The lamentation of Enugu lady miner

Loretta Aniagolu, ex-banker is now into mining. In this interview with REGIS ANUKWUOJI in Enugu, the chief executive of LOC Metals & Minerals Limited recounts her experience in the mineral sub-sector, saying that Nigeria’s regulatory framework is chaotic. She also addressed other related issues. Excerpts:

The mining industry in Nigeria in the past had the highest employer of labour, what is happening at the moment?

I think there are lots of issues that need to be addressed in the mining sector, particularly for those of us who are in solid minerals. We have difficulties as far as allocation of mining sites and areas are concerned. The office in charge of allocation of mining sites and areas has a lot of confusion and a whole lot of things are not properly organised. You have companies that are given allocation to places they did not ask for. You apply for a particular place; they will give you an approval for another place. You think it is that particular place, only to go there and discover that they have given you another place that you don’t know. So, if you come in with your allocation, you find out that another company has the same allocation. This leads to law suits and many other forms of rancour.

So, there’s lot of confusion in mining sector such that even those of us in the sector are now confused. There are conflicting policies; policies of government in the sector are not properly explained, regulations are not explained. You set up your mining operations, bring in expatriates with huge sums of money, you then find out that there are kinds of misrepresentation and mismatch. That aspect takes you back to zero and you shut down.

The mining industry is a very lucrative sector, but it requires thorough organisation. In fact, what the government should be looking at is to bring out money and pay for proper geological service to be done on all the mining locations to determine the extent of the minerals we have, choose about five or 10 minerals not more than that and concentrate on that; find out where they are in Nigeria, determine their quantity and qualities and then issue licences and make people pay.  It will be better for me to pay N50million for a licence that I can estimate what I am going to get out of it, where my investments are sure, my projections are definite and I know what I am going to get out of making such an investment, against paying for a licence for N100, 000 and end up paying more because the minerals of my interest do not exist where I was allocated. Such developments are neither in the government interest nor in the interest of the investors. That is why many foreigners are not investing in the mining sector in Nigeria.

Also, we need to get our network sorted out. If you are going to be a mining country, you must be listed and have a relationship with the likes of London Metals Exchange which is the body that actually determines the pricing of all solid minerals across the world. We do not have that kind of relationship and we don’t have anything to do with them. So, I think that it is a policy issue and I also think that it is important to understand which areas we need to put our effort into and I think that is what should be done. The government is putting all their hands in everything at the same time in the mining sector. That is not how the sector should run. You should concentrate, select certain minerals and be known in the world for those minerals and then build export around those minerals.

Does that suggest why Nigeria does not export solid minerals as much as it should?

Well, as an operator, we were exporting to India and China, but as at now operations have stopped as a result of challenges from the communities who do not really understand what we are doing and who also believe that the miners were working for them and that anything they got belonged to them. Basically, you are their employer.

Nigeria does not have the basic infrastructure to sustain and support the mining industry. For instance, we do not have proper laboratory that is accredited. So, as we are producing lead and zinc you have to test your lead and the result of the test is used to determine your price. Therefore, without a proper testing equipment that will help one fix the prices of the product, you will be short-changed, For instance, in our own case, we have to send our lead all the way to England to an accredited laboratory, and for every sample we send, it cost us about $300, just the testing alone. It does not include the cost of sending them. So you can find out that the whole set-up does not support you for export. We were exporting from Port-Harcourt, but they do not have testing equipment for what is going out. Because you are supposed to ship with a particular certificate from the country indicating what you have, the quality of what you have, and because Port Harcourt cannot test the materials, you are not able to get the proper certificate to ship to any other country.

So, there are lots of things that needed to be done which we are not doing. We must make sure we have accredited laboratories, that we have communities who are responsive to investors’ security in those areas because this is done in the middle of the bush. So, we have very antagonistic communities.

We don’t have the support services for testing and we also don’t have accounts of where the minerals are. For instance, if you are an investor and you come into Nigeria demanding to mine lead, and that you have the capacity to mine 100,000 tons a month, they cannot tell where to go and invest because they don’t know. So as an investor, you ought to get this information to make investment decision.

That is the same problem I think the coal industry has, because our factory is supposed to use coal from Enugu to fire it, but we can’t use the coal because the coal in Enugu has very low caloric content. Despite the fact that it was not available but even the testing was very low, may be that is what is putting the investors off when they come in and see the amount of investment they are going to put in the coal industry, and when they test the coal, may be, the quality of the coal is not up to what they expected. I do not really know about the coal industry, we concentrated on lead and zinc; so the coal industry is not an area that I am familiar with, but I know the problem we suffer in coal quality and the failure of competent testing.

What is your assessment of Nigerian business environment?

The Nigerian business environment is extremely very difficult; a very difficult place to operate and I think it is getting even more difficult. I was not surprised with the survey report of the World Economic Forum where Nigeria has dropped about 7 steps down in ‘ease of doing business’. As somebody doing business in Nigeria, it is a very difficult environment to operate in. The difficulties are based on the fact that we have a very inconsistent policy regime. To get anything through with government is almost like pulling your hair out. Ultimately, it is also a contradiction from what the government says it wants to achieve. When you establish a business, people would be employed, money will be in circulation, and lives will be elevated in terms of welfare of citizens etc. When you find that most of the difficulties are actually posed by government, you begin to wonder whether they were really thinking a lot of things through, because when you put a policy in place, you should sit down and look at the far-reaching effect. You should bother how it would affect businesses in one year, five years and in 50 years time, etc. I just don’t know if we do such in-depth analysis before we put out policies. Certainly, the business environment here is extremely difficult- from acquiring land for setting up a business, to getting the licence that one requires- every single process is an absolute nightmare.

What is your suggestion to improve the business environment?

Well it is the matter of will. For the government, when they resolve to improve the business environment, attracting industries, improve the welfare and lives of people creating jobs, then they will do what is necessary. I mean they know what to do to create jobs. They need to interact with businesses and find out what their difficulties are. They should hold meetings with them, and discuss things like multiple taxes and all that.

You set up in a community you have complete aggression from members of the community, all the things that government is supposed to provide for that community they expect you to provide them. You are now going to build schools for them, provide water supply, and give electricity which is not part of your budget. As a private company, your job is to do business and pay taxes to government. It is the responsibility of government to provide to all those committees, but the community cannot reach the government to exercise their protest. So the private sector becomes the scapegoat.

Do you think commercial banks are doing enough in promoting SMEs in terms of loan?

Yes and no. Yes in the context that a lot of banks are willing to actively support small scale businesses, but “No”, because they are mere custodians of money of their shareholders. They are not charity organisations and when you live in a country where you give loan to somebody or business that is located at a particular address today and tomorrow he moves to another address, you pursue them to get your money paid back, only to find out that the business does not exist anymore and there is nowhere to find the person.

In other countries, people have phone numbers and you keep having that numbers till you die so that you can’t run away. So, it is easy for banks to track those who borrow money from them, plus all kinds of systems that they have in those countries to track people who are borrowing. In Nigeria, the system does not exist. It becomes very difficult for a bank to just make out loans to people.

REGIS ANUKWUOJI