Gold prices have shown significant fluctuations in recent years, and 2024 continues this trend. These shifts are having a direct impact on Nigeria’s gold mining sector, creating both opportunities and challenges for local miners and investors. While rising global gold prices could boost export revenues, forex instability and the rising costs of mining equipment are complicating profitability for Nigerian miners.
Global Price Trends and Their Impact
In 2024, global gold prices have generally trended upwards, driven by economic uncertainties, inflation fears, and increased demand for safe-haven assets. This has been beneficial for Nigerian gold miners, as higher prices mean greater export revenues. Global demand for gold remains strong, particularly from key markets like China and India, which further drives up prices. These positive trends in the global gold market present opportunities for Nigeria to capitalise on its gold resources, especially as the country seeks to diversify its economy away from oil.
However, while export revenues may increase, operational costs remain high due to forex volatility and the depreciation of the Naira. Since much of the equipment used by mining companies is imported, miners must contend with rising import costs. This squeezes profit margins and hampers the expansion of mining operations.
Domestic Market Dynamics
Domestically, the Nigerian government has taken steps to improve the regulatory environment for . Programmes such as the Presidential Artisanal Gold Mining Development Initiative (PAGMI) have led to the formalisation of small-scale mining operations and increased local gold production. By issuing more licences to small and medium-sized miners, the government aims to reduce illegal mining and increase the volume of gold legally traded within the country.
With more production being formalised, Nigeria’s local gold market could stabilise, making the sector more attractive for investors. The government’s long-term plan involves building a sustainable gold mining industry that can provide jobs, reduce illegal activities, and contribute significantly to the national economy.
Looking Forward
If the global gold price remains strong, and Nigeria continues to improve its mining infrastructure, the sector stands to grow significantly. However, sustained policy support will be essential for miners to navigate the challenges posed by high import costs and forex volatility.