Inside the plan to make Nigeria Africa’s mining hub
New reforms set to turn nation into investors’ haven
By Udenna Orji
Nigeria, Africa’s largest economy and oil producer, is on her way to becoming Africa’s mining hub. With a bouquet of new regulations and policy reforms, the mineral-rich nation is becoming the toast of investors and catching the attention of global mining giants.
Discerning foreign investors are taking positions, and applauding the ambitious reforms being carried out by the President Muhammadu Buhari administration. With the nation’s oil-dependent economy troubled by the COVID-19-battered global oil industry, President Buhari has committed to diversifying the economy and positioning the country’s hitherto neglected mining sector as the viable alternative to oil.
Two erudite and ambitious gentlemen are leading the charge to make Nigeria Africa’s mining hub. Architect Olamilekan Adegbite, minister of mines and steel development and Dr. Uchechukwu Ogah, minister of state in the mines and steel development ministry.
Foreign investors are already gushing over the emerging investment-friendly policies in the nation’s mining sector.
Dr. lan Burston, Chairman Kogi Iron, confirmed that hitherto mining was difficult in Nigeria but that the Buhari government had created a conducive and friendly environment for mining businesses to thrive.
He said: “Nigeria is a very serious mining province from what I have experienced lately. The geological experience in Nigeria has been significant and I am very excited. By this month of September we will begin our very first export to China. We are also working on building Nigeria’s best mining house with the production of at least four products. In ten years we hope to have five operating mining houses in Nigeria.”
Speaking in the same vein, Director, AG Vision, Brad George, who has worked with 16 nations in the area of solid minerals exploration and presently operating in the North East on a 15,000 square kilometres land, the largest in Nigeria, expressed conviction that Nigeria has a very friendly environment to do mining business. “l believe gold market has very good prospects like it happened in nickel and zinc because Nigeria has a solid and workable mining system.”
Chief Executive Officer of Comet Minerals Limited, Mr. Stephen Davis, said “the Nigerian Mining Act, good team of experts, advisers and technical personnel, coupled with the ministers’ resolve and capacity to assist companies to thrive and build capacity upon good mining environment and conditions have helped the country to be an excellent ground for mining…and after about 11 years of being around, Nigeria has emerged as a world class centre for Nickel production”
Organized mining began in Nigeria 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.
The exploitation and exploration of solid minerals are governed by The Nigerian Mining and Minerals Act 2007 (“the Act”) which was passed into law on March 16, 2007 to repeal the Mining and Minerals Act, No. 34 of 1999. The Act vests control of all properties and minerals in Nigeria in the states and prohibits unauthorised exploration or exploitation of minerals.
According to the Act, all lands in which minerals have been found in commercial quantities shall from the commencement of the Act be acquired by the Federal Government in accordance with the Land Use Act. Property in mineral resources shall pass from the government to the person by whom the mineral resources are lawfully won upon their recovery in accordance with provisions of the Act.
The Minister, amongst other things, is charged with the responsibility of ensuring the orderly and sustainable development of Nigeria’s mineral resources, creating an enabling environment for private investors, both foreign and domestic, by providing adequate infrastructure for mining activities and also identifying areas where government intervention is desirable in achieving policy goals in mineral resources development.
The Act also provides for the establishment of the Mining Cadastre Office (MCO), which shall be responsible for the administration of mineral titles and the maintenance of the cadastral registers, and empowers the Minister, by regulation, to determine areas eligible for the grant of an exploration or mining lease, based on a competitive bidding process.
The MCO shall collect a fee for processing of applications for mineral titles and an annual service fee established at a fixed rate per square cadastral unit for administrative and management services. In other words, the FG owns, controls, monitors the exploitation and exploration of natural solid mineral resources.
In economic development, mineral resources are the foundation upon which an industrialised economy is built, and industrialisation is essential if Nigeria is to reduce over-dependence on the oil industry – an industry which, despite the revenue it generates, provides employment for just 6 per cent of the Nigerian labour force.
