Nigeria, AFC Sign $1.3 Billion Deal to Transform Mining Sector

The Federal Government of Nigeria, through the Solid Minerals Development Fund (SMDF), has signed a landmark $1.3 billion investment partnership with the Africa Finance Corporation (AFC) to co-finance strategic initiatives aimed at repositioning the nation’s mining sector and deepening its contribution to the economy.

The Memorandum of Understanding (MoU), signed in Abuja on Sunday, March 1, 2026, commits both institutions to jointly fund three major projects, placing emphasis on downstream processing and sector expansion.

At the centre of the deal is the construction of a $1.3 billion alumina refinery, described as the largest single private-sector-backed investment in Nigeria’s mining space to date. The proposed facility is designed to process about one million tonnes of bauxite ore per annum using modern Bayer-process technology and will feature an on-site gas-fired cogeneration plant to provide steam and electricity for operations.

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Beyond the Refinery

In addition to the refinery, the agreement covers:

A nationwide geoscience mapping programme to strengthen Nigeria’s geological data and improve investor confidence; and
The establishment of a strategic investment vehicle to accelerate mineral exploration and unlock high-potential assets across the country.

The initiatives form part of ongoing reforms by the Federal Ministry of Solid Minerals Development aimed at shifting Nigeria from the export of raw minerals to domestic processing and industrial value addition.

Minister of Solid Minerals Development, Dele Alake, described the agreement as a landmark step toward transforming the sector and significantly increasing mining’s contribution to Nigeria’s Gross Domestic Product (GDP).

According to him, the partnership is expected to drive job creation, technology transfer, foreign exchange earnings, and long-term economic growth, while ensuring that Nigeria derives greater value from its mineral resources.

Executive Secretary of the SMDF, Fatima Shinkafi, said the agreement represents the largest funding commitment in the Fund’s history, signalling renewed private capital inflows into the solid minerals sector.

Economic Projections

Officials said the alumina refinery is projected to operate at approximately 95 percent capacity utilisation over a 20-year lifespan, producing an estimated 19 million tonnes of alumina over that period.

The project is expected to generate substantial foreign exchange earnings through exports of refined alumina, while stimulating ancillary industries across the mining value chain.

Industry analysts say the AFC-SMDF collaboration reflects Nigeria’s broader strategy to attract market-driven capital into priority sectors capable of delivering measurable economic impact. As implementation begins, attention will likely focus on regulatory approvals, financing structure, and project timelines factors considered crucial to determining the long-term viability and economic returns of the investment.

The agreement marks a significant move in Nigeria’s effort to grow mining’s real contribution to the economy by backing its mineral potential with structured financing and institutional support.

Amanze Chinonye

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Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.

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