How private sector intervention in gold will boost economy
With gold trading at over $1,946 per ounce and still rising, it’s a good time for Nigeria to pursue wealth creation and diversify its economy by creatively exploiting its natural and human resources.
Gold prices have not only rebounded in the international market amid global recession that has made investors wary of currencies, but also have for decades defied predictions of free fall like oil and other commodity prices.
But a gold processing centre that would end the export of raw gold out of the country is yet to debut to fully harness the potential in this high-risk, high-rewarding industry.
Minister of Mines and Steel Development, Olamilekan Adegbite, said the government had licensed two gold refineries – one in Abuja, and the other Ogun State, to produce the metal for export and for the Central Bank of Nigeria (CBN), to hold in its reserves.
The country’s first gold refining licence was issued in 2018 to local firm Kian Smith Trade & Co., which expects to begin operations this year, having failed to start last year.
The Guardian gathered that another firm is billed to start production in Osun State next year, creating 400 direct and 1,000 indirect jobs in the process.
The prospects in the gold industry and how it could further be developed to great benefit to the country, raises questions on the absence of a refinery.
However, experts said that the government has little or no business in creating a refinery, and called for private sector intervention.
President of Geological Society of Africa, Prof. Gbenga Okunlola, at a Nigerian Mining and Geosciences Society (NMGS) webinar, tagged: “The Nigerian Mining Industry: Reviewing Current perspective and facing the inevitable post Covid-19 realities.” noted that nationalising the gold sector may not be in the best interest of the country, as more often government’s business is nobody business.
He said: “Between the 70s and 1999, for almost 20-30 years, everything went down in the country in terms of mining, but if the trajectory had continued and there had not been a break in the sending away of the expatriates and all, Nigeria would have had a gold refinery by now. But a lot of efforts are being driven by the private sector and many are still underway.
“Besides, Gold refinery is not just like gold smiting where you just melt and join, there are standards and certification globally, if not it will not be respected. So, it’s an organised sector, and I think that is the way it is being handled now.”
Okunola also called for refined and organised refineries that would be accepted globally with its products, saying: “Globally, gold is a huge physical exchange monetary instrument. Again, people will ask: Why is the government not starting a refinery? But what is the government’s business in starting a refinery; we should have less of it.
“Where is the money for the government to invest in gold refineries when there are other issues? Let the private sector be encouraged to look at it. If we have one or two success stories, I assure you Nigerians are fantastic at looking at good opportunities; they just need to see one or two people succeed, and before you know it, they will go into it.”
Okunlola expressed optimism that if the government could support and encourage the private sector, such ventures would boost the economy and place Nigeria on the path of development.
“Let me take the issue of limestone for instance, we had about 4-5 limestone cement companies in Nigeria, but now, we have quite a lot all over. The last time, somebody said we have about 30 cement factories and more are coming up. This is because there is a success story. So, it is the same thing with the gold refinery that I think should have happened before now.
“But they need to get their facts right, they need to get certified, they need to see it as another serious industry. The mining policy in Zambia has less government, because it is handed more by the private sector. When the government made profits in the 90s, the Zambian economy almost collapsed because they were trying to nationalize the industry.
“Nationalisation cannot help us; we must encourage private investment. With all the corruption that we are seeing all over, nationalisation will not help the system, let’s have less-government. If a private sector man puts his money into this, he will want to see it through, but sometimes the government’s business is nobody’s business. Get your physical policies right, get your royalty regime right; let it be attractive, block revenue leakages; get your tax incentive correct; get your capacity development okay; get your social and infrastructural linkages and the condition for investment right, and you will be sitting down while people will be making money for you.”
The General Secretary, NMGS, Dr. Akinade Olatunji, added that there are several globally acceptable gold refining techniques and the process is open to global scrutiny.
“There are also global certifications usually assigned to gold refineries. These certifications are only given after stringent vetting by the certification bodies. These are international bodies, which do not compromise on the specified standards. For Nigeria gold refinery to be acceptable globally, it must meet all the rigour of global certifications.
“Success begets more success. If the current refineries being promoted become successful, more will follow. All the government needs do is to ensure that the policies put in place are sustained and pursued to a conclusive end.”
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