Solid minerals: Still a long way to unearthing nature’s endowment
Organised mining of solid minerals in the country began in 1903 after the British colonial government created the Mineral Survey of the Northern Protectorates. But despite over one century of mining activities, the mining industry is still at its infancy, and highly underdeveloped. This has made inevitable, the country’s continuous importation of minerals that are abound in its nooks and crannies.
The stunted growth experienced in the sector also find expression in the fact that mining accounts for less than 0.3 per cent of the country’s Gross Domestic Product (GDP), despite the sector having the potential to become a major catalyst for economic development.
Since coming on board, the Muhammadu Buhari-led administration has expressed its desire and determination to reposition the solid minerals and metals sector to serve as a frontier of economic diversification, create jobs and broaden the range of economic opportunities available to Nigerians, and generally ensure that the sector contributes optimally to the building of a strong and virile economy that supports its diversification drive. But all these have remained on paper.
With right to ownership of mineral resources held by the Federal Government, which also grants permission to organisations to explore, mine, and sell mineral resources, it is common knowledge that the illegal mining carried out mainly by foreigners, who collaborate with indigenes has robbed the country of billions of naira over the years, as well as, led to the death of many owing to the crude methods employed by the illegal miners.
The discovery of oil in 1956, which ought to have added to the good fortunes of the emerging country, sadly became a curse for the nation, as it badly hurt the mineral extraction industry.
As if the shift in focus by government and industry to the new resource was not bad enough, the Nigerian Civil War contributed its quota by leading to the departure of many expatriate mining experts.
As time went by, the mining industry was monopolised by state-owned public corporations, a development that led to a decline in productivity in the entire sector before the Olusegun Obasanjo administration began the process of selling off government-owned corporations to private investors in 1999.
Despite all efforts of present and past governments to get the sector to grow, it has been pinned down by a litany of problems, which include insufficient funding, lack of geological data, weak institutional capacity of the supervising ministry, limited supporting infrastructure, limited cooperative federalism in sector governance, low productivity, illegal mining and community challenges, weak ease of doing business and perception issues, as well as protracted litigations on legacy assets.
This much was gleaned during the maiden edition of the National Council on Mining and Mineral Development (NCMMRD), where the permanent secretary in the ministry, Mohammed Abbas, said the council’s main objective was to brainstorm and provide inputs into the governance of the sector in order to achieve desired results in the diversification of the economy.
“The federal and state governments must work together to address issues affecting the sector which borders on illegal mining and poor mining governance,” he said at the event, which theme was, “Enhancing Mineral Resources Governance Towards Economic Growth and Diversification,”
Another staff of the ministry, who confirmed the poor performance of the domestic mining industry stressed that the dominance of illegal miners in the sector has worked against proceeds from coordinated exports helping in the diversification of the nation’s resources.
“What we need to do as a nation is to bring about a system that would help us export. In Ghana, for instance, all exports are paid for through the country’s Central Bank,” he said.
“Nigeria has significant solid mineral resources with potentials to attract investments for diversification from oil, but the mining sector is dominated by illegal mining carried out mainly by foreigners collaborating with indigenes. In the absence of petroleum, Nigeria is endowed with mineral resources and the development of mining industry appears to be an appropriate strategy for export expansion. Apart from the fact that many people have died in the process of illegal mining due to crude methods, it has also robbed the nation of huge revenue.”
Government’s efforts towards reforming the sector of late have brought about some key changes such as passage of a new Nigerian Minerals and Mining Act 2007, and Nigerian Minerals and Metals Policy 2008, meant to engender modern mining and to sharpen the knowledge of mineral endowments in the country.
The Roadmap for the Growth and Development of the Nigerian Mining Sector is another vital document that was produced through a robust process of consultations and stakeholders’ engagements. Approved by the Federal Executive Council on August 31, 2016, the document prescribes collaborative actions of all stakeholders to guide the growth and development of the sector over the next two decades.
Also, as a way of tackling the poor funding, which has remained the bane of the sector, the ministry sought for and obtained approval for N30bn (approx. $100m) intervention fund from the Federal Government, partly to help provide cheap loans and grants to industry participants, as well as, directly investing part of it in foundation infrastructure. And for the first time since 2004, the ministry got the Federal Executive Council (FEC) approval in October 2016 for the amount, by securing access to the revolving mining sector component of the Natural Resources Development Fund.
