OPINION

Nigeria’s Solid Minerals Sector Repositioning For Growth

Open pit mining

By lshaku Kigbu

The face of the solid minerals sector began to change with approval of the Roadmap for the Growth and Development of the Nigeria mining industry by the Federal Executive Council in November 2016. To a large extent, it is the most potent intervention meant to grow the industry and diversify the Nigerian economy using solid minerals as one of the strategic pillars in line with the Economic Recovery and Growth Plan (ERGP) agenda of the present administration.

For a nation hungry to be repositioned on the path of international best practices in global dynamics of solid minerals trade and investment, the roadmap was to entrench Nigeria as a notable solid minerals destination.
Developed by Dr. Kayode Fayemi as minister and Hon. Abubakar Bawa Bwari as minister of state for Mines and Steel Development in collaboration with the federal government and key stakeholders, the idea serves as renaissance for modern day mining.

With efforts geared towards ease of doing business in Nigeria to attract investors and improve funding, a N30bn intervention fund out of which N15 billion was earmarked for exploration projects to generate the needed geosciences data to provide the necessary incentive for investors, saw growth in the sector in a meteoric rise last year in GDP contribution from 0.33% in 2015 to 0.6% according to the National Bureau of Statistics.
Although Dr Kayode Fayemi moved on to the Ekiti State government house, Abubakar Bawa Bwari has continued to champion the implementation of the roadmap. Revenues generated by the ministry from royalties and fees improved to N3.92billion in 2017 from N2.08 billion in 2015. As at November 2018, over fifty companies exported minerals to Malaysia, China, UAE, India, Switzerland, Thailand, Portugal, Russia, Cameroun, United Kingdom and USA with royalties to government amounting to over N270 billion.

For years, the right of royalty valuation had been an issue, but today to promote and encourage more exporters to go into mining and to cater for the environmental degradation resulting from activities of the ‘informal’ artisanal producers that traders patronize – royalties for mineral trading exporters are pegged at 5% to 8%; with the extra 2% to be deployed for environmental remediation by the government.

Mineral stone

The recent unprecedented leap in revenue generation as against a non-impressive performance within the last decade is as a result of the present focus on doing the right things. According to the latest official performance of the sector released by the Nigerian Extractive Industries Transparency Initiative (NEITI) report, between 2007 and 2016, the mining sector had made a paltry $1.78 billion dollars from the $476.8 billion dollars the sector recorded in the extractive industry with over $475 billion contributed by the oil and gas sector within the last 10 years showing a 99.59% earnings compared to the 0.41% gotten from the solid minerals sector, but that has since changed.

Recent checks reveal that the solid minerals sector is beginning to experience real transformation in terms of increase in revenue profile and impact on the economy in line with the (ERGP) agenda. A boost in the local mineral production index has helped private operators to commit more investments to the sector. A clear example is the commissioning of the first modern incubation centre for gemstone faceting in Gwarimpa Abuja. There is resurgence in ore mining in Kaduna, with the discovery of nickel in Kaduna also leading to the exploration of the mineral by an Australian company, Comet Minerals Group.

In Bauchi State, an ore grade discovery of 22% lead content compared to the global grade average of 6% by Symbol Mining of Australia has opened a new investment chapter for Nigeria in lead/zinc production. Kogi Iron Ltd, an ASX listed iron ore mining company is breaking new grounds in iron ore utilization after developing ways of using its iron ore resources to produce high grade steel. lron Ore projects in Agbado-Okudu and Ebiya Iron Ore in Ajaokuta LGA of Kogi State including the Amansiodo Coal Project in Enugu are among projects geared towards satisfying the current estimated local steel demand which stands at 4.5 million tonnes per annum. One remarkable leap in Nigeria’s solid minerals development experience is the operation of gold mining production by Segilola/Thor Explorations Ltd, listed on the Toronto Stock Exchange, in Osun State, with a proven reserve base of 600, 000 ounces of gold on a part of their tenement.

The National Gold Purchase Programme, aimed at promoting the production, aggregation and refining of Nigerian gold for purchase by the Central Bank of Nigeria was one of the major outcomes of Economic Recovery and Growth Plan (ERGP) focus labs. The ministry after granting its first ever gold refinery license in Nigeria to Kian Smith Trade Co. Ltd, a private sector operator in a ground breaking ceremony for the plant on December 13, 2018, in readiness to commence production of 99% bullion bars and coins in the third quarter of this year, further explains the gains of the roadmap and the focus of the ministry.

Abubakar Bawa Bwari

Unknown to many, artisanal and small-scale miners remain an integral part of the mining industry since they account for 90% of mineral production exported. Therefore, in line with the roadmap, the ministry, has employed capacity building measures to give this group of operators’ small-scale loan scheme through the Bank of Industry (BOI). For the purpose of derisking the sector, part of the intervention fund was to scale up exploration on mineral resources so as to ensure the generation and dissemination of critical geoscience data in order to increase investor confidence.

There is already the Integrated Exploration Programme (NIMEP) with the award of N15 billion contract to five exploration companies for the purpose of exploring priority minerals like gold, lead, zinc, iron ore and earth metals. On April 8, 2019, the NIMEP programme yielded huge result with the ground breaking ceremony of AG Vision Mining Site in Kuchiko, Suleja, Niger State, as part of NIMEP’s biggest exploration activity ever embarked upon by the ministry.

A National Bureau of Statistics (NBS) report in the fourth quarter of 2017 indicated that coal mining, which is a sub-sector of the solid minerals grew by 2.86% in Q4 2017 from -38.49% in Q3 2017 and 0.44% in Q4 2016. Metal ores grew by 31.86% in Q4 2017 from 10.70% in Q3 2017 and 7.03% in Q4 2016. Same year, revenue profile of the mining sector alone improved by 500% over preceding years to underscore the resolve of the new administration to work within the framework of the roadmap for sustainable growth and development in the mining sector.

The improvements, to many, were largely due to enhanced ways of doing business within the sector, improved logistics for mines inspectors and strict adherence to the roadmap which has helped to attract foreign investors and major miners to the industry. Presently export of mineral commodities is being done with more respect to the rules. A new export guideline will soon come into operation to address issues of mineral exportation without due permits.

Artisanal mining

The Mining Cadastre Office (MCO) within the last three years has realized over N5 billion as revenue generated through processing fees and other licensing fees as the sector continues to grow. Industry leaders agree that continuity in the implementation of the roadmap will further consolidate the gains so far established in the sector. Much so because a remarkable difference between the solid minerals sector and the oil industry is that while the oil industry has capacity to employ few people while creating wealth, the mining sector is able to increasingly employ several people as well as create great wealth.

Before now, the lack of accurate mineral production data and drastic shortfall in concise geosciences data constituted the single biggest impediment to attracting major investors to the sector. But that will soon be a thing of the past as the Mining Cadastre System is being upgraded with the introduction of online mineral title administration aimed at making the operations of the Nigeria Mining Cadastre Office more transparent, efficient and accessible. It would also reduce Mineral title processing time from 45 days to 15.

In conclusion, while it is safe to say the Nigeria solid minerals sector is on a path of growth, it is important to add that consistency in political administration is very important to maintain the trajectory.

Author Kigbu is the Special Assistant (Media) to Nigeria’s Minister of State for Mines and Steel Development

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