Monday , June 26 2017
Breaking News
Home » NEWS ANALYSIS » Nigeria on the Road to Shared Mining Prosperity

Nigeria on the Road to Shared Mining Prosperity

 

 

 

BY Akin Rotimi

There is no doubt that Africa is blessed with an abundance of natural resources. At the country level, Nigeria is estimated to have the second largest deposit of Bitumen in the world, spanning over 120km across Lagos, Ogun, Ondo and Edo states. National reserves of coal are estimated at 2.7 billion metric tonnes; while iron ore, limestone and lead are 10 billion, 3 trillion, and 5 million metric tonnes respectively. Nigeria has at least forty other minerals with varying estimates of reserves, out of which government is concentrating on developing seven priority minerals namely – Coal, Lead Zinc, Iron Ore, Gold, Bitumen, Barite, and Limestone.

 

The reality of our situation however, is that these minerals have co-existed with abject poverty, inequality, conflict, and environmental degradation – a paradox that has been the subject of scholarly interrogation and analysis over the years. A recent Tana Forum report indicates that “the mispricing of natural resources in Africa leads to the loss of $50 billion per year – more than Africa’s combined foreign direct investment and overseas development aid.” The challenge before successive administrations of the Nigerian government therefore, has been how to turn the tides and make our resources work optimally for us. The Buhari administration has iterated that one of its policy priorities is to reposition the mining sector to play a more prominent role in addressing key national challenges. The objective is to grow the sector’s contribution to GDP as part of a broader agenda to diversify government’s revenue sources, and address our historical dependence on oil. The sector is projected to create jobs and increase the range of economic opportunities available to Nigerians. As the administration reaches its mid-term mark, what is the state of the Nigerian Mining Sector? How have the ministers in charge of the Ministry of Mines and Steel Development, Dr. Kayode Fayemi and Hon. Abubakar Bawa-Bwari, minister and minister-of-state respectively, fared so far with the mandate given to them.

 

To start with, against the grain of political correctness, the ministers have very often given credit to their ministerial predecessors since 1999, for the grounds that had been covered so far in identifying and tackling the sector’s seemingly intractable challenges such as – Limited Supporting Infrastructure; Insufficient Geological Data; Limited Cooperative Federalism; Low Productivity; Illegal Artisanal Mining and Community Challenges; Weak Institutional Capacity of Government Entities; Insufficient Funding; and Weak Ease of Doing Business and Perception Issues. Commenting on the ‘Roadmap for the Growth and Development of the Nigerian Mining Sector’, which was approved by the Federal Executive Council on August 31, 2016, Minister Fayemi clarified that this was not yet another policy document produced for the sake of it, especially since a previous roadmap was produced as recently as 2012.

 

The roadmap is a carefully developed document that synthesises critical elements from all existing legal and policy instruments regulating the sector into actionable goals and strategies, with definite targets over the short, medium and long term. It builds on, copiously references, and seeks to address grey areas in such policy instruments as the Nigerian Mining and Minerals Act, 2007; National Minerals and Metals Policy, 2008, Nigerian Minerals and Mining Regulations, 2011; as well as the 2012 Roadmap. The attention paid to ensuring continuity in policy direction, as well as the inclusive process of broad consultation that guided the development of the roadmap, has augured well for its acceptability and the restoration of the confidence of investors and other stakeholders in the sector. This is significant considering the sector requires a great deal of consensus building and collaboration in tackling the earlier stated challenges.

 

The ministry has begun recording considerable achievements. In addressing the challenge of insufficient funding, the ministry has secured approval for N30bn (approx. $100m) from the mining sector component of the Natural Resources Development Fund from the FGN. This is partly to provide cheap loans and grants to industry participants as well as for directly investing in foundation infrastructure. The ministry has also recently secured the World Bank’s approval for $150 million to support the ministry’s Mineral Sector Support for Economic Diversification (MinDiver) program. Plans are underway to assemble a $600M investment fund for the sector, working with entities such as the Nigerian Sovereign Investment Authority, the Nigeria Stock Exchange and others. This is a departure from the past, judging by the fact that in 2015, out of the meagre N1 billion allocated to the ministry, only N352 million was released.

