Moving mining in Nigeria beyond ‘side hustle’
Nigeria, like every other resource-dependent country, has had its fair share of the hemorrhaging impact of the COVID-19 pandemic, with the economy still struggling to get out of recession. Despite the abundance of other mineral resources, oil remains the dominant revenue earner. With the new normal, it is time to mainstream the solid minerals sector into the national economy, FEMI ADEKOYA writes.
As the world prepares for a post-oil economy, industry stakeholders believe the future of technology and energy transition depends on metals obtainable via the solid minerals sector.
According to NBS data, Nigeria imports, mostly raw materials, manufactured products, solid minerals and agricultural products from China.
The total trade in solid mineral goods stood at N40.8billion in Q3, 2020, comprising an import component of N35.2 billion and the export component of N5.5billion.
The major products exported under this sector were Other Cement exported to the Niger Republic, worth N1.4billion. This was followed by Cement Clinkers exported to Cameroon, worth N1.2billion as well as Lead Ores and Concentrate exported to China, worth N1.0billion.
In terms of imports, Plasters of Calcined Gypsum were mainly imported from Turkey, worth N4.0 billion and Egypt (N1.9billion). This was followed by Gypsum, imported from Spain worth N4.4billion. Crude salt was also imported from Brazil and Namibia worth N3.2billion and N1.9billion respectively.
To make the solid minerals sector a major revenue earner, there has to be a departure from the norm. According to the Minister of Mines and Steel Development, Olamilekan Adegbite, with the oil price shocks and effects of COVID 19 pandemic hitting Nigeria hard, solid minerals provide an avenue for diversifying the nation’s revenue.
He stressed that under the strategy of his ministry and the Federal Government, seven minerals have been designated as key drivers of the mining agenda and they include; Coal, Gold, Iron Ore, Bitumen, Limestone, Lead Zinc and Bauxite.
Giving further insight, he said Bitumen, for example, which Nigeria has huge reserves, in can be deployed for road construction and deepening the infrastructure base of the economy.
He added that some key minerals that will also be considered by the Ministry of Mines and Steel Development are Lithium and Cobalt for industrialization and development of areas like aerospace, telecommunications and electric vehicle manufacturing.
Mining sector reforms to the rescue
Adegbite noted that the first 60 years of the 88-year-old Nigerian mining industry was immensely successful, providing the stimulus for the growth and development of the economy, including infrastructural and municipal development.
“Unfortunately, as we all know, the discovery and production of oil shifted our attention away from the mining industry while others were steadily developing theirs.
“Today, many countries that were behind us have become attractive mining jurisdictions such as Ghana, Mali, Burkina Faso. A few others have become highly industrialized nations after they leveraged their mining industries such as Australia, Canada, Finland, and Sweden.
“We need to take advantage of the immense opportunities associated with the mining industry to industrialize our nation. There is no doubt that the mining industry is going to become more important to the future of the world which is moving towards digitization and automation”, he added.
He reiterated that minerals constitute a large portion of the inputs used in the production of mobile phones, laptops, ICT gadgets, batteries, and solar panels.
Although Covid-19 has had an impact on the battery and electronics market in the short term, the recovery projections are most likely positive in the medium term.
Nigeria’s huge infrastructure deficit can be addressed by sourcing and utilizing domestic raw material inputs from the mining industry.
Regardless of the pandemic and looming global and national economic crisis, Nigeria cannot afford to overlook the opportunities in the global and domestic mining industry.
Adegbite explained that ongoing reforms underpinned by the roadmap for the growth and development of Nigerian mining industry as approved in 2017 are geared towards rebuilding the sector and unlocking its full potential.
According to him, the vision is to build a globally competitive minerals and mining ecosystem and related processing industries capable of contributing to wealth creation, providing jobs, and advancing social and human security.
“In implementing the reforms, we are seeking to serve two markets, a domestic industrialization market that is more beneficiation focused and an export market that is more focused initially on the export of ores and raw materials and will continue to expand”, he added.
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 has become more important than ever.
Adegbite said the country has learnt lessons from neglecting the development of the 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.
He allayed investors’ fears and assured them that the mining sector was friendly and that the government had put in place incentives that would favour investors.
“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.
Director-General, Nigerian Mining Cadastre Office (MCO), Obadiah Nkom stated that the pandemic, while disrupting the programme for 2020, also helped to adapt to the new normal.
He explained that the ministry has continued all its programmes, such as the migration to online, adding that the opening of the six zonal offices and equipping them is in progress.
“Last year our agency generated about N2.6 billion; this year, the pandemic struck and affected mining operations a lot. However, we have generated about N1.8 billion and before the year ends, I believe we would have generated more.
“The honourable minister has been working hard despite the pandemic, holding several virtual meetings with foreign investors, requesting them to come into the mining sector. Perhaps, this is why despite the pandemic, expressions of interest from foreign investors were up this year by about a 100 per cent which can be attributed to all the hard work of the minister”, he added.
Encouraging states to participate in mining as corporate entities
With states being under pressure to boost their internally generated revenue, more states are looking to mining as a source of additional income.
Despite the controversy over ownership of solid mineral mining, Adegbite added that states must be mindful about the exclusivity of the Federal Government under the constitution in order not to erode investor confidence in Nigeria, as the mining industry prized policy consistency and predictability.
With stakeholders in host communities of the Niger Delta region demanding ownership and control of the trust funds proposed in the Petroleum Industry Bill for the development of oil-bearing areas, Adegbite, in an interview with The Guardian, explained that it would be unfair for some states, due to the mining of certain minerals, to benefits alone while enjoying from the same purse where oil proceeds are shared.
“The first thing I ask state governments is that, ‘as a state, do you benefit from the money of oil and gas?’ Oil and gas activities are under 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 Niger Delta; now that our 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 your place, it has to go to the joint purse where we will share it. This is what I tell states”, he added.
He also noted that states can participate in mining but not as subnational but as corporate entities.
“All the states in Nigeria today have a mining company. If you have a mining company, you can also mine whatever 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 corporate not as subnational”, he said.