Kayode Fayemi also told Reuters Nigeria had made a "promising" nickel discovery and was looking for investors for a moribund steel plant, part of efforts to reduce reliance on oil exports.

The OPEC member has made boosting the mining sector a priority as a slump in crude sales, which provide 70% of government revenues, has pushed Africa's biggest economy into recession.

"We are looking at a $500 million fund from their side which would primarily focus on exploration," Fayemi, Minister for mining and steel development, said in an interview, referring to the sovereign wealth fund.

The ministry was also discussing with the stock market selling "corporate mining bonds" in partnership with mining and other investors. He gave no details or timeframe for either project.

Nigeria has been trying to attract foreign mining firms. Currently, the only significant foreign investor in the sector, where 80% of mining is carried out on an artisanal basis, is Australia's Kogi Iron. Nigeria has largely untapped deposits of 44 minerals, which include gold, iron ore, coal, tin and zinc, in more than 500 locations spread across Africa's most populous nation.

The Minister wants to increase mining's contribution to gross domestic product (GDP) to 10%, from just 0.3% now, within a decade.He said a geologically "strange" discovery of nickel in the northern state of Kaduna seemed promising.

The discovery of some 40 million tonnes of nickel with a depth of five metres over a 13 kilometre area, around the town of Dangoma, was announced in August by an Australian team registered as Comet Nigeria Limited.

"It could also be that what they are telling us is an under-estimation of what it ought to be by the time we do core drilling," he said.

Fayemi also said there was a need to get a grip on Nigeria's informal gold rush which he said is dominated by smugglers.

"Clearly a lot is being taken out illegally," he said, adding that gold was being smuggled to neighbouring Cameroon and Niger, as well as Togo and is registered in those countries.

Fayemi said his Ministry did not have figures for gold production but the central bank had provided figures that his department was trying to validate.

"They have given figures in the region of about 100kg of gold leaving the country on a daily basis," he said.

"None of this gets accredited as gold from Nigeria," added Fayemi. The most recent official estimate of proven gold reserves is 300,000 ounces and dates from 2013 but Officials say it is likely to be more since no new research has been done for 30 years.

Nigeria also hopes to revive the moribund steel plant in Ajaokuta. In August, a deal was reached with Global Steel Holdings, an Indian firm, giving the government renewed control after four years of mediation and eight years of inactivity.

Fayemi said PricewaterhouseCoopers' was conducting an audit which began on August 1 and would last 150 days, followed by a public bid process. The Minister said companies from China, Ukraine, Russia and Belarus had expressed an interest in operating the plant.

"By the time we put it out on offer to everyone we will get the best bidder who can really do what we want done with the steel plant," he said.

Fayemi said the priority was to "produce steel locally rather than from scrap metal". He estimated that steel production could begin as soon as March 2019.

--reuters--