Unlocking Developmental Financing for the Mining Sector
Nigeria boasts a wealth of mineral resources that span from gold to tantalite, limestone, and everything in between. The nation's geological composition presents a treasure trove waiting to be tapped. However, despite having an estimated $700 billion worth of mining potential, mining exploration in Nigeria remains poorly funded, with only a fraction of mining projects reaching their full potential. Many promising projects languish in the exploration or feasibility stage due to difficulties in accessing financing for project design, construction, and production. The high capital risk and expertise gap associated with the sector have continued to pose significant challenges for accessing private sector funding and investments
Solution
Recognizing the need to bridge the funding and expertise gap, Africa Finance Corporation(AFC) and the Solid Minerals Development Fund (SMDF) have formed a formidable partnership to deploy project development funding and technical advisory to fast-track the closure and operations of commercial-scale mining projects in Nigeria. AFC and SMDF willco-fund and co-develop mining projects to mitigate risks that would otherwise have prevented the necessary 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, with a primary focus on precious metals, base metals, and minerals critical to the global energy transition. The Project Development Facility aims 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.
The AFC-SMDF Project Development Facility represents a pivotal initiative aimed at catalysing the growth and development of Nigeria's mining sector. This collaborative effort between the Africa Finance Corporation (AFC) and the Solid Minerals Development Fund (SMDF) will address longstanding challenges that have hindered the realization of Nigeria's immense mining potential.
As we move forward, the AFC-SMDF Project Development Facility invites you to explore the potential, join our collaboration, and be part of the transformation of Nigeria's mining sector. Together, we can unlock the full spectrum of opportunities that lie beneath Nigerian soil.
Consideration
Projects supported under the AFC-SMDF Project Development Facility need to fit into four broad strategic pillars: good management and governance, technical soundness, compliance with regulations and ESG standards, and alignment with priority minerals for the program. Priority Minerals: We prioritize the development of projects related to precious metals and minerals crucial for the global energy transition, especially gold, critical minerals (lithium, nickel, cobalt, copper), and other base metals.
Management and Governance: The project should be headed by a great management team, guided by well-defined development plans, clear governance structures, and policies. The company should have upheld meticulous financial records and discipline, with a proven history of success in the mining industry.
Technical Soundness: We prioritize projects with low exploration risks, the presence of a strong technical team, and a well-defined competitive advantage, as these form the bedrock of successful and sustainable mining projects.
Compliance and ESG: Projects must adhere strictly to regulatory requirements, demonstrate an understanding of environmental and social issues, and a commitment to community and environmental management.
FAQs
What is the AFC-SMDF Project Development Facility?
The AFC-SMDF Project Development Fund is a collaborative effort between the Africa Finance Corporation (AFC) and the Solid Minerals Development Fund (SMDF) aimed at catalysing the growth and development of Nigeria's mining sector. It provides funding and technical expertise to transform mining projects into bankable opportunities.
What types of mining projects does AFC-SMDF support?
We primarily focus on precious metals and minerals critical to the global energy transition, especially gold, critical minerals (lithium, nickel, cobalt, copper, etc.), and other base metals. Projects should also align with our key strategic pillars of good management and governance, technical soundness, compliance with regulations and ESG standards, alignment with priority minerals, and others.
Who can apply for the AFC-SMDF Project Development Facility?
Project sponsors, mining companies, and entities engaged in mining activities in Nigeria can apply for funding. Projects at various stages, from exploration to development, may be considered.
How can I apply for the AFC-SMDF Project Development Facility?
To apply for funding, your project should have completed pre-feasibility studies and secured relevant government permits. You can submit your project for consideration through our portal.
How does the investment process work?
The investment process involves project submission, initial screening, in-depth evaluation and due diligence, review by sub-investment committees, crafting indicative term sheets, negotiation of definitive agreements and deal structuring, project monitoring, and co-development. It culminates in long-term financing for project development.
What role does sustainability play in the project selection process?
Sustainability is a key consideration. Projects must align with best practices and global standards for environmental and social responsibility. We work closely with project sponsors to ensure responsible mining practices.