The solid minerals sector in Nigeria has long been treated as the poor relation of the oil and gas sector. Compared to the level of investment and development in oil and gas extraction – which has grown exponentially since Nigeria joined the Organisation of Petroleum Exporting Companies (OPEC) in 1971 – mining activity
has suffered stagnation, and even decline. While petro-dollars dominate the economy, the National Bureau of Statistics lists solid minerals as contributing less than 1 per cent of GDP, despite significant coal and iron ore reserves, and known deposits of gold, uranium, tin, tantalum and several other minerals.
But the vast potential of Nigeria’s mineral wealth has not always been so ignored. Before the oil boom of the 1970s, the economy was largely sustained by the exploitation of solid minerals. International blue-chip mining companies have long since given the sector a wide berth due to its reputation for inefficiency.
President Mohammadu Buhari has acknowledged its potential as an alternative to the petroleum industry for foreign exchange earnings, and said he would revitalise its fortunes.
The rationale for Nigeria’s renewed interest in exploiting its natural resources is simple. The government recognises that over dependance on oil also leaves the economy vulnerable to international oil politics and fluctuations in oil prices.
A Nigeria Extractive Industries Transparency Initiative (NEITI) report (2019) noted that today, the mining industry has the potential to sharply contribute to the country’s GDP, but was currently under-performing, responsible for 0.33 per cent of employment in Nigeria, 0.02 per cent of the country’s exports and 0.3 per cent of the country’s GDP.
Speaking on the on-going reforms, Adegbite said “the development of the mining sector is not a new thing. We have been on it for quite a number of years, at least in the last ten years. But that wouldn’t happen until we have the big players…We are willing to give good incentives of lowering export levies for mining companies
that are willing to commit to developing, processing and refining facilities and give licensing support to investors who meet our mineral downstream criteria.
In a keynote address at the Nigerian Economic Summit Group (NESG) Webinar On Unlocking Nigeria’s Economic Potentials, amid and after COVID-19 pandemic, Adegbite stated that the conference focusing on the Nigerian mining industry was timely, stressing that mining offers the robust economic potential to diversify the economy, create jobs and increase government revenue. This is the core mandate of his Ministry; using the over 44 different mineral types occurring in over 500 locations across the 36 States and the Federal Capital territory of Nigeria to diversify the economy.
He further stated that seven of these minerals have been designated as strategic to unlock the enormous potential in the sector and the minerals are coal, iron ore, bitumen, gold, limestone, lead-zinc, and barite. He added that alongside the seven strategic minerals, the Ministry is also looking into key minerals to fuel the future, and these are titanium, tungsten, lithium, and cobalt, which have various applications in futuristic industries such as aerospace, telecoms, and electric vehicle manufacturing.
Minerals in Nigeria and where they are foundAccording to NEITI’s audit findings, solid mineral deposits are scattered all over Nigeria, with more deposits in certain areas than others. Over 40 million tonnes of talc deposits have been identified in Niger, Osun, Kogi, Ogun and Kaduna states. There are huge deposits of coal ranging from bituminous to lignite in the Anambra Basin of South-Eastern Nigeria. There are lead-zinc ores within the Asaba Area of Niger Delta, while tin, niobium, and lead, are to be found around Oyo and Igbeti, with as much as over a billion tonnes of gypsum spread around Sokoto, Niger, Ondo and Ekiti states.
Nigeria’s potentially most beneficial solid minerals are spread around the nation but most of them are in the North. Limestone deposits occur in Cross River, Ogun, Benue, Gombe, Ebonyi, Sokoto, Edo and Kogi states; magnesite in Adamawa and Kebbi states; coal in Enugu, Imo, Kogi, Delta, Plateau, Anambra, Abia, Benue, Edo, Ondo, Bauchi, Adamawa and Kwara states; wolframite in Kano, Kaduna, Bauchi and Niger states; silver is found only in Kano, with kyanite in Kaduna and Niger states; manganese only in the Northern states of Kebbi, Katsina and Zamfara with diatomite found only in Yobe State, while ilmenite-rutile is only in Bauchi, Plateau and Kaduna states; fluorite only in Taraba State with gold in Niger, Kebbi, Kaduna, Kogi, Kwara and Zamfara and a little in Osun.
