Generating Data for the Mining Sector

Jonathan Eze writes that a bankable data for the mining sector would attract foreign investors to the country.

The acting minister of Mines and Steel Development, Abubakar Bwari, has said that the Federal Executive Council (FEC) approved the sum of N12.7 billion for exploration and consultancy projects in the mining sector, adding that the projects will help in getting accurate mining data, which will attract local and foreign investments.

He also noted that major challenge in the diversification programme of the government in the mining sector has been that of data, which he said exploration data will focus on gold, industrial minerals, earth metals and iron ore.

According to him four companies in exploration and four companies in consultancy side of the project, therefore N12.7 billion worth of contract has been awarded to the eight companies to commence work.

“And with this, we will encourage both local and foreign investors to come in. Our major challenge is the bankable data, most mining companies will not want to come into your country when they are not sure of what they are going to meet. “We really need to explore because you cannot mine without information and information can only be gotten through exploration”, he stated.

Nigeria is endowed with vast reserves of solid minerals, including, but not limited to, precious and base minerals, industrial minerals, energy minerals and metals. The country was a major exporter of tin, columbite and coal in the 1960s to early 1970s.

However, activities in this sector began to nose-dive considerably by the mid-1970s due to a number of political and economic factors, especially the significant focus on crude oil production as a major source of foreign exchange for the country.

Successive governments at the federal level have demonstrated commitment to revamp the sector. For example, in 1999, a new national focus and strategy on mining evolved and this culminated in the enactment of the Nigerian Minerals and Mining Act (the Act) in 2007, amongst other policy efforts. However, these efforts have only led to a minuscule growth in the sector; with the sector’s contributions to the Nation’s Gross Domestic Product (GDP) remaining at less than 1% as at 2015. By the first half of 2016, Nigeria entered into a period of economic recession, which continued in the third quarter of the year. The recession was primarily due to dwindling government revenues; caused by the twin problems of severely impaired local crude-oil production, and low global oil prices. As part of the economic recovery plan, the government prioritised the diversification of the country’s revenue base as paramount and identified agriculture and mining as the pivotal sectors.

To demonstrate government’s commitment to the diversification plan, the Ministry of Mines and Steel Development (MMSD or the Ministry) issued a revised sector growth and development roadmap, with the objective of addressing the key challenges identified in the sector and outlining strategies for rapid development and utilisation of key minerals and metals. One of the targets of the roadmap is the growth of the sectors’ total contribution (direct and indirect) to Nigeria’s GDP to about 10% by 2026.

In order to adequately reposition the sector, the federal government launched a N30 billion intervention fund to open up the sector to multinational companies. The fund will be used to promote exploration and research. Government expressed desire to negotiatiate with respect to the concession of the country’s railway infrastructure to boost evacuation.

Nigerian’s mining sector can be categorised according to the key activities in the sector as follows: exploration and mining (upstream), processing and beneficiation (midstream), and marketing and transportation (downstream). Only the upstream and downstream subsectors are currently active. The federal government plans to implement some initiatives to enliven the mid-stream subsector. For example, there are plans to bolster production and beneficiation of industrial and ferrous minerals by initiating policies that stipulate minimum local content threshold for the utilisation of these minerals by various industries/sectors.

Whilst the downstream subsector is dominated by individuals and indigenous companies, the upstream subsector is dominated by small scale/artisanal miners, and local integrated manufacturing companies (for example, cement manufacturers that extract limestone for use). Also, a few junior mining companies have executed joint venture arrangements with indigenous companies for mining operations. As at December 2016, a total of 2,395 companies and individuals were licenced to operate in the upstream sub-sector. All of these entails that the sector needs regulation to coordinate its activities for optimal performance.

Thus in February 2018, it was announced that the federal government concluded arrangements to establish the Nigerian Mining Commission to take charge of the regulatory role of the Ministry of Mines and Steel Development. This is to ensure predictability in the mining sector and boost local and international investments.

The former minister of Mines and Steel Development, Dr. Kayode Fayemi, who disclosed this at the Nigeria Day at the African Mining Indaba in Cape Town, South Africa, said the law setting up the commission was already with the National Assembly.

Fayemi spoke as Nigeria took the centre stage at the forum, with the formal presentation of its new Airborne Electromagnetic Survey results amid endorsements for the country’s mining sector reforms by experts, operators and developmental agencies.

The presentation of the Airborne Electromagnetic Survey results, a high point of the event, was witnessed by renowned stakeholders in global mining, including the Deputy Minister of Mines and Minerals of Venezuela, Franklin Ramirez Araque; Australian Ambassador to Nigeria, Paul Lehman; former Nigerian High Commissioner to South Africa, Musa Ibeto; and the Permanent Secretary in the ministry.

Others were representatives of top mining conglomerates and mining nations such as Canada, Zambia, Angola, South Africa and Senegal.

The minister stated then, that the government was determined to strengthen regulation in the sector as well as ensure the improvement of its geological data.

He said the commission would not only be the final authority on regulatory matters, it would also take charge of mining leases.

Fayemi, in an interactive session with investors and the media after the presentation of the survey results, noted that the delivery of the geological data was in line with government’s desire to ensure bankable geological data that would be an incentive to investors.

He stated that the ministry would undertake more extensive electromagnetic airborne geological survey of some promising parts of the country this year, as well as the completion of the National Mineral Database.

The minister said, “We want to ensure predictability; that is what we want to offer. We want to be a big mining destination.”

Still on the intervention by the federal government, the President Muhammadu Buhari administration recently approved N12bn for exploration data generation.

Elated by this development, Miners Association of Nigeria, MAN, hailed the federal government over the approval of N12.7 billion for exploration data generation for investors and operators in the mining sector. The commendation was made by the National President, Sani Shehu, describing it as good omen and step in the right direction for the sector’s development and productivity.

He said: “It is a good omen for the sector. I mean operators and other stakeholders. As operators we understand the critical nature of data generation in a formalised mining situation, therefore, data generation of this magnitude cannot be done except by the government. “So I think it is a step in the right direction and that would also attract foreign investments.

“This will also simplify our search for minerals so business can be made with ease. I think that tallies with government’s initiative of ease of doing business. However, he said the statement of the Minister still demands more details on “Who is going to do what, which states the exploration will be done, the minerals mentioned are in many states, and we do not know which of them the exploration will be carried out, when is it to be carried out? So we need to await details from the Minister for further comments.”

He added that the amount approved cannot cover all the states in the country for mining data generation, which will lead to selection of states for exploration activities based on the approved N12.7 billion by the government. “The N12.7 billion will not be able to adequately cover all the states in Nigeria, so there would be selection of states to start with, and as for exploration time goes on I know more funds would be made available for the continuous exploration exercise”.