De-risking Nigeria’s solid minerals sector for foreign investments

Mining activities in Nigeria contribute about 0.5 per cent to the country’s GDP. This is largely because activities in the sector are largely artisanal and informal. To be able to attract required investments needed for growth, there is a need to de-risk the sector and invest in generating geoscience data useful to investors. FEMI ADEKOYA writes on government’s efforts in attracting foreign investors to the mining sector.

Stakeholders familiar with activities in the solid minerals industry note that the sector is capable of generating a yearly revenue of $60 billion if properly harnessed.

To however achieve this goal, there is a need for government to de-risk the sector through regulatory frameworks, improvement in governance and provision of quality geoscience data for potential local and foreign investors.

Currently, about 80 per cent of mining activities in the country are said to be illegal, depriving the various tiers of government of billions of Naira in supposed royalties annually.

For instance, between 2016 and 2018 alone, Nigeria lost about N353 billion in gold smuggled out of the country and sold in the international market without any revenue accruing to the government.

However, as part of efforts at curbing illegal mining activities, the Minister of Solid Minerals and Steel Development, Olamilekan Adegbite noted that the government had been engaging mining operators in the communities to lure them into formally registered cooperatives for the purpose of safely mining the nation’s resources.

Indeed, the ministry, under Adegbite’s charge, had as part of the re-launch of Nigeria as a mining destination, not only moved to formalise artisanal miners, but also committed to helping artisanal and small-scale miners to access funds.

The move appears to be bearing fruits. For instance, Adegbite said more than 1, 500 Artisanal Mining Cooperatives (AMCs) have been registered nationwide, just as about 250 Private Mineral Buying Centres have been registered to facilitate trading in mineral commodities.

On the complain that the sector was dominated mostly by artisanal miners, consultant geologist, Oyewola Oworu had said the concern should not constitute a problem, saying that the artisanal miners were only mining the secondary arrangement of mineral deposits.

He said: “The artisanal miners are just mining the secondary arrangement. The primary source of gold is buried underground and it will need a huge investment to get into it. In terms of number, the artisanal miners are many but in terms of production, what they are doing is not much”.

Though their production appears to be insignificant, it is widely believed that allowing such activities to thrive will keep the desired investments away from the sector.

At a recent forum with the media, Adegbite stated that government does not realise anything from illegal mining, saying: “Solid minerals are in Nigeria in abundance, everywhere in Nigeria you find one thing or another, so most of these people just want to till the land, not going so deep, they find some minerals, and they sell them in raw form. They of course make a living, and then they go back and decide who continues. These kinds of people are not formalised, and the government does not realise anything from them”.

According to him, Nigeria had always been a mining economy, but the discovery of oil changed the narrative.

Preparing for a future beyond oil
With the world looking at a future beyond fossil fuels, Adegbite emphasised the need to develop the solid minerals sector by exploiting key resources that can increase government revenue and generate employment for teeming youths.

He said: “Nigeria needs to prepare well ahead of time for the future beyond hydrocarbons because there will come a time when you will not be able to sell your fuel anymore. It will no longer be attractive; nobody wants oil, and everybody will be using this mineral to power other things.

“Hence, the mandate of Mr. President to refocus the economy away from just oil and gas into mining and steel development, and of course agriculture. To do that mining, Nigeria is the big player left but predominantly artisanal.

“Nigeria is the second largest producer of minerals, but the government hasn’t made sufficient effort to explore it, so what do we do? We need formal mining in Nigeria, you need to bring the right investors to come and do mining in Nigeria, and that is what we are trying to do”.

Incentives as driver of investment
Each of the seven strategic minerals identified by the Federal Government for exploitation— coal, bitumen, limestone, iron ore, barite, gold, and lead—require a long-term strategy.

With the dynamics of global trade changing as a result of many sovereign entities reviewing their alliances, the need to sell the country’s mining industry becomes important than ever.

Leading a team consisting of Director-Generals of MIning Cadastra Office, Nigerian Geological Survey Agency respectively, Project Coordinator- MINDIVER, Director Investment Promotion & Mineral Trade Dept., Special Assistant to the HM, Special Foreign Mineral Promoter, among others on a London Investment visit, Adegbite said the country has learnt its lessons from neglecting the development of the nation’s solid minerals sector.

According to him, the Federal Government is determined to protect any direct foreign investments as indicated in the Nigerian Mineral and Mining Act 2007.

The Minister allayed investors’ fears and assured them that the mining sector was very friendly and that the government had put in place incentives that would favour investors in the sector.

“Our focus is now on de-risking the sector, by the provision of more up-to-date and comprehensive data on mineral occurrences in Nigeria and enabling a more investor friendly environment through favourable incentives.

“The upsurge of mineral exports from the informal and small-scale miners has encouraged the country to confidently promote activities that will trigger the emergence of a new vista and its sustainability”, he added.

Some of the innovations embarked upon by the Ministry, according to Adegbite, is the upgrade and expansion of the nation’s data base to de-risk the Nigeria Mining jurisdiction in order to make potentials more palatable to investors.

“The ongoing National Exploration Project (NIMEP), is government’s rapid response to the dearth of investible geoscience data. NIMEP Contracts have been awarded to five JORC certified exploration companies for further investigation into gold, lead, zinc, iron ore and rare earth metals which we consider priority minerals along the identified mineral corridors.

“At the end of the exercise the viable areas will be delineated into concession blocks for interested investors to bid.

“The upgrading and automation of the Nigeria Mining Cadastre Office for full online operations will be completed this year. The major objective of this project is to make online application for titles seamless. This will cut down the time for processing licenses from 45 days to 15 days”, he said.

While collaboration and sharing of data may have been difficult in the past, the Minister also explored talks with the British Geological Survey Agency to seek collaborations between it and the Nigerian Geological Survey Agency.

He explained that the development of the new Mineral Export Guidelines has reached final stages and it is expected to be implemented this year to ensure transparent and timely issuance of export permits of minerals from Nigeria.

Marketing the gold project to investors, he said the outstanding gold discovery by Segilola Resources operating Limited/Thor Explorations Limited, whose exploration exercise in the Southwest of Nigeria established a proven reserve of one million ounces of gold on part of its tenements, has finally received attention from international investors.

On his part, the Director-General, Nigerian Geological Survey Agency, NGSA, Dr. Abdulrazaq Garba, said the London trip presented an opportunity for the Ministry to expose to the international community the mineral endowments of the country, including the latest developments in the minerals sector in terms of the efforts of the government to generate credible geoscience data and de-risk the sector.

“It also presented the opportunity to sensitize the international fora on developments in the Automated Mining Cadastre System that ensures transparency in the licensing regime and online application system. Government initiatives elucidated to attract investments include fiscal incentives, downstream projects, among others.

“Judging by the huge volume of inquiries from international mining companies – both majors and minors – regarding the NIMEP programme, it would be right to say that the interest has been overwhelming. The Ministry is also eager to follow-up on all the requests made at the conference”, he added.

Attracting new investments into Nigeria’s solid minerals space remains a daunting challenge going by investors’ experience in the sector. If government however follows through its word based on the reviews and de-risking efforts, Nigeria’s earnings from solid minerals may increase and the previous narrative changed.