CAPE TOWN, South Africa. The Nigeria Mining Sector received a great drive for accelerated development today February 7, 2023 at the ongoing Mining indaba in Capetown, South Africa as the Solid Mineral Development Fund (SMDF) signed a milestone agreement with the Africa Finance Cooperation for the accelerated growth and development of the Nigerian mining sector.
The signing of the agreement has been described as a milestone in the quest for adequate financial support to mining projects in Nigeria.
Executive Secretary and CEO of Solid Minerals Development Fund, Hajiya Fatimah Umar Shinkafi, said: “We are pleased to sign this agreement with the Africa Finance Corporation today, signifying AFC’s commitment to driving sustainable economic growth through economic diversification and industrialization,” adding that the agreement is a significant step for SMDF in its effort to develop the Nigerian mining sector and position the country as a stable and low-cost supplier of critical minerals.
While she recalled that the Africa Finance Corporation led the financing of the only commercial mine in Nigeria, she expressed confidence that: “Naturally, we see a key opportunity to combine AFC’s investment track record with the SMDF’s technical talent, intellectual capital, and deep sector knowledge and expertise to grow the oriented projects, where our collaboration can help create value.”
Africa Finance Corporation (AFC) is Africa’s leading infrastructure solutions provider. The essence of the collaboration is to deploy project development funding and technical advisory to fast-track closure and operations of commercial scale mining projects in Nigeria. This following AFCs flagship investment in the first commercial scale gold mining project in Nigeria, the Segilola Gold Mine in Osun State, through an innovative financing package comprised of debt, equity and a stream.
Challenges around development and finance mean that only a fraction of over US$700 billion of potential Nigerian mining projects receives the necessary funding, according to SMDF. Under the Memorandum of Understanding (MoU) and leveraging AFCs project development expertise, AFC and SMDF will co-develop mining projects to mitigate risks that would otherwise have prevented financing to drive bankability. This intervention will create a pipeline of high-quality and feasible projects with considerable economic impact and scope for AFC and SMDF to deploy their balance sheets.
Since 2014, AFC has deployed US$900+million from its balance sheet and mobilized US$250 million in Mining Projects across Africa in several minerals critical for the energy transition, including bauxite, manganese and copper. As such, the alliance will focus primarily on precious metals and minerals critical to the global energy transition. AFC and SMDF will combine their own funds with innovative investment tools to reduce risks around exploration, drilling, confirmation of deposits, and third-party development costs, including technical and environmental studies, project structuring, and project contract negotiations. Only projects that have completed phases of pre-feasibility studies and secured all relevant government and regulatory permits are eligible for consideration. The partnership aligns with AFC’s mission to foster industrial development, unlock value from natural resources, and catalyze significant long-term growth and diversification opportunities. It also advances SMDF’s 2025 Strategy to build investment partnerships that will spur private sector-led investment in the mining sector and position Nigeria as a leading emerging mining destination.
“AFC is a premier investor in Nigeria’s mining sector, a top priority for the Federal Government to attract Foreign Direct Investment and drive diversification of the economy. This partnership with the SMDF will enable the Corporation to continue to drive the closure of bankable mining projects that are critical to Africa’s economic diversification efforts, value addition and the energy transition” said Sameh Shenouda, Executive Director and Chief Investment Officer, Africa Finance Corporation. “We are delighted to work with an institution of such high repute, particularly one in our host country, Nigeria.”
The Solid Minerals Development Fund is a Nigerian Government owned Fund established to drive and catalyze private sector-led investments in Nigeria’s mining sector. The SMDF’s mission is to actively pursue investments that will de-risk the Nigerian mining sector, to be the partner of choice for opportunities, and to empower the economic development and diversification of the Nigerian economy.
The SMDF’s approach is to provide flexible financing options, build economic partnerships and deliver extensive contact networks and a complete in-house technical evaluation and support team dedicated to advancing projects.
AFC was established in 2007 to be the catalyst for private sector-led infrastructure investment across Africa. AFC’s approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth.
Fifteen years on, AFC has developed a track record as the partner of choice in Africa for investing and delivering on instrumental, high-quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications. AFC has invested over US$10 billion in 35 countries across Africa since its inception.