Nasarawa State in the North has been appropriately tagged as Nigeria’s home of Solid Minerals. The state is one of the most naturally endowed states in Nigeria in terms of the availability of economically and commercially viable natural resources. These include clay, columbite, ilmenite, mica, barytes, pyrite, galena, limestone, sodium chloride, ephalerite, silica sand, granites, tantalite, mica, sphalerite, talc, gemstone (tourmaline, aquamarine and sapphire), halcopyrite, topaz, cassiterite, columbite, tantalite, emerald, heliodor, amethyst, quartz, coking coal, marble, and iron ore.
Bauchi is another richly endowed state in the North with metal ores, non-metallic ores and gemstones. Other untapped mineral resources in Bauchi include kaolin, talc, tin, quartz, iron ore, gypsum, zircon, calcite, tantalite, chalcoprite, mica, copper ore, limestone, tourmaline, beryl, garnet, columbite, muscovite, aquamarine, topaz, marble, bismuth, wolfromite and others.
Yet with these potential money spinning resources, states in the country are starved of funds and are currently facing a cash crunch.
Reforms and Regulations
To grow the mining sector for sustainable development, the Federal Government embarked on far-reaching reforms. The reforms range from the creation of technical departments and agencies in the Ministry of Mines and Steel Development to the enactment of Nigeria Minerals and Mining Act 2007; including development of the new mining regulations.
This has ushered in a new regime of transparent mining and mineral titles administration in the country. Over this period, government has invested heavily in the sector through comprehensive geo-scientific information gathering to the creation of enabling environment for investment opportunities in the sector.
Emphasis is being placed on enforcing the security of mining titles in order to boost the confidence of investors in the sector. The Government is doing everything it can to ensure that mining titles are secure and cannot be overturned unless there is an excess breach of regulations or, where necessary, if it has to enforce its ‘Use it or Lose it’ policy.”
The incentives being provided by government include exemption from customs and import duties in respect of plant, machinery, equipment and accessories imported exclusively for mining operations.
Government has also approved expatriate quota and resident permits in respect of approved expatriate personnel and personal remittance quota for expatriate personnel free from any tax imposed by any enactment for transfer of external currency out of Nigeria. Permission has also been given for remittance of foreign capital in the event of sale or liquidation of mining plant.
The government has also approved tax holidays which may be extended if the government is convinced of the expansion, efficiency and development of mining operations and the capacity building programme.
Investors across the globe are urged to explore all the viable investment opportunities that abound in the Nigerian mining and steel sector, especially against the backdrop of the economic mechanisms and reforms being put in place in the industry to encourage the development of a robust private-sector led economy.
The government has committed to supporting any company or organization that is seriously engaged in the utilization of the abundant mineral resources in the country for economic development activities. Speaking at a meeting with mining industry operators, Adegbite threw more light on “some ongoing initiatives we have designed to support the sector. One of which is the optimisation of our mineral value chain. The ultimate objective is to minimise the export of raw materials, creating value along the chain that would
increase industrial and manufacturing activities, create employment, and foster skills development. Presently, our priority is anchored in the gold sector. We are creating a gold ecosystem to minimize the high rate of illegal gold mining and smuggling, increase the government’s revenue from the resource, create jobs, and improve environmental and social stewardship. Through the ongoing Presidential Artisanal Gold Mining Initiative (PAGMI), we are organising, formalising, and equipping Artisanal and Small Scale Gold Miners (ASGMs) in Kaduna, Kebbi, Osun, Niger, and Zamfara states. Miners of precious, metallic and industrial minerals will be linked to formal markets through licensed private mineral buying centres. One such initiative is the recently launched Dukia-Heritage Bank Buying Centre. Two companies (Kian Smith and Dukia Gold Limited), located in Ogun state and the FCT, have been granted licenses to refine gold and are in the process of building their refineries”
He disclosed that the government is making efforts to stimulate mineral processing across the country using a hub approach that would give access to artisanal and small scale miners to add value to their commodities.
“We are trying to stimulate mineral processing across the country using a cluster or hub approach. Each cluster will be provided with road and power infrastructure to encourage investors in processing and refining equipment to support a network of miners and processors”, he stated.
Infrastructure being put in place
Adegbite also highlighted other measures and initiatives put in place to galvanise the sector for positive and steady growth which include working with several stakeholders to design mining-specific credit enhancement instruments. Miners will be able to access long-term finance at concessionary rates through these instruments.
