Obtaining a license to purchase and possess minerals is essential for businesses looking to engage in the legal trade or possession of minerals in Nigeria.
The license is issued by the Ministry of Mines and Steel Development (MMSD) through the Mines Inspectorate Department, and it is mandatory for any entity wishing to handle minerals within Nigeria.
In this comprehensive guide, we will explore the process, costs, requirements, and other critical details necessary to acquire this license, with a focus on clarity and compliance with Nigerian laws.
Why You Need a License to Purchase and Possess Minerals
The Nigerian government regulates the mining industry to prevent illegal exploitation of mineral resources.
Businesses are required to obtain a license to legally buy, store, and trade minerals sourced from licensed mining operations.
Failing to secure this license can result in significant legal penalties, business shutdowns, or both.
This article aims to provide you with an in-depth understanding of the steps, required documents, and costs involved in obtaining a License to Purchase and Possess Minerals under Regulation 133, as well as answers to frequently asked questions and common misconceptions about the process.
Step-by-Step Guide to Obtain a License to Purchase and Possess Minerals
Here are the key steps involved in obtaining the license:
Step 1: Write a Formal Application
An application letter should be addressed to:
The Director,
Mines Inspectorate Department,
Ministry of Mines and Steel Development,
No. 2 Luanda Crescent,
Wuse II, Abuja.
This letter must be on the company’s letterhead and should specify the mineral type(s) you are seeking to purchase or possess.
Step 2: Submit Required Documents
Your application must include the following documents:
| Document | Description |
|---|---|
| Certificate of Incorporation | Issued by CAC, including CAC Form 2 and Form 7 |
| Tax Clearance Certificate | Valid certificate showing 3-year tax clearance |
| Attestation of Non-Conviction | Mines Inspectorate Department form verifying no criminal convictions |
| Banker’s Guarantee | Reference letter from company’s bank, addressed to Director of Mines Inspectorate |
| Source of Supply | Letter of introduction/consent from licensed mineral title holder |
| Evidence of Technically Competent Personnel | Documents showing employed qualified personnel (e.g., mining engineer/geoscientist) with COMEG seal |
Step 3: Hire a Technically Competent Person
It is a mandatory requirement to hire a competent professional who is registered with COMEG. The individual could be a Mining Engineer or a Geoscientist.
You need to submit the following:
- Credentials of the mining engineer/geoscientist.
- An employment letter for the technical person.
- Acceptance letter from the technical person.
- COMEG seal of the technical person.
Step 4: Payment of Prescribed Fees
The MMSD has specified fees for different mineral types. You need to pay these fees to process your license:
| Mineral Type | Fee (₦) |
|---|---|
| Non-Metallic Minerals | ₦100,000/mineral |
| Metallic Minerals | ₦100,000/mineral |
| Gemstones | ₦200,000/mineral |
| Precious Metals | ₦200,000/mineral |
Note: You must provide proof of payment during your application submission. Payments are made directly to the Ministry of Mines and Steel Development’s official accounts.
Step 5: Submit the Application Package
Once all required documents are in order, submit your complete application, including:
- Application letter
- Required documents
- Proof of payment
The submission should be made at the MMSD office, located at No. 2 Luanda Crescent, Wuse II, Abuja.
Costs Involved in Obtaining a License to Purchase and Possess Minerals
Below is a detailed cost breakdown for obtaining the license:
| Requirement | Cost (₦) |
|---|---|
| Certificate of Incorporation | Varies (dependent on company setup) |
| Tax Clearance Certificate | Dependent on company’s income level |
| Banker’s Guarantee | Determined by the bank (variable) |
| Technical Competence Hiring | Varies (salary of mining engineer/geoscientist) |
| Licensing Fees for Minerals | ₦100,000 – ₦200,000 per mineral |
Be sure to budget for these costs accordingly, and ensure that your financial records and tax filings are in order before starting the application process.
Frequently Asked Questions (FAQs)
1. How long does the license process take?
The process can take anywhere from 4 to 6 weeks, depending on how promptly you submit all required documents and how efficiently the Ministry of Mines and Steel Development processes your application.
2. Can I use an exploration license as a source of supply?
No, exploration licenses cannot be used as a source of supply for purchasing minerals. You must obtain minerals from a title holder with a Mining Lease, Quarry Lease, or Small Scale Mining Lease.
3. What is the duration of the licence?
The Licence to Purchase and Possess Minerals is typically valid for one year and must be renewed annually, subject to compliance with all regulations.
4. Can I apply for more than one type of mineral at the same time?
Yes, you can apply for licenses to purchase and possess multiple mineral types. However, each mineral will attract a separate fee (₦100,000 for non-metallic minerals, and ₦200,000 for gemstones and precious metals).
5. What happens if I operate without a license?
Operating without a valid minerals license can lead to severe penalties, including fines, legal action, and possible closure of your business.
Common Misconceptions About the Minerals License
Misconception 1: The License Is Permanent
Fact: The minerals license is not a one-time approval. It is issued for one year and must be renewed annually. Failure to renew the licence will render your business operations illegal.
Misconception 2: Small Companies Do Not Need a License
Fact: Regardless of the size of the company, if you are involved in purchasing or possessing minerals, you need the appropriate license. Small, medium, and large enterprises are all subject to this regulation.
Misconception 3: Exploration Licenses Can Be Used as Supply Sources
Fact: Exploration licenses allow holders to explore mineral deposits but not to supply them. Only title holders with Mining Leases, Small Scale Mining Leases, or Quarry Leases can legally supply minerals.
Conclusion
Acquiring a License to Purchase and Possess Minerals in Nigeria is a structured and mandatory process that requires the submission of several documents, proof of technical competence, and payment of prescribed fees.
The steps outlined above offer a clear pathway for businesses to comply with Nigerian laws and operate legally within the mineral industry.
By addressing common misconceptions and answering key questions, this guide provides the clarity needed to avoid mistakes and ensure a successful application.
With attention to detail and proper preparation, your business can acquire the license and maintain compliance with Nigerian regulations in the mineral sector.
