Fovie: Prior to Oil Boom, Nigeria Had Thriving Mining Sector

Patrick Fovie, a young owner of an indigenous mining company, in this interview speaks on how the federal government can assist local miners reap the benefits in the mining sector. Chuks Okocha brings the excerpts

What is Riverland Engineering Services Limited all about?

Riverland Engineering Services Limited is an indigenous mining company and one of the leading mining companies that has keyed into the lofty strides of the President Bola Tinubu’s government push to deepen the solid minerals sector of Nigeria. 

The Minister for Solid Minerals, Dr. Dele Alake, has gone over and beyond to sell the idea and gains of solid mineral mining to Nigerians and the world. As a developing sector, the return on investment is more than 300 per cent. There is no other sector that gives as much payback as mining. The demand for resources has been pushing up the price of minerals and as such, prices have been rising steadily for the past five years. Increasing world population and improved standard of living has brought about massive demand side push in the minerals and commodities market.  For instance, copper, which is a massively used metal sells for about $8,000/ton presently, but has been projected to sell for 40,000/ton by 2030. The international price for Gold has been above $2300/ounce (28.35 grams) and climbing up through the year, with a processing cost of less than $800/ ounce, the rest is profit. Lithium ore goes for between $200 -$700/ton depending on the grade encountered, discoveries of 10,000 tons and above have been recorded. Less precious materials like Quartz and Feldspar are also money spinners, the demand is perennial and quantity required runs into 100 of thousands of tons, and the extraction and processing is marginal.

So, how is your company involved in the mining of these precious stones?

Riverland Engineering Services Limited has its operations in Kogi West, located in the prolific Mopa-Muro and Kabba-Bunu area of Kogi State, Nigeria. Our flagship operation is named the Goldstone Project, where we operate an overpit gold mine and we are concurrently exploring our satellite mines and have met huge prospects for Lithium, and Marble. We have acquired and focused on long-life, low-cost gold assets as a first step, with plans to evolve into a multi-mining establishment in the near future. We pursue value-creating opportunities involving other minerals, where we can leverage our existing assets, skills and experience to maximise value.  The geology and age of rocks in central Nigeria are not only encouraging, the area is a virgin territory that has not been explored nor mined with modern equipment. It has been an interesting journey from conception. There were challenges, but they were all surmountable. Challenges like language barrier with some workers, opacity of modern mining and its practices to the host communities, infrastructure, funds, getting experienced staff etc. Establishing a mine comes with its environmental, infrastructural, economic and social challenges. To operate responsibly, we weigh potential development risks against the profitability of production, and the local wealth and employment it creates. Throughout the mine lifecycle – from the earliest exploration activity through closure – we engage and consult with communities and governments that host our operations as well as other stakeholders with respect and transparency. Once a target area has been identified, and geological, geophysical and geochemical data indicate a high probability of a deposit, drilling is conducted. Drilling helps us evaluate the type and grade of minerals in the ore. With drilling, we decide how many samples are needed, in what direction the drill holes will go, how far apart they will be, how deep they will go. Because per-foot drilling costs are expensive, these decisions must be made carefully. 

Another way we sample is through trenching, this is carried out by excavators. Trenching shows the different layers that will be encountered as we go down the depth and opens these layers up for analysis. Sustainability is fundamental to the way we do business in the GoldStone Mines. We are committed to responsible mining, managing our impact and contributing to our host communities and society through infrastructural development and sponsorships. We invest in our communities and align our focus with community identified need and priorities. Our strategy recognises that we operate in a complex environment and our ability to achieve sustainable outcomes is intertwined with people, politics, the government and the economy. In response, our strategy is dynamic and adaptive, considering developments in the areas in which we operate. 

So, what are the prospects of mining contributing to national revenue like crude oil?