Generating integrated geoscience information that will help in derisking the mining sector. This is through the ongoing National Integrated Mining Exploration Project (NIMEP). Target minerals include gold, platinum group metals (PGM), nickel, chromium, lead/zinc, barite, iron ore, copper, and others.
Development of a mineral economic corridor to address infrastructure gaps in the mining value chain. Transport networks connecting mines to ports and end-users to enhance the competitiveness of the Nigerian mining industry since the infrastructure will be shared with other sectors.
Effort is being made by the government to retrieve Nigeria’s colonial geological data from the United Kingdom by engaging the British Geological Survey (BGS) to build a national electronic geo-data archiving management system to be called the Nigerian Geo-data Centre at the Nigerian Geological Survey Agency (NGSA).
This would provide easy access to geoscience data for prospective investors on potential areas to target for exploration and mining within and outside Nigeria. The BGS will also integrate historical geo-data of Nigeria in NGSA and the National Steel Raw Materials Exploration Agency (NSRMEA) into the system.
For seamless transportation of mineral resources, the government is implementing a National Integrated Infrastructure Masterplan involving new rail networks, waterway dreadging and upgrading of seaports, all designed to facilitate export and import of goods. The Central Corridor Railway Line linking
Warri Port to Abuja through mineral resources endowed regions of the North Central, home to iron ore, steel plants, coal resource and pegmatite-bearing lithium, is under construction.
Nigeria has gone into a Build-Operate-Transfer arrangement with Russia
for the completion of the massive Ajaokuta Steel Plant, a move set to launch her as West Africa’s largest steel producer and kick-start her ambitious industrialization plans.
An enthused Adegbite noted that “with support from the administration of President Buhari and his ethos on diversification, job creation, and sustainable revenue generation, I am confident that Nigeria’s Mining Industry is on track to reach our goal of five per cent GDP contribution in the next five years”.
Illegal Mining and Mineral Smuggling
Illegal mining and mineral smuggling have been the bane of Nigeria’s mining industry. The worst hit is gold, which is the favourite of illegal Chinese miners and their Nigerian collaborators. Scores of illegal Chinese miners are regularly apprehended in gold mines by security agents.
Nigeria’s House of Representatives Tuesday November 12, 2019 urged the federal government to make gold mining one of the major sources of revenue for the country. The House urged the Ministry of Mines and Steel Development to provide geological records of gold deposits in the country.
Resolution to that effect was reached at the plenary after the House considered and adopted a motion tagged “Need to Prioritize Gold Mining as one of the Major Earners of Revenue to the Nation” moved by Rep. Oghene Emma Egoh.
Egoh while moving the motion said:
“Aware that Nigeria has abundant gold deposits and therefore there is the need for many large scale gold mining companies, gold mining policies, state of the art geological survey, including map production and maintenance of up to date geological records, health and safety inspections and maintenance records, legal records of licences and legal examination of new applications, among others;
“Also recall a publication in This Day Newspaper that Nigeria loses about $9 billion (nine billion dollars) to illegal mining every year and that many lives are lost as a result of mining activities that ignore environmental protection policies;
“Also aware of official records that mining in Nigeria accounts for a mere 0.3% of Nigeria’s Gross Domestic Products (GDP), meaning that the Federal Government may not have official records of the number of mineral deposits in Nigeria which if ascertained, could make the mineral sector one of the largest contributors to Government’s revenues through the payment of royalties, employees income taxes and corporate taxes;
“Concerned that though Gold is found in large quantities in Zamfara State, illegal miners cart away billions of dollars’ worth of gold yearly, leaving the State with a poor state of education and an inadequate healthcare system;
“Acknowledge that if the resources are effectively managed by the Government, 30% derivation from gold earnings can go a long way in boosting the economy of Zamfara State while the remaining 70% can go into the federation account;
“Desirous of the need for the Ministry of Mines and Steel Development, whose responsibilities are to promote full-scale gold mining in Nigeria, facilitate interaction between mining employers, examine mining policy issues, create partnerships with key stakeholders and to come up with modernized and conducive policies, legislative and functional environment to facilitate real investments in gold mining”.
His motion was eventually adopted and committed to the Committee on Solid Minerals Development to ensure compliance.
