Solid Minerals as Catalyst for National Devt

Eromosele Abiodun writes that mining and export of Nigeria’s vast solid mineral deposits will have several multiplier effects on job creation, development of states, and social infrastructure

Last week, the Governor of Kaduna State, Mallam Nasir el-Rufai, revealed that the raw gold deposit in one local government of the state is larger than the entire mineral deposits in the Republic of South Africa.
The governor, who disclosed this at the opening of the Kaduna economic and investment forum enthused: “We have just confirmed that Kaduna State, indeed Birnin Gwari Local Government Area alone, has more gold than South Africa. This is proven, this is verifiable. We have all the data and we are collaborating with the Federal Ministry of Solid Minerals.”

The governor said solid minerals alone could attract about N40 billion investments to the state, and urged investors to explore the opportunities in the state.
He said the new vision of his administration is to make Kaduna a state programmed for abundant investments, economic opportunities and prosperity.

The governor added that his government had put all mechanism in place to ensure peace and security, good governance, improved quality of lives, and social inclusion for the people and investors coming to do business.
He said discussions were ongoing with a large international mining company to come and explore gold reserves in state.

“We are focusing on mining and agriculture in creating jobs in this state. The mining company we are discussing with is going to take our local miners, train them and group them into cooperatives so that they would be like sub contractors to them and be able to work with them. We are working with the federal government very closely to ensure that this happens” he said.
El-Rufai said the government was also taking advantage of its abundant agricultural resources to woe investors, adding that Kaduna has the best ginger in the world and that N5 billion would be spent on ginger production in the state. He expressed the determination of his government to tackle the daunting development challenges that are facing the state.

A Nigerian Challenge
As it is in Kaduna, so it is in every Nigerian state.  From Abia to Zamfara states, solid minerals deposits abound, huge enough to make Nigeria one of the most prosperous nations on the face of the earth. Among the key mineral deposits in the country are topaz, tin, iron ore, columbite, limestone, gold, gypsum, kaolin, lead, zinc and bitumen. Latest numbers released by the National Bureau of Statistics (NBS) showed that the solid minerals sector contributes less than one per cent to Nigeria’s Gross Domestic Product (GDP)  as against nine  per cent of South Africa’s GDP in 2011. The domestic mining industry is underdeveloped, leading to Nigeria having to import minerals that could produce domestically, such as salt or iron ore.

Right to ownership of mineral resources is held by the Nigerian government, which grants titles to organisations to explore, mine, and sell mineral resources. Organised mining began in 1903 when the Mineral Survey of the Northern Protectorates was created by the British colonial government. A year later, the Mineral Survey of the Southern Protectorates was founded. By the 1940s, Nigeria was a major producer of tin, columbite, and coal. The discovery of oil in 1956 hurt the mineral extraction industries, as government and industry both began to focus on this new resource. The Nigerian Civil War in the late 1960s led many expatriate mining experts to leave the country.  Mining regulation is handled by the Ministry of Solid Minerals Development, which oversees the management of all mineral resources. Mining law is codified in the Federal Minerals and Mining Act of 1999. Historically, Nigeria’s mining industry was monopolised by state-owned public corporations. This led to a decline in productivity in almost all mineral industries. The Obasanjo’s administration began a process of selling off government-owned corporations to private investors in 1999.

Gains of Privatisation
Since the privatisation of government corporations and the investments that they have attracted, things are looking good for several of them. The solid mineral sector has also attracted massive investments. Although the statistics of the amount invested so far in the sector is not available, it is believed that things are beginning to get better. For instance, the Nigeria Extractive Industries Transparency Initiative (NEITI) recently reported that the solid mineral sector contributed only N113 billion to the nation’s coffers in five years. With the reality that the revenue from crude oil is no longer reliable for effective budget planning, analysts have continued to insist that Nigeria must diversify its economy by repositioning the solid mineral sector.

To this end, the Minister of Solid Minerals, Dr. Kayode Fayemi, emphasised the urgent need to revive the solid mineral sector to serve as a reliable revenue yielding alternative.
He observed that Canada, Australia and South Africa, among other countries, had explored such endowment to meet their economic needs.

He also said that the federal government recently approved the demand for states to be allowed to exploit mineral resources in their areas.

Fayemi said that states could link up with private investors to form partnerships to realise the objectives of the federal government in that regard.
Analysts believe that the initiative will open avenues for royalties, add more companies to the tax net and create massive jobs.

