Mining sector still at ‘potential stage’

Mining sector still at ‘potential stage’

When President Muhammadu Buhari’s administration was sworn-in in 2015, the solid minerals and agriculture sector were areas of interest in his effort to diversify the economy.

His Minister of Mines and Steel Development then, Dr. Kayode Fayemi, said the country had good prospects in the solid minerals sector, having 44 key minerals in about 350 spots across the 36 states and the FCT.

The face of the solid minerals sector began to change with approval of the roadmap for the growth and development of the mining industry by the Federal Executive Council (FEC) in November, 2016. To a large extent, it is the most potent intervention meant to grow the industry and diversify the Nigerian economy using solid minerals as one of the strategic pillars in line with the Economic Recovery and Growth Plan (ERGP) agenda of the present administration.

Developed by Dr. Kayode Fayemi as minister and Hon. Abubakar Bawa Bwari as Minister of State for Mines and Steel Development in collaboration with the Federal Government and key stakeholders, the idea served as renaissance for modern day mining.

Some of the challenges which the sector was faced with were low revenue from government for solid minerals exploitation, exports and inaccurate export data. Revenue from exports was next to nothing as minerals were exported without due permits, inspection by pre-shipment agents or payment of royalties.

Also, lack of accurate minerals production data, as well as drastic shortfall in concise geosciences data constituted the single biggest impediment to attracting major investors to the sector.

To demonstrate in concrete terms the commitment of the Buhari administration to the sector, N30bn (approximately $100m) was approved as intervention fund for the ministry to fund exploration projects, generate the needed geosciences data and provide the necessary regulatory framework to enable sectoral growth.

For the purpose of de-risking the sector, part of the intervention fund was to scale up exploration on mineral resources so as to ensure the generation and dissemination of critical geosciences data in order to increase investors’ confidence.


Contribution to GDP

Under the President Muhammadu Buhari administration’s strategic interventions from 2016, the mining sector has witnessed a steady rise in its contribution to the nation’s Gross Domestic Product (GDP).

Overall, the revenue generated by the ministry from royalties and fees has improved from N2.08bn in 2015 to N3.92bn in 2017 and N2.97bn as at October, 2018. Limestone mining has continued to lead in royalties earned by government.

The limestone resource base of the country has been increased from 2.3 billion tonnes to 10.6 billion tonnes. It is found to occur in 14 states: Sokoto, Gombe, Benue, Kogi, Edo, Oyo, Ogun, Cross River, Ondo, Plateau, Bauchi, Akwa-Ibom, Enugu and Ebonyi. An estimated 4.8 billion tonnes of marble was found in Nasarawa, Ondo, Edo, Oyo, Kogi, Kwara, Niger,Kebbi states and the FCT.


Lapses in exports

Records from the Nigeria Customs Service (NCS) indicate that the mining sector had a total of 2,670 exports from 2013 to 2017, while royalties were paid for only 56 within the period. Exports documentation was cumbersome and the process of minerals export took 46 days to complete. This was occasioned by lack of a distinct procedure for conducting minerals exports.

Procedures and documentation requirements for Ease of Doing Business in Nigeria have reduced, hence processing minerals export permits from 14 days to two working days. The whole export circle from inspection at source to shipment now takes 16 days, instead of 46 days. The implementation of the document will also boost government’s revenue from royalties by 50 per cent; from the current N2.9bn to N4.5bn in the very first year.

Again, the Mining Cadastre System was upgraded with the introduction of online minerals titles administration aimed at making the operations of the Nigeria Mining Cadastre Office more transparent, efficient and accessible. Minerals titles processing would be reduced from 45 to 15 days.


National geological security

In response to the recent earth tremors experienced in some areas in the FCT and the increased frequency of earth tremors in Nigeria, the ministry acquired high sensitivity seismometers/tilt meters for use in monitoring and detecting earth movements and earthquake-related activities; locally and internationally. This is to provide timely information and advice to the general public and requisite government agencies.

The equipment has been installed at the Nigerian Geological Survey Agency (NGSA) office in Abuja.

Formally, tributaries in the mining sector accounted for 47 per cent of the minerals production. Today, they account for 90 per cent of minerals production exported.

Consequently, the ministry, in line with the roadmap, took measures to capacitate this group of operators.


Artisanal and small scale miners

The Ministry of Mines and Steel Development, in collaboration with the Bank of Industry (BoI), established a small scale mining loan scheme with BOI. The aim is to make funds readily available to artisanal miners and other operators in the industry at a concessionary rate of five per cent, with softer collateral requirements.

However, it was observed that artisanal miners are having challenges in accessing the fund, arising from their inability to satisfy necessary, but stringent requirements stipulated by the co-funder of the facility. The ministry understood the position of BoI on the loan requirements, and has taken steps to develop a unique template for the disbursement of the fund.


Local production

The local minerals production index has experienced a boost as private operators are committing more investments to the sector.

Steel:  The two integrated steel plants, Ajaokuta Steel Complex owned by government and Premium Steel (formerly Delta Steel) now run by private operators, are working towards commencement of production, start-up challenges are being addressed.

Private operators:  It is pleasing to note that some private steel plant owners: African Natural Resources and Mines Limited, KAM Steel and WEMPCO, have acquired minerals titles to mine iron ore for steel production to substitute scrap iron/steel as feed stock.

A careful review of the performance of the administration in the first tenure reveals that majority of the mining sector industry leaders agree that continuity in the implementation of the Roadmap for Growth and Development of the Nigerian Mining Sector will further consolidate the gains so far established in the sector.

The vigour with which the minister continues to implement the roadmap is already unlocking significant values.

For instance, at the Ajaokuta Steel Company which is generally adjudged as the bedrock of Nigeria’s industrialisation, resuscitation effort is in top gear to get the company set for profitable production.

A major setback for the industry was the need to construct external infrastructure such as railway needed for transportation of bulk materials from the National Iron Ore Mining Company to the Ajaokuta Steel Company, and finished products from the steel company.

As a show of genuine commitment, the Buhari administration embarked on construction of various rail lines, most of which are already completed.

Towards the re-operationalisation of rail transport services, the Ministry of Transportation constructed the Central Rail Line of Itakpe-Ajaokuta-Warri.

Work is in the final stages for the reactivation of Ajaokuta’s 110mw thermal power plant for use in generating internally needed electricity, while the excess is fed into the national grid.


Illegal mining and community challenges

The ministry took the following measures to address the issue of informal and illegal mining.

Cooperatives: The Artisanal and Small Scale Miners (ASM) department is working with the state MIREMCOs, SMDF and other relevant MDAs to formalise and organise artisanal miners into cooperatives for easier management and monitoring. This will facilitate their access to financial and commodity markets through grants and the establishment of minerals-buying centres. 2,457 applications were received for registration of mining cooperatives and 725 have been certified.  Each of the certified cooperatives comprises of not less than 10 members and engages not less than 20 artisans. Accordingly, over 15,000 direct and formal jobs have been created in the sector.

Generally, the Nigeria solid minerals sector is on the path to glory but it has yet to turn the country’s potentials into a major revenue earner.


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