‘Mining revenue should be shared from federation account like oil’
Olamilekan Adegbite is the Minister of Mines and Steel Development. In an interactive session during his visit to Rutam House, headquarters of The Guardian Newspapers Lagos, he talked about a range of issues bordering mineral resource development and the programmes of President Muhammadu Buhari’s administration, as captured by Kehinde Olatunji.
What is your Ministry doing to exploit the abundant minerals in the country?
THE mandate that was given to me is that mining should be an alternative to oil and gas. Nigeria’s economy has been subject to the dynamics of the oil and gas industry because we don’t control prices. Anytime there is a problem with oil and gas in the international market, the Nigerian economy shivers.
The first, I was told, is to diversify the economy through mining. Secondly, I was asked to create employment for Nigerians through mining and steel, and finally, generate revenue from the sector. A lot of Nigerians are not involved in mining because they don’t know about it. However, we need to involve Nigerians. All they need to do is to be aware of the sector and its profitability.
Mining is about data; nobody sees what you want to mine because it is under the ground. That is why an aeromagnetic survey is needed; this means there are airplanes flying over the place with equipment to take photographs. When they come up with the photograph, geologists will then identify the element and minerals. But this is not sufficient, because what that only tells you is that there are sufficient minerals in that spot but what is the quantum? This is what is called data. We also need to know if it is commercially viable.
Since the sector was created, President Muhammadu Buhari was the first President to give extra-budgetary funding. In 2017, he gave N30 billion to the sector out of which N15 billion was committed to exploration. The exploration is coming to fruition and the data is coming out. When I got into the office, we decided to take the data internationally and locally. We informed our people that Nigeria has gold, iron ore, and coal among others. As of today, there are 44 minerals that have been identified in Nigeria. In mining, there are some people called competent persons; to attain the status of a competent person in mining, that means you are known globally, and your word is as good as taken to the bank.
For our projects to be credible we engage competent persons, and so when they tell people that Nigeria has this quantum of gold and other minerals, people will believe them. If not for the COVID-19 pandemic, more people would have come into the industry and we would have been seeing some major results. We decided to look beyond international investors and proclaim the gospel of mining to let Nigerians know that we have these minerals so that people can invest and make lots of profits. We have done very well when it comes to gathering data; now we need to let people know and that is what we demonstrated when we presented the gold bar to the President.
For the first time, gold was mined in Nigeria. We are unable to refine it in Nigeria yet. We have given three licenses to refineries in Nigeria; Ogun State, Abuja, and the latest one I signed recently is in Kano State. These refineries are coming up so we will be able to refine our own gold. The one we presented to the public was mined locally and processed to a certain level, after which we sent it to a refinery in Turkey, and they returned to us – what is called the London Bullion Market Association (LBMA) standard. This is the standard for trading gold in the world.
The gold bar that was presented to the President was 12.5 kilograms and as of that date was worth about N168 million. It was presented to the President, and CBN bought it into its foreign reserves and paid in naira. We don’t have to rely totally on oil and gas to earn foreign money. There is a possibility that we can earn money for this country through mining; that was the essence of the gold bar that was presented to the President. Further, we are saying: don’t just do gold, when we take gold out of this country, the most common destination is Dubai, which turns the gold into jewelry and our women go there to buy. We are losing a lot of money and value that way, so another thing we are doing is that we are training our people in jewelry making so that instead of selling the gold at a small price, we can sell higher. When we make ornaments of beauty, then we can earn more money.
Within the context of a discussion of federalism, mining is on the exclusive legislative list, we would like to know the move the Ministry is making to ensure true federalism in mineral resources?
The first thing I ask a state government is: ‘as a state do you benefit from the oil and gas money?’ Oil and gas are also mining because you dig into the ground and look for resources to mine. One is solid, while the other is liquid. We have all partaken in the lunch of our brothers in the Niger Delta, now that our own mother has cooked our meal; we now say everybody should go to their tent. It’s unfair; federalism cannot come in like that.
Even if we are to turn off the tap today from the Niger Delta, some states will not survive because it will take time for them to develop their mining sector. Most states in Nigeria wait for federal allocation and the bulk of the money is from oil and gas. When we find minerals in our own place, it has to go to the joint purse where we will share it. This is what I tell states. Further, states can participate in mining but not as sub-national but as corporate, and they are beginning to yield to that. All the states in Nigeria today have a mining company. If you have a mining company, you can also mine whatever that is on your floor. You can approach the Ministry as a corporate body, and we will treat you like any other investor or company that is coming. The governors have been reassured that they can participate in mining but they have to do it as a corporate, not as a sub-national body.