Nigeria Can Generate N5trillion Annually
Meanwhile, stakeholders in the industry have expressed the optimism that Nigeria can generate as much as N5 trillion annually from mining and exporting of its vast solid mineral deposits, with several multiplier effects on job creations, state development and social infrastructure that could make the solid minerals sector as the main catalyst for the national development.

At a press briefing in Lagos recently, the Association of Metal Exporters of Nigeria (AMEN) called on the federal government to provide the enabling environment for the development of the Nigerian solid minerals sector. Metallic solid minerals are the most exported solid minerals from Nigeria.

AMEN is the umbrella body of most active metal exporting firms in Nigeria and its members account for the largest share of foreign exchange income from solid minerals exports.
The association, which comprises various companies in the business of metal export, commended the focus of Fayemi, and expressed its readiness to partner  the government in the development of the Nigerian solid minerals sector.

President of AMEN, Mr. Seun Olatunji, said there is need for synergy between government agencies and private operators to unlock the values in solid minerals sector.
He noted that with not less than 38 viable solid mineral deposits in sustainable export quantity in Nigeria, the solid minerals sector has the potential to generate not less than N5 trillion annually once the government put in place necessary frameworks.

He pointed out that the solid minerals industry could serve as the much-needed solution to unemployment as the development of the value chain from mining to export can create more than five million jobs.
“We are glad that the current government is serious about solid minerals and diversification of the economy. Government should come up with policies that will enable Nigerians to benefit optimally from the country natural resources,” Olatunji said.

According to him, there is need for government regulatory agencies such as Standards Organisation of Nigeria (SON) to work with established private sector companies under the auspices of AMEN to develop globally acceptable regulatory standards for Nigerian metallic exports.

Absence of Efficient Regulations
He noted, however, that Nigeria has been losing considerable values due to the absence of efficient regulations and standards for metal exports.
“Our vision is to have a solid minerals industry where all operators along the value chain are well compensated and where Nigeria can realize the full potential of its God-given natural resources,” Olatunji said.

Vice President, AMEN, Mr. Bamidele Ayemibo, underscored the need for government to consider viable public private partnership (PPP) option to develop basic infrastructure such as crushing plant and standardised weighing bay among others.

According to him, with a crushing plant, government should put in place a general policy that ensures that all metal exports are crushed and SON and other regulatory agencies should see to the enforcement of standards in the solid minerals exports in order to ensure that Nigerian exports are competitive in the global market.

General Secretary,  of the association, Mrs. Kemi Ayo-Ogunkeye, added that standard-setting will bring values to Nigerian businesses and Nigeria as this will not only enhance the volume of transactions but also the reliability of the business.

She said the AMEN is willing to support government efforts in developing the solid minerals exports, noting that members of the association as established operators have the wherewithal to contribute meaningfully to the government’s efforts at developing the sector.

Speaking in the same vein, Financial Secretary of the association, Mr. Adegbola Ilori, said the association would also interface with the National Assembly to seek review of existing laws and to promote new laws that could help the development of the solid minerals industry.

He commended the policy initiative aimed at encouraging state governments to play actively in the development of solid minerals in their domains noting that such a policy could be a major solution to the cash crunch bedevilling many states and help to stop rural-urban drift.

Inclusive Consultation
While commending Fayemi for his vision to develop a multi-level developmental blueprint for the Nigerian solid minerals industry, they urged the minister to include industry operators in the process of determining the future of the industry.

Fayemi had recently inaugurated a 17-man committee to develop a 24 month short-term plan, 10-year mid-term plan and 25-year long term plan for the solid minerals industry. The committee is chaired by Professor Ibrahim Garba co-chaired by Professor Siyan Malomo.

Olatunji, said the terms of reference of the committee, which included prioritization of activities, development of a consensus strategy for buy-in by all stakeholders in the industry and improvement of the sub-sectional activities along the minerals value chain, reflected a thoughtful directional leadership by the Minister.

He said while the minister has laudable idea and the commitment for the overall good of the industry, there is a need to engage industry operators with visible records of active operations such as members of the Association of Metal Exporters of Nigeria in fashioning a practicable and realistic blueprint for the industry.

According to him, while the minister has a good knowledge of a number of challenges affecting the rapid growth of the solid minerals sector, the industry consultation and engagement should be broadened to include key stakeholders like metal exporters.