 As we seek to create value, we recognise that this cannot be achieved in isolation, and a collaborative approach is a prerequisite to success. In all, Nigeria has one of the best mining laws in the world. Mining in Nigeria is operated under the Nigeria Minerals and Mining act of 2007 and the Nigerian Minerals and Mining Regulations of 2011. Prior to the oil boom of the 70s, Nigeria had a thriving mining sector with tin, lead, gold, coal, zinc and columbite being well traded. Factors such as the civil war led to the exodus of many foreign mining companies. Also, the indigenisation decree of 1972 limited the shares ownership of foreigners to 40 per cent in companies they funded, and this led to massive withdrawal of foreign mining companies, a void we never filled. The oil boom saw the nation focus on oil, thus, the dearth of mining companies. As mentioned earlier, Nigeria has one of the best investor-friendly Mining Acts in the world. Nigeria does not operate a Free Carried Interest policy (The government does not automatically own a stake/interest in your mine as obtains in many African countries), tax exemptions on foreign currency remittances. Exemption from Import and Customs duties on mining machinery and equipment; three years tax holiday, loss relief until full recovery, accelerated capital allowance, among others. Nigeria has not been well explored with modern techniques and technology. The geology is very rich and promising, consisting of rock formations from the Precambian era. These are pegmatite rich rocks loaded with precious stones. Nigeria is also host to the Birimian Greenstone Belt. This is a gold bearing geological structure that runs through parts of West Africa. 

Minerals in great demand found in Nigeria include BerylliumLithium, gold, lead, tin, ZirconFluorite, coal, copper oremica, rare earth minerals such as: Rutile, Ilmenite, Monazite and Xenotime are also plentiful in Nigeria. Some of these minerals are sold per kilogram, some sold per ton. In all, there is a lot of money being made in mining. 

What are the challenges?

A lot of mining in Nigeria is done informally and there is little processing or value addition in most cases. Thus, most of the gains go to foreigners who buy off locals and export. This is the trend Dele Alake is putting a stop to. With the robust framework put in place by the federal government, the yield and gains of the solid minerals industry will rival that of the oil industry when properly embraced by the organised private sector. It is only the private sector that can and will drive this progress. Foreigners will not come down to initiate this development. Until we prove to the world that it is feasible, we should not expect foreign direct investments. A few processing plants are here already, but, the core work of mining extraction has to be initiated and done by Nigerians. The days when foreign companies come to Nigeria to develop an industry from scratch are long gone. Foreign companies that embark on such projects go to countries with low population such as Guyana, Papua New Guinea and Western Australia. With the youthful and entrepreneur zeal of Nigerians, one would expect that the renewed push for the mining sector to kick off would be well embraced by the populace, but, that is not the case. Due to opacity and a lack of mentors, people have not embraced the sector.  There is the unfounded fear in respect of insecurity and safety in the mine, I can tell you indubitably that it is blown out of proportion. 

While many Nigerians wait for a soft landing into the industry, foreigners are eating our lunch. The major challenge we have as miners is funding and expertise, when the Chinese come to Nigeria to mine, they are sponsored from China by Chinese government-backed financial institutions such as the China Development Bank, Industrial and Commercial Bank of China, China export-Import bank, etc. This gives the Chinese a subsidised risk investment seed and these loans have less stringent conditions precedent to draw down. Good enough the present government has made the acquisition of mineral titles more accessible to indigenous companies. The government has also provided backed funds available for access by Nigerian Mining Companies. The Africa Finance Corporation has been impressive in its commitment to assist Nigerian Mining companies as well. For mining and miners in Nigeria to progress, we have to embrace synergy and capacity building, companies have to form consortiums to fully achieve their potentials. 

These consortiums can be among indigenous companies, and partnership with foreign companies. For local companies, as simple as combining to lease equipment, or to join forces in exploration campaigns go a long way in savings and efficiency. Foreign mining companies insist on partnerships with “Brown Field” companies, companies that are already in operation and will be good for expansion, thus, binding together to start up will give indigenous miners massive leverage to discuss with foreign entities.