‘Mining industry’s growth stunted by lower oil prices’
Despite a marginal rise in combined production of mining and utilities by one per cent, there are indications that global production growth from mining activities may have continued to decline as a result of lower crude oil prices since 2015, latest report released by the United Nations Industrial Development Organization (UNIDO) has shown.
According to the report, while there is a gradual decline in mining activities in industrialised countries, the sector plays a dominant role in some developing economies of Africa and the Gulf region.
Indeed, the Federal Government had expressed interests in diversifying the economy through agricultural sector and mining sector, as a result of untapped potential in the sectors.
Already, data provided by the National Bureau of Statistics (NBS) shows that Ogun state has recorded the highest amount of mining activity in the country in the last three years.
The data, which was released over the weekend shows the disaggregated mining and quarrying activity volumes of Nigeria’s 36 states for the period 2010-2015.
In 2015 Ogun state alone was responsible for processing 15 billion metric of mining activity (other than metal ore and coal). Also, in the 2014 financial year, the state came top accounting for 14 billion metric tones of mining activity.
The share of developing and emerging industrial economies in the global production of mining and utility sectors is constantly rising and in 2015 reached 50 per cent of the global total.
However, the development of this sector involves a huge infrastructural network of mines, structures, pipelines, electricity mains, among others.
The report added that many resource-rich developing countries are yet to exploit their mining industry potentials for economic growth.
UNIDO report showed that extraction of crude oil accounts for almost 90 per cent of the mining industry in oil-rich economies.
The World Statistics on Mining and Utilities is a biennial publication of UNIDO which presents global statistics on mining and quarrying, electricity, gas, steam and air-conditioning, as well as water supply, sewerage, and waste management.
The report states that the growth potential of mineral products is generally diminishing due to the depletion of mineral resources.
Specifically, the report showed that the decline in recent years was caused by lower demand of minerals from slow growing manufacturing combined with falling oil prices.
The report also refers to OPEC data, which lists the average price of crude oil per barrel at USD 49.5 in 2015, down from USD 109.5 in 2012. Although, crude oil price has been hovering between $45 and $47 since July 2016.
Between 2010 and 2015, the yearly average growth from mining and utilities in industrialised countries was around 1.0 per cent.
During the same period, the annual average growth in emerging and developing economies was estimated at 2.8 per cent.
Both figures indicate a declining trend compared to the data published in the 2014 edition of the same UNIDO report.
Despite the gradual decline of mining activities in industrialized countries, this sector plays a dominant role in some developing economies of Africa and the Gulf region. In recent years, the contribution of mining to GDP rose significantly in Angola and Equatorial Guinea.
The United States accounts for more than 15 per cent of the total value added of mining and utilities. China ranks second, however its position relative to the population size is much lower.
In terms of per capital value added of the mining and utilities, leading economies in 2015 were Qatar, Kuwait, Norway and Brunei Darussalam.