Export of unprocessed minerals
Minister of Mines and Steel Development, Kayode Fayemi’s disclosure that the Federal Government is making moves to stop exportation of unprocessed minerals out of the country will be more meaningful if the plan is all- encompassing. Against all economic and common sense, all of Nigeria’s crude oil is being exported in unprocessed form! And that is where all attempts to add value and make more money for Nigeria should start from.
The minister made the disclosure in Lagos during a Town Hall meeting with stakeholders in the mining sector. The meeting was attended by representatives of local and international mining outfits, officials of federal, state and local governments, financial institutions, manufacturing companies, professional bodies, community organisations, security agencies and civil society.
The minister noted that government was aware of the activities of some foreign nationals who export unprocessed minerals through illegal routes, thereby denying the country accruable revenue.
He stressed that unauthorised export of minerals is injurious to the economic plan of the government and reiterated his ministry’s effort to woo operators to set up plants in Nigeria where they could process the minerals before exportation of the finished products.
In a related development during a meeting with members of the Association of Miners and Producers of Barite (AMAPOB) in Benue State, the minister said the Federal Government was considering injection of funds and creation of good market environment to boost mining activities in the country.
He announced government’s plan to give tax holidays to miners in an attempt to explore the full potentials of seven minerals out of the 40 known minerals in the country. These minerals include limestone, barite, iron, bitumen, lead and zinc.
The minister regretted that whereas the commercial value of Nigeria’s solid minerals runs into hundreds of trillions of dollars, currently, Nigeria earns a paltry $89 million per annum.
While the ideas being pushed by the minister are worthwhile, nothing can be achieved except those ideas are put to concrete use. There have been lots of talks in the solid mineral sector without action, which explains why revenue from the sector is minuscule. Whatever needs to be done should be followed up with action.
As a richly endowed mineral producing nation, government has a role to play in formulating a comprehensive framework to make the country reap huge benefits from her natural resources.
Unfortunately, rather than be a blessing, the minerals have become a curse. Part of the problem is failure of the country to have an enduring strategy for exploitation.
Something like granting tax holidays ought to be a policy already. But the minister’s submission gives the impression that such an idea is still in the making.
Under its mineral strategy, for instance, the United States offers a number of important minerals like gold, coal, clay, copper, and so on. But instead of exporting the mineral, the U.S. imports most of the minerals she needs because of the low supply and high demand.
The over 78 major minerals that the U.S. produces absorb nearly 270, 000 people in direct employment. The industries that support mining account for about three million additional jobs.
The situation is different in China, which has huge deposits of coal, iron, copper, aluminum, and others. China exports her minerals to Europe, the United States and some other countries and rarely imports.
South Africa’s economy is largely built on gold and diamond mining. The mining sector is an important foreign exchange earner. In 2009, the country’s diamond industry was the fourth largest in the world. South Africa also produces coal, manganese and chrome. The country also produces energy mineral, non-ferrous metals and minerals, ferrous minerals and industrial minerals.
The Nigerian government should come up with a medium to long-term strategic plan on the mining and export of minerals in the country. But the objective cannot be achieved without a time-line within which the operators are expected to set up structures for processing the minerals. Having said that, the onus is on the ministry to come up with the needed strategy and the minerals in question should be spelt out. Nigerian minerals include coal, lignite and coke, gold, columbite, bitumen, iron ore and uranium, among others.
It may be easy to announce the ban on the export of unprocessed minerals but not easy to enforce.
One way to effect change is to hand over the minerals to their owners. Let the states and local governments own the minerals in their domain. The constitutional provision that vests ownership of all minerals in the Federal Government is antithetical to federalism and even productivity. The federating units should own what belong to them and pay appropriate taxes to the Federal Government.
Amid the biting recession, government ought to develop an economic recovery plan that includes the exploitation of the minerals.
That solid minerals account for only 0.3 per cent of the country’s GDP is a shame. Prior to the discovery of oil in 1956, Nigeria was a major producer of tin, columbite and coal. The time has come to open the industry further to private investors.