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Across Nigeria, mining sector holds opportunities for investors

The race for critical minerals that will power clean energy technologies like electric vehicles and wind turbines is heating up and in Nigeria, where deposits of some of these minerals are, the right policy can give the country an edge.

Concerns about climate change and the effect of greenhouse gas emissions are fuelling the rise of renewable energy sources and electric vehicles across the world and in turn, the minerals required to make some of their most important parts.

“Based on this, there are certain metals that will rise in demand in a bid to deliver a carbon-constrained future. We term these as the minerals of the future, some of which are aluminum, cobalt, copper, nickel, lead, manganese, bauxite, and lithium,” notes Habeeb Jaiyeola, associate director at PwC Nigeria.

While there are deposits of some of these minerals including iron ore, copper, manganese, graphite, bauxite (the main source of aluminium), cobalt (a by-product of nickel and copper ores), there has not been extensive research to determine the economic viability of these resources.

This provides the first step course of action to unlocking investment into the sector. To incentivise investment into the energy sector in the early 1900s, the government gave the investors a nationwide exploration licence as well as generous concessions that enabled them to turn the focus on finding oil.

Lawmakers are currently considering the Nigerian Metallurgical Industrial Bill, which seeks to provide for the regulation and effective monitoring of metallurgical activities in the mines and steel sector and raw materials development in Nigeria with the goal of catalysing development in the Nigerian mining industry.

Analysts say Nigeria should review its priority list to include some of these minerals of the future and deliberately drive investments into them.

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Minerals of the future and location

Manganese – Katsina, Kaduna, Niger, Kebbi; Graphite – Kaduna, Bauchi, Gombe and Adamawa; Bauxite – Benue, Delta and Ekiti; Iron ore – Adamawa, Bauchi, Bornu, Enugu, Oyo, Jigawa, Katsina, Anambra, Kebbi, Kogi, Niger, Yobe.

Besides these minerals of the future, Nigeria has about 44 different types of minerals, which have been identified in more than 500 locations across the country according to the Ministry of Mines and Steel Development.

Out of these different minerals, the government has identified seven namely, Coal, Bitumen, Limestone, Iron Ore, Barites, Gold, and Lead/ Zinc for priority development till 2025, which it considers strategic and of economic importance in Nigeria.

Okechukwu Ogah, minister of state, Ministry of Mines and Steel Development (MMSD), in a recent interview said the Federal Government had started the development of lead/zinc processing cluster in Ebonyi; and other mineral resources development in the region.

He added that the government would exploit comparative advantage and provide support to other production value chains in the nation’s economy, revealing that other salt and limestone facilities would be a needed boost for fertilizer operations.

Other mineral resource clusters he mentioned include a Barite development area in Cross River State for export and for oil and gas production.

The pandemic has slowed economic activities in the mining sector, however, the price of gold surged as it is largely seen as a reliable store of value leading to a surge in gold smuggling and illegal mining.

According to the National Bureau of Statistics, mining and quarrying make up 0.17 percent of employment in Nigeria. Artisanal and small-scale miners who make up about 85 percent of miners in Nigeria cannot continue with their regular activities as a result of the pandemic.

The States Disaggregated Mining and Quarrying Data for 2018 by the NBS showed Nigeria produced 55,850,075.43 tons of solid minerals and Ogun State produced the highest tons of solid minerals producing 16,497,405.35 tons of solid minerals representing 30 percent of the total tons of solid minerals produced in the year under review.

Analysts say there are certain institutional, legislative, and operational bottlenecks that need to be addressed to ensure the smooth operation of the key players in the sector.

This includes blocking revenue leakages and aligning scarce human and financial resources to priority projects, involving more private operators, and fostering transparency and frequent engagement between relevant bodies to improve organisational efficiency.

The government also needs to ramp up efforts at formalising artisanal mining groups, gathering data across the value chain, secure mining areas prone to security challenges and encourage safer mining practices, and strengthen local content efforts to spur domestic production.

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