Everyday we see in the pages of newspapers stories of illegal miners. What is the government doing to address this?
When it comes to illegal mining, the problem is that mining in Nigeria is mostly artisanal. Artisanal miners are pseudo-legal but the Nigerian government has decided not to criminalise them, but rather accommodate them and bring them into the fold. In the Ministry, there is a department that is mostly for artisanal and small-scale mining. The Ministry identifies the people who are doing artisanal mining, get their data, biometrics and bring them into the fold and form cooperatives. So, we extend the incentives of the government and train them on safer mining methods. Any Nigerian that is doing mining at an artisanal level is not considered illegal but foreigners are not allowed.
So, the illegal miners are the foreigners who come into the country and partake in artisanal mining. What these people do is, they come in riding on the back of artisanal miners, and offer them peanuts and exploit them. But now, we have mining police. Every state is headed by Federal Mine Officers. Whenever they sight any of these things, they have the ability to arrest with the collaboration of the Nigerian Security and Civil Defence unit and the Police. There have been some success stories. But whatever they cannot handle, they escalate it to the Ministry. At the federal level, there is a security council headed by the Minister and has the Chief of Army Staff, Department of State Services (DSS), Inspector General of Police (IGP), and the Commandant General of the Civil Defence. At this level, we can activate a more robust force to neutralise such illegality. That is what we are doing and we are getting results. Once they are detected, we dislodge them.
Also, we are sensitizing our people because Nigerians in high positions encourage many of them. We are trying to discourage them (artisanal miners) that if they want to do mining, they can do it properly. They don’t have to engage in any illegality with the foreigners. These are ways we deal with illegalities in the industry and we are getting results. Once we are able to wean off artisanal miners from these (foreigners) people, there will be nowhere for them to hide, because normally they hide behind the artisanal miners where the activities are taking place.
How do we achieve a quantum leap in the mining sector and ensure the sustainability of reforms, so that solid minerals will take over from oil?
President Buhari stands out as the only president that has ever given the mining sector extra-budgetary allocation. The money we get from the budget cannot even do exploration on one mineral, but he gave N30 billion. Though it is small compared to what we need, we are going back to ask for more. We started having traction from the time of the Governor of Ekiti State, Kayode Fayemi when he was the minister. The N30 billion was given in 2017 and he left in 2018. I picked up from where he stopped. We have started seeing results. For instance, we are able to produce gold, and it has contributed to our foreign reserves. It is not just from selling oil and gas that we are getting dollars, we are getting dollars from gold. The sector is already delivering on employment generation. The fact that we are not criminalising artisanal miners or sending them away is a good thing. If we say because they don’t have a license, they should go, we are going to create more problems for ourselves. By doing so, we will be sending them to the unemployment market. We are rather recognizing them and making artisanal mining attractive. We are beginning to make an impact when it comes to employment generation.
On revenue, what we realise is that though the artisanal miners will give us employment and feed people, it will not be able to generate the kind of money that we need to match oil and gas. We don’t have the potential to match oil and gas unless we have the big investors and that is why we go on international roadshows. We need the Rio Tintos of this world in Nigeria to come and mine, but Rio Tinto will not come into Nigeria if we don’t have the data that says where they are going is worth the while. But we have a Canadian company, Thor Exploration mining gold in Osun State. That is the first formal mining company in Nigeria.
There is a lot of attention on gold, is the Ministry going to accord other minerals the same attention where there will be a ready off-take for whatever they produce?
Gold gives immediate gratification and that is why it is given prominence. In the five strategic minerals, we have gold, iron ore and bitumen. We are working on the other ones, they are being developed, and they will go into bidding as well. They are accorded the same attention.
In terms of minerals export, there are issues with identification of types of minerals, what is your Ministry doing around that?
On classification, we are talking with the Ministry of Finance; they need to give us shipment inspectors. Somebody is exporting silver and he goes to the Customs to say he is exporting lead. Because of the lower cost of lead, they will charge him five percent of N20 million instead of N200 million if he had declared silver. To avoid this, we have discussed wanting a pre-shipment inspector for mining export. We are working on it as part of the downstream policy that we are bringing in.