“For a fact, AMEN has not been invited to any of the engagement talks by the ministry. Yet, we, metal exporters, put several Nigerian-origin solid minerals on the foreign markets map including Lead ore, Zinc ore, Copper ore, Beryl ore, Manganese ore, Cassiterite, Zircon sand, with verifiable, valid NXP forms opened in compliance with Central Bank of Nigeria (CBN) monetary policies,” Olatunji said.

He noted that there is need for inclusion of those already achieving feat in the sector by generating export proceeds in order to achieve quick gains, pointing out that it would be counterproductive to neglect those with end-to-end knowledge on the conversion of the available base metals, minor metals and others into the much desired foreign exchange for the Nigerian economy as it stands today.

“Opportunity to contribute their quotas should be made accessible to those who have the practical know-how in selling Nigeria’s metallic minerals in exchange for forex. Let’s not shove aside these critical stakeholders; who account for over 80 per cent of the solid minerals export proceeds into the CBN coffers and by extension the commercial deposit banks,” Olatunji said.

He pointed out that the metallic solid mineral exporters actually finance directly the artisanal miners spread across the geopolitical zones of the country as the deposit money banks will not finance any artisanal miner directly; therefore, the exporters take the risks; – obtain high interest rates loans from the commercial banks to give support to the artisanal miners through advance payment options for their products and working capital.

“It is known for a fact that the export proceeds data captured by CBN from sales of mostly metallic solid minerals of Nigerian origin were achieved as a result of the activities of the various exporters in conjunction with the artisanal miners cutting across the various mineralised states in Nigeria,” Olatunji said.

He said while the industry consultation must necessarily include government agencies affiliated to the ministry of solid minerals, the academia, other consultants and the miners association of Nigeria, which seemed so far to have the attention of the Minister towards policy formulation, the consultation should include metal exporters and other practicing industry operators in order to drive the much desired growth in the sector.

“It is important not to ignore the quick gains which can be made by gathering the challenges militating against the export trade of Nigerian origin solid minerals in the international market today. Only the exporters can paint a true picture of these challenges, because they have to contend with both local and international parties in the course of the trade,” Olatunji said.

A New Dawn
In what can be described as a new dawn for the sector, the ministerial committee set up a month ago to chart a course has submitted its final findings to Fayemi last week.
The Roadmap committee under the Chairmanship of Prof. Ibrahim Garba and 14 other eminent Nigerians was inaugurated on March 1 to formulate a course that will stimulate the rapid growth of the sector.

Receiving the deliberations, conclusions and recommendations of the committee in Abuja, Fayemi, said:  “This event marks a significant milestone in the development of the mining and minerals and metals sector, with the submission of the mining and metals roadmap by the committee which we set up about four weeks ago.”

According to him, “I am impressed with the quick turnaround by the committee in concluding this assignment. You will recall that the roadmap committee was inaugurated a month ago to formulate a course that will stimulate the rapid growth of the sector.

“The mining industry is a key area of focus of the current administration, and it excites me that we are already charting the path for sustainable growth in the sector, with the involvement of representations from the spectrum of stakeholders within the sector.”

Speaking further, Fayemi said: “We have tried at the time of setting up this committee to ensure all stakeholders are appropriately represented. I am aware that the committee has consulted far and wide. This is quite encouraging. It is obvious that we are ready as a nation to embark on this journey of sustainable development for the Nigerian mining and metals sector.”

He hinted that the roadmap shall be reviewed, subjected to other stakeholders review in the coming days, “so that we can ensure an air tight document that can withstand the test of time. The roadmap committee shall continue to see us through this process and we will continue to work with them to ensure the buy-in of all relevant stakeholders were captured.

“At the end, we want to ensure this is a national document that is supported across board, and outlives any administration. The journey for sustainability for the sector has to be a continuous one,” he said.
In his comments, Garba disclosed that the roadmap became important “due to the time we are in.”

According to him, “when other roadmaps were made, Nigeria was still flowing in oil money. So, whatever this sector was going to contribute as at the time may not be too significant. But, today, we wake up to the reality that whatever this sector will contribute will be very important.
He said: “Governors must cooperate with the federal government to avoid unnecessary lacuna that will scare away foreign investors. They must not be overbearing on the use of their lands.”