Types of Mineral Titles and Licenses
A mining title can be granted to an individual, a company or a co-operative. The grant of exploration license or mining lease could be by competitive bidding or on individual request. In competitive bidding, the government consolidates various mineral locations into blocks, and offer the blocks for sale to international and local investors with sufficient financial and technical capabilities to carry on mining operations. The bidding procedure will normally include:
- An advertisement in both local and international media
- Data room due diligence process
- Receiving Expression of Interest (EOI)
- Selection of preferred investor
- Communication of selected investors to the National Assembly Committee on Solid Minerals
- Offer of the mineral title
Applicable Incentives
The key incentives available to companies engaged in mining operations are summarized below:
- Under the Mining Act
- Tax holiday for an initial period of 3 years from commencement of operations and renewable for additional 2 years.
- Exporters of mineral products may be permitted to retain part of their foreign exchange earning in a domiciliary account for the purpose of acquiring spare parts and other mining inputs.
- Exemption from customs and import duties in respect of plant, machinery equipment and accessories imported exclusively for mining operations. However, the plant and equipment can only be disposed of locally upon payment of the applicable customs and import duties.
- Free transferability of foreign currency through the Central Bank of
Nigeria (CBN) for the following: – Payment for servicing of certified
foreign loan,
- Remittance of foreign capital in the event of sale or liquidation of the business.
- Grant of personal remittance quota for expatriate personnel free from any tax imposed by any enactment for the transfer of external currency out of Nigeria.
- All infrastructure cost provided by the mining company and approved by the MCO to be capitalized and capital allowance claimed at 95% in the first year of operation.
- Annual indexation of unutilized capital allowance carried forward by 5% for mines that commenced production within five (5) years from the date of enactment of the Act.
- Accelerated Capital Allowance on mining expenditure (95% initial allowance and retention of 5% until asset is disposed.
- The Minister may grant a concession for the royalty payable on any mineral to be deferred for a number of years, subject to the approval of the Federal Executive Council.
- Actual amount incurred out of reserves made for environmental protection, mine rehabilitation, reclamation and mine closure cost shall be tax deductible, subject to certification by an independent qualified person.
- Under Company Income Tax Act (CITA)
- A new company engaged in mining activities shall be exempted from tax for the first three years of its operation.
- The profits earned by a mining company after the initial tax holiday period may be exempted from income tax under the following circumstances:
- If the minerals are exported from Nigeria, and the proceeds from such exports are repatriated to Nigeria and used exclusively for the purchase of raw materials, plants, equipment and spares.
- If the minerals produced are exclusive inputs for the manufacture of products for exports, provided the exporter gives a certificate of purchase of input to the company.
- Potential exemption of interest on foreign loan from income tax, subject to the conditions stipulated under CITA.
- Where a mining company records a turnover below N1 million within the first five years of commencement of business, it will be liable to tax at the rate of 20%.
- Grant of Investment Allowance of 10% on qualifying plant and machinery.
- A company may also be entitled to claim an additional rural investment allowance on its infrastructure cost, depending on the location of the company and the type of infrastructure provided.
Draft-Solid Minerals (4.7 MiB)
Cysus Global Limited
Cysus Global Limited is one of the major dealers in Gemstones and Minerals.
They also deal largely on ICT.
Visit htt://cysuscomputers.com. At there Office in Computer Village , the
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