mining right obtainable under different  titles in the country, these are the Reconnaissance Permit (RP), Exploration licence (EL), Small Scale Mining Lease (SSML), Mining Lease (ML) and Quarry Lease (QL) the Water Use Permit.

Reconnaissance Permit

This permit allows holders to search for mineral resources on a non-exclusive basis.

It gives the right to obtain access into, enter on or fly over any land within the territory of Nigeria, likewise the permission to obtain and remove surface samples in small quantities which must be conducted in an environmentally and socially responsible manner.

Upon the payment of a prescribed fee, the MCO is subjected to approve applications from qualified applicants within 30 days of receipt of application with a processing fee of N50,000 payable to MCO through remittal. However, excavation drilling and other subsurface activities are not permitted.

Reconnaissance Permit is non-transferable and it’s issued for only one year but renewable annually.

Exploration licence

The bearer of an Exploration Licence (EL) has the exclusive right to conduct exploration upon the land within the area of his licence. The mining area for EL usually doesn’t exceed 200 square kilometres with a processing fee of N100,000 payable to MCO through remittal.

The MCO, under the law is obliged to approve the EL within 30 days of receipt of an application by a qualified applicant.

The bearer is allowed to remove, conduct bulk sampling and testing, export and sell mineral resources not exceeding established limits. The licence is usually granted for a 3-year initial period but renewable two further periods of 2 years each.

Quarry Lease

This permit gives liability to exploit all naturally occurring minerals such as clay, marble, gypsum, limestone, gravel, sand, among others.

The lease is issued for five years and renewable every five years, provided the renewal application is made months before the lease expires. The sum of N100,000 is made for the processing fee payable to MCO through remittal for a land not exceeding 4 Cadastral Units. Each additional Cadastral Unit costs N50,000

The application is processed within 45 days of receipt of application.

Small Scale Mining Lease

The holder of the Small Scale Mining Lease has the exclusive right to carry out small-scale mining operations within a mining area greater than five acres but less than three kilometer square for a period of five years initial period but renewable for further period of five years only.

The lease is issued within 45 days of application with a processing fee of N50,000 payable to the MCO through remittal. Each additional Cadastre Unit costs N20,000.

However, when the level of operation of a SSML exceeds the defined area, the holder shall convert such a lease to a Mining lease by submitting a written ap

plication to the MCO.

Application Requirements for Exploration Licence, Quarry Lease and Small Scale Mining Lease

Mining Lease

The bearer of this lease can exclusively use, occupy and exploit minerals within the lease area not exceeding 50 Kilometres Square.

The lease is granted within 45 days of receipt of application with a processing fee of N500,000. It is issued for a period of 25 years initial period and renewable every 24 years.

Water Use Permit

This is granted to the holders of Exploration Licence, Quarry Lease, Small Scale Mining Lease and Mining Lease who require the use of water for their operations.

The procedures for the grant of Mining Lease in Nigeria;

1. The first step for any company desirous of obtaining a mining license is applying to the Honourable Minister in charge of the Ministry of Mines and Steel Development for Certificate of Entry into Mining Industry. This is done by attaching to the application:

• Payment of the prescribed fees
• (ii) Submission of the company’s Certificate of Registration,
• (iii) Evidence of technical competence and
• (iv) Evidence of financial capability.

2. Then the next step is for the company to apply and obtain a Prospecting Right (PR) to enable it to carry out general and scientific prospecting for the categories of minerals within the prospecting right. If properly conducted, work on this right will guide the company towards zeroing into a particular mineral within a specific land area.

3. The company will then apply for an exclusive prospecting license (EPL) in the State Mines Office where the mineral is located. The exclusive Prospecting License (EPL) is an exploration licence for a particular mineral(s) over a particular land area which, by law, should not exceed 22 square kilometres.

Once granted, the area is held exclusively to the company, which will now confidently invest in mineral exploration work on the area without hindrance. This licence is renewable every one or two years depending on the nature of the terrain. And after the company has satisfied itself of the availability of the mineral in commercial quantity on the EPL that it will apply for a grant of a Mining lease over the whole or part of the area covered by the EPL.

Requirements for grant of Mining Lease in Nigeria

The followings are the requirements for granting mining lease in Nigeria

• Completed application forms
• Exploration License
• Copies of Certificate of incorporation including Form CAC2 and CAC7 containing Particulars of Board of Directors, Memorandum and Articles of the Association for Corporate body. Certificate of Registration for Cooperative Society and/or copy of National I. D card/Drivers Licence for an individual.
• Pre-Feasibility Report (must be stamp and signed by COMEG Member)
• Prospecting plan
• Payment of processing fee
• Current Tax Clearance
• Evidence of Financial Capability with sufficient working capital by way of: i. Verifiable bank Statement of account. ii. Verifiable bank reference letter
• Evidence of Technical Competence through: i. CV and Certificates of a Mining Engineer or Geoscientist, COMEG registration certificate compulsory for EL ii. Letter of employment and that of acceptance by the employee. iii. Three months pay slip
• Consent Letter signed by landowners/occupiers, attached with sworn affidavit from a High Court. Attestation of non-conviction of criminal offences under the Act by a Lawyer

According to Section 60 of the Act, the duration of a Mining Lease is 25 years, which is subject to renewal, provided that the holder has complied with minimum work programme and all other legal and regulatory requirements for mining in Nigeria. The mining lease area shall be determined in relation to the orebody as defined in the feasibility study, in addition to an area reasonably required for the working of the deposit, not exceeding 50Km² i.e 250 CUs.’’

It is important to state here that the mining lease should not be confused with various mining licenses applicable in the mining sector in Nigeria. Any investor or individual who intends to trade in Nigerian’s mining sector by merely purchasing mineral resources for the purpose of exportation or industrial use will only be required to obtain mining licenses such as Possess or Purchase License or Mineral Buying Centre License or Mineral Export Permit.

Inconclusion, the mining sector has continued to resurface in the Nigerian economy in recent times, especially where the government is making enabling policies and efforts to diversify the economy. The procedures for obtaining mining lease in Nigeria and other requisite licenses may be cumbrous, however engaging a professional, such as legal any practitioner that has the knowledge of the enabling Acts with experience in processing mining leases or licenses could be of a great assistance in expediting and simplifying the process.

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