Still as part of efforts to tackle the problem of poor funding, the ministry also secured support from the World Bank for the funding of the Mineral Sector Support for Economic Diversification (MSSED or MinDiver) programme, a critical component of which is to provide technical assistance for the restructuring and operationalisation of the Solid Minerals Development Fund, which would make finance available to artisan and small-scale mining (ASM) operators, through micro-finance and leasing institutions. The fund is expected to also help bring back on stream, previously abandoned proven mining projects like tin ore, iron ore, coal, gold and lead-zinc.
Present and ongoing efforts of the administration appear to have recorded slight positive movements on the scale, as the National Bureau of Statistics (NBS) recently disclosed that the mining and quarrying sector has grown by 14. 85 per cent from 10.7 per cent in Q4 2017, and 22. 64 per cent in Q3 2017.
According to the 2018 first quarter GDP report released by the NBS, the growth in the mining and quarrying sector is a clear indication of better days for the mining industry, which some say is experiencing sustained improvement in its contribution to the national economy.
But Advisory Partner and Mining Leader at Pricewaterhousecoopers (PwC) Nigeria, Cyril Azobu, maintains that a number of factors including, access to funding for investors, and refusal of banks to finance projects in the sector due to a host of reasons, have affected the development of mining in the country.
He added that poor understanding of technicalities in the sector; unwillingness to deploy long-term funding, and non-availability of bankable feasibility studies, and the inability to use mining licenses as collateral for loans in the country were also dragging the sector down.
While deploring the country’s inability to embark on detailed geosciences data gathering, as obtained in other global mining hubs, he also pointed out that the absence of a formal policy on artisanal mining has given rise to a largely informal operation, fraught with the use of crude equipment, and characterised by extremely dangerous working practices.
Azobu noted that continually operating in this kind of environment “exposes miners to uncontrolled risks, while leaving the environment prone to degradation, erosion, excessive pollution and poisoning of the local communities. There is a huge infrastructure deficit in the country.”
He however, expressed optimism that if the right steps are taken and the current momentum sustained, the solid minerals sector can contribute up to 10 per cent of GDP by 2020 from a current contribution, which he said has risen to about 0.46 per cent.
Since mining is on the exclusive list, it is always creating tension between many states and the Federal Government over taxation on mining industries, as some states, including Lagos and Ebonyi, have been barring miners from operating in their domain.
This development probably forced the Federal Government to recently warn that any state government that bans legal miners from operating in its jurisdiction could lose its share of the 13 per cent mining derivation revenue.
Technical Adviser to the immediate past Minister of Mines and Steel Development, O’Seun Adewale, while making the disclosure in Abuja recently said, “States are entitled to benefit from revenue of minerals derived from their locations. The revenue is being calculated for each state based on the amount of mineral commodities recorded,” he said.
Like oil and gas producing states, the 13 per cent derivation revenue is shared among states that active mining of solid minerals is taking place in their domain.
Adewale in reiterating government’s position said the ministry has written to states that barred genuine miners from operating in their states, that Section 39 of the 1999 (Constitution as amended) puts mining on the exclusive list. This development, he said, confers the right on the Federal Government to issue mining licence, collect royalties and supervise mining operations as well as take necessary action when any provision of the Mineral Act is violated.
President, Progressive Miners Association, (PMA) Sunny Ekozin, agrees with the government saying that states that are trying to collect taxes, or in any way be involved in the sector in any form or shade were doing so against the dictates of the law.
“Both the Nigerian constitution and the Nigerian Minerals and Mining Act 2007 forbid states from so doing.”
The perennial absence of geological date in the country, PMA president said, remains another major problem stunting the sector’s advancement.
“The lack of geological data is a major impediment to the country’s solid mineral development, and the earlier this matter is sorted out, the better for the country.
However, in shedding light on steps being taken along that line, the immediate past Minister of Mines and Steel Development, Dr. Kayode Fayemi, while rendering his account of stewardship said, “in the area of addressing the lack of geological data, “We have facilitated payment and the release of the results of the aeromagnetic survey of the whole country carried out since 2006, but which had not been released due to non-payment. Our Nigerian Geological Survey Agency (NGSA) has undertaken additional ground investigations nationwide to upgrade our National Minerals Database, and to further ascertain the assays of our mineral assets to the level that can easily attract financial investments and assure operators of the scope of operations required for further exploration and/or mining.”