 

In addition to funding support from multilateral agencies, partnerships on technical cooperation have been forged or re-activated with several foreign governments. Partnerships have been operationalised with the governments of South Africa, China, Australia, Canada, the United Kingdom and the United States of America. Nigeria now takes the lead in regional efforts to develop mining, especially within the framework of the Africa Mining Vision. Two Nigerians have been elected to the leadership of renowned mining-related regional bodies including the Director General of the Nigerian Geological Survey Agency, Mr. Alex Nwegbu, who is now President of the Organization of African Geological Surveys (OAGS), and Prof. Gbenga Okunola, who is now President of the Geological Society of Africa (GSAF). These positions confer on Nigeria the visibility and status within the continental mining community to advance our national interests.

 

The institutional capacities of the ministry and its agencies have been strengthened with a particular focus on mines safety and security. The ministry is collaborating with the Ministry of Interior and the Nigeria Police Force to establish the Mining Police as provisioned in the law. There is significant improvement in the Mining Cadastre Office’s administration of mineral titles. The MCO has now met the target of consistently issuing licenses to applicants within the statutory 30-45 days, provided the applicant has fulfilled all requirements.

 

Another major achievement is the signing of a ‘Modified Concession Agreement’ between the Federal Republic of Nigeria and Global Infrastructure Nigeria Limited, effectively resolving the protracted litigations surrounding the ownership of Ajaokuta and Niomco. The agreement was executed on behalf of the FGN by the Vice President, Prof. Yemi Osinbajo, SAN. With this development, both NIOMCO and Ajaokuta Steel Company have been liberated from eight years of dormancy that was occasioned by the protracted arbitration between the FGN and GINL. The implication of the signing is that ownership of ASCL has now reverted to the FGN, and government will now proceed to shop for a new core investor with the financial and technical capacity to run the steel complex. The operationalisation of ASCL will provide the needed inputs to support the infrastructure requirements of the country and lead to import substitution, and save the country about 3.3 billion dollars annually spent on the importation of steel products. The Nigerian Steel Dream, conceived in the 1970s, but which has been elusive is once again on the way to becoming a reality. The ministry is similarly working in concert with industry stakeholders to expand the domestic processing of our other ores, which will lead to the creation of jobs and reduce the pressure on our Naira.

 

Other achievements in the sector include the Review of Existing Mineral Royalties and Licensing Fees leading to increased revenue for the FGN. Furthermore, the ministry has embarked on a structured expansion in federal revenues across the entire mining value chain with an initial priority on improving reporting, tax collection, royalties, personal taxes and company tax. To stem the illegal trading of minerals, the ministry has registered over thirty Mineral Buying Centers, and enacted the Revenue and Reporting Compliance Agreement with the Nigeria Customs Service, which has improved the policing of mineral exports.

 

In the FGN’s recently launched ‘Economic Recovery & Growth Plan (2017-2020)’, the Minerals and Metals sector was duly recognised as one of those to drive Nigeria’s recovery. The document projected to grow sectoral contribution to GDP from N103 billion (2015) to N141 billion in 2020, at an average annual growth rate of 8.54%. Other targets for the sector include the facilitation of Coal to Power Plants to contribute to meeting our energy needs. The strategy document which is very much in sync with the sector’s Roadmap, also aims to produce geological maps of the entire country by 2020 on a scale of 1:100,000; as well as integrate artisanal miners into the formal sector. As stated earlier, industry participants will also be encouraged to scale up domestic mineral processing and beneficiation that strengthens backward and forward linkages.

 

Importantly, the ministry has put in place a Geosciences Communication and Stakeholder Engagement plan, which is an integrated strategy that facilitates the free flow of information, as well as transparency and accountability. As part of this plan, the ministry recently commenced the development of a web portal to facilitate the dissemination and access to geo-sciences data. The portal will also host the automation functions of the Mining Cadastre office to improve mineral titles administration.

 

Clearly, there is a lot more grounds to cover, but there is no doubt that the Nigerian Mining Sector has come a long way in the last two years, and is well on the road to recovery. The ministry has been commended for having some of the most active communication channels on social media, and a functional website www.minesandsteel.gov. This has ensured Nigerians are being effectively carried along On the Road to Shared Mining Prosperity.

 

  • Rotimi is a Senior Special Assistant to the Minister of Mines and Steel Development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Tiny URL for this post:
 

Share This:

About Author