Nigeria loses $1.54bn to illegal gold mining annually

At a time when Nigeria faces mounting pressure for alternative sources of income following dwindling oil revenues, the country is also said to be losing about $1.54 billion annually to illegal mining of gold – huge amount of money unaccounted for through under the radar sales of the expensive commodity.

This was revealed by Kayode Fayemi, the minister of solid minerals development, during an exclusive interview with BusinessDay in Abuja.

“…Even for gold that no records show what has been exported from this country, we now know from investigations by NEITI that Nigeria not only has gold but exports it, averagely 100 kilograms per day,” he said.

At the current average price of $1,200 per ounce of gold in the international market, that amounts to $4,232,400 per day and $1,544,826,000 per annum unaccounted for, considering that one kilogram is equal to 35.27 ounces, going by international rates.

According to the minister, those who engage in these economically damaging practices escape with their mineral finds undetected through their thriving unregistered and illegal exploration and exploitation activities, as well as their “under the radar sales.”

This robs Nigeria of its commonwealth, and leaves its citizens poorer in health and finances, as 80 percent of the five million people engaged in mining activities in the country- about four million of them, are illegal or informal miners.

“This implies that they operate without licenses or mining leases, you just find them with their diggers and their shovels going round looking for gold, iron ore, lead, zinc, you name it,” Fayemi lamented.

He blamed the bad situation on mainly perception, as well as poor data, which he sees as a big issue for Nigeria’s mining industry.

“We have an aerial survey but aerial survey is an indicative sense of what you have, it is not an actual sense of it, so we still need to do a lot more in data generations and that is one of the priorities that we have in the sector now,” he added.

“We also need to clean up the licensing process to review, we need to reassess, we need to validate licenses in a manner that is consistent with global standards.”

Expressing that the monster of informal and illegal operators needs to be tackled, he also noted that the idea is not to criminalise them but to formalise and help them to be better organised for legitimate operations that can give them access to finance, and take them out of the shadow economy in a manner that also guarantees legitimate taxes for the government from their respective operations.

In order to further clean up the sector, the enforcement of mining laws is being fine-tuned by the ministry, whereby the use or lose clause in the Nigeria Minerals and Mining Act would be invoked so as to discourage the unproductive attitude of licensed speculators, who continue holding onto licenses without using them.

“Very soon, when you see our publication on licenses that are going to be revoked, you will see that people just hold on to licenses, waiting for some investors who will come and take the licenses from them for a fee, rather than really working towards exploring and exploiting the opportunities, having secured the licenses,” Fayemi reiterated.

The essence, he said, is to clean up the licensing process by reviewing, reassessing, validating the licenses in a manner that is consistent with global standards.

Without this, lingering conflicts among miners and between the state and the federal government over particular coordinates would remain unaddressed, he noted.

The minister believes that “this can happen with a good mix of political will and policy, as was the case under the Obasanjo administration, when Nigeria moved from being a net importer of cement products, such as limestone and gypsum, to a net exporter and multinational, with Dangote, the cement giant, having factories in at least 14 countries.

On the issue of security, pending the next three months when the budget is passed, the ministry of solid minerals is now developing a comprehensive framework with the Nigerian immigration service, the civil defense, the police, with the aim of having mines units in each state which could be called upon in times of any security breach.

“However, this cannot work effectively until we address the tension between state and federal ownership,” according to Fayemi.

The ministry of solid minerals plans to address this perennial dichotomy using models from countries such as Indonesia, Australia, Canada, and Brazil, where states play greater roles in mining and then pay taxes to the federal government.

“Given my own knowledge of what used to happen and the concern expressed by states, the way they have been shut out from mining operations, mining will not succeed in Nigeria unless we practice it the way it is done in other places,” Fayemi posited.

YANGE IKYAA