The scourge of illegal mining and mineral smuggling also attracted the anger of the Senate. President of the Senate, Dr. Ahmad Lawal called the pepetrators “criminals, whether they are Chinese or anybody else, because this is going against our sovereignty. Nobody should come into our country, go to our sites, exploit our minerals and go away with them. We want to attract foreign direct investments, but we should have proper processing of every concern that wants to participate in this sector. What is happening is criminal and…. it is for us in government to ensure that this is stopped.”
To check the trend, artisanal miners are now being registered and formed into cooperative groups by government while Mineral Buying Centres have been set up for artisanal miners to legally sell to.
Financing arrangements have also been put in place to provide them with revolving loans to aid their mining activities while security has been beefed up to arrest and prosecute anyone engaging in illegal mining and mineral smuggling.
Going Forward
The World Bank, Price Waterhouse Cooper (PwC) and Nigerian Institute of Mining and Geosciences (NIMG), Monday June 1, 2020 tasked the Federal Government on galvanizing the mining sector to cushion economic shocks in the post-COVID-19 era. The organizations made this known in a statement signed by the Media Officer, Mineral Sector Support for Economic Diversification (MinDiver) Project,
Ishaku Kigbu, while at a crucial session on Day 3 of the Virtual Mid-Term Review (MTR) of the MinDiver Projec.
The Task Team Leader on the MinDiver Project at the World Bank in Washington, Mr. Mike Stanley, advised that Nigeria should not delay and wait for oil prices to rebound as there is the possibility that the market will experience an oversupply of the commodity from other oil-producing countries, including Saudi Arabia. He asserted that oil revenue had started to decline since 2014 and that it was imperative for the Nigerian government to rethink deeply, focus on developing solid minerals like iron ore, limestone for water carbonates, lithium, cobalt; and generally think out of the box to attract investment.
He added that there is a need to deepen development through the iron ore and steel deposits on the Central Economic Corridor. “Nigeria should begin to think of a need to develop a One-Stop-Shop and understand what investors need and want as well as focus on value-added processing which will, in turn, create jobs without being moved out of the country in this COVID-19 period”, he said.Habeeb Jaiyeola of PwC, in his presentation stated that with the stark reality of the Nigerian economy facing recession due to the COVID-19 pandemic, the nation must begin to prepare post-Covid-19. “As a mono-economy dependent on oil, which unfortunately has gone down without assurance of going up, and attendant limited markets for exports due to fall in global demand, the Nigerian government must begin to see the mining sector as essential,” Jaiyeola said,
Professor Bolaji Hassan of the Nigerian Institute of Mining and Geosciences, NIMG, Jos, called for the development of the steel sub-sector, saying it will create an enabling environment for the mining industry to develop. Hassan said that the development of the Itakpe Iron Ore has become urgent and that the Ministry should engage the National Steel Resources Development Agency (NSRDA), to come on board for the development of iron ore.
National President of Women In Mining Nigeria (WIMN), Engr Janet Adeyemi, tasked the Federal Government to harness the nation’s lithium and lead minerals. She said the world is in a hurry to switch over to renewable and clean energy, in which the use of battery technology is on the rise as most sectors have already adopted battery technology. She urged the government to attract investors to harness the huge deposits of lithium and lead across the country, noting that these would generate foreign exchange in excess of revenue from crude oil and gas, as the global demand for battery minerals is high.
Managing Director of Fugro Geophysical Services Ltd, a leading service provider for the collection and interpretation of data relating to mining and minerals research, Dr. Godwin Ofune, believes Nigeria still possesses immense capacity to reclaim its pole position in mining and therefore attract billions of dollars worth of exploration investments that have been going to neigbouring countries as well as South Africa and Angola. He stressed that for the nation to develop its economy, it must look inwards to identify areas where it has comparative advantage over other nations and efforts should be geared towards the development of the identified areas.
“Because the competition for exploration dollars is tight, Nigeria must focus only on metals or resources where it has the greatest comparative advantage and it must leverage on its huge database and other major improvements in the sector to translate potentials into viable investments”, he advised.
With the avalanche of reforms, investors and advisers egging her on, mineral-rich Nigeria may well realize her ambition as Africa’s mining hub.