He added, “The Nigerian Geological Survey Agency (NGSA) has also signed and operationalised MoUs and technical cooperation agreements with the China Geological Surveys, Shandong Mineral Exploration Agency and the National Office Hydrocarbons and Mines ‘ONHYM’ of Morocco. The collaborations are intended to leverage on the expertise and state-of-the-art technologies of these organisations in assisting Nigeria generate investor-friendly geosciences’ data.
“The ministry has initiated engagements with SGS, a world-renowned material testing company, to strengthen the capacity NGSA Laboratory Facilities in Kaduna towards achieving ISO 17025 accreditation within the shortest possible period. The objective is to significantly reduce the thousands of mineral samples being shipped abroad for analysis, thereby reducing the huge revenue loss and correspondingly incentivise the mining sector,” Fayemi stated.
He further explained that as part of the support the ministry received from the Natural Resources Fund, it has finalised exploration initiatives totaling N15b allowing successful entities to help with the exploration of priority minerals like gold, lead, zinc, rare earth metals to mention a few.
Fayemi added that as part of efforts to address the weak institutional capacity in the sector, “We have initiated the establishment of the National Minerals Commission (NMC), which would harmonise the functions of the Cadastre Office and a number of key departments in the ministry, under a unified administrative structure for greater efficiency and effectiveness in sector governance. This has been approved by the FEC and passed second reading at the National Assembly.
Government’s determination to win the war against illegal mining saw it recently commissioned 50 operational vehicles for use by the Special Mines Surveillance Taskforce and the State Minerals Resources and Environmental Management Committee (MIREMCO).
Fayemi, who handed over the vehicles to the heads of the operation units, said strengthening the surveillance unit with operational vehicles and gadgets was part of government’s strategy to strengthen units in all the states of the federation.
Until the delivery of the vehicles, the special surveillance task force and the MIREMCO could not deliver effectively on their mandate, a situation that brought a surge in illegal mining activities.
As part of steps to ensure a coordinated approach to curtailing the menace, sanitising the mines, and positioning the sector on the path of sustainable development, Fayemi said, “We have delivered on the objective of building a collaborative sector security framework by working extensively with state governments and relevant ministries to formalise and manage our artisanal miners, while also working with defenCe and security agencies to curb the actions of illegal mining in the country.
He added, “Under the MinDiver programme, we have commenced modalities for capacity building in community-based organisations and other community representatives, helping them participate in key decisions in mining operations and processes. We are also providing guidance on suitable benefit sharing mechanisms (e.g. foundations, trusts and funds) and their applicability in different mining operations at all levels of engagement on behalf of mining communities.”
Despite all these, a community leader in Plateau State, Chief Ishaku Pam, wants the Federal Government to involve community leaders and traditional rulers in the fight to check the excesses of illegal miners in their domains.
While deploring the huge revenue loss occasioned by illegal mining activities, he said mining used to be one of the largest revenue earners in the country after agriculture before the discovery of oil. So, there should be collaboration between the Ministry of Solid Mineral Resources and the Ministry of Environment in the management of mining activities.
While also calling for adequate compensation of every solid mineral-bearing community, Pam added that, “Government should provide basic social services to host community to avoid militancy as witnessed in the Niger Delta region. This would take care of illegal mining.
“Moribund industries like Steel Rolling Mills in Jos, Makeri Smelting Company, Ajaokuta Steel Plant should be refurbished so that they can produce raw materials… the solid mineral resources deposit in the country is far larger than the oil deposit. Strictly speaking, all states in the country have at least one or more solid mineral in their domain, some are even yet to be discovered.”
The community leader, who pointed out that processes involved in exploiting solid minerals were cheaper than that involved in refining large quantity of crude oil, stated that government can generate huge revenue from solid mineral if enabling laws are put in place.
“The money that could be made from tin, columbite, gold, diamond, which are found in some states is by far bigger than what even agricultural and oil products put together can give. So, government should be fully involved and take mining activities seriously.
“Marker Smelting Company and Jos Steel Rolling Mills were established in Jos to process tin and other mineral resources into iron and so on, and huge revenue accrued from that and unemployment issue was addressed. Today, we don’t have this because of the archaic law on mineral resources, which is fully controlled by the Federal Government.
That is why we are grappling with the proliferation of illegal mining in these areas. The Federal Government cannot directly monitor the activities of illegal miners, except through the state and local governments because the mining areas are spread deep into the hinterlands, where federal agencies cannot reach.”
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