Africa’s biggest economy has exported gold worth N78.9 billion within the last 15 months, a first-time trend in Nigeria’s export economy.
Findings by BusinessDay showed Nigeria is gradually tapping from a cash-spinning mining sector that has remained largely under-utilised since the crude oil boom, a development that is part of a key step in efforts to pivot the economy away from oil.
Data gleaned from the National Bureau of Statistics (NBS) showed Nigeria exported nonmonetary gold (including gold plated with platinum) in powder form to Switzerland valued at N14.39 billion in the first quarter of 2023.
Further findings showed Nigeria exported nonmonetary gold worth $61.6bn in 2022, the highest since NBS started collating data.
Experts said the government’s decision to relax regulations and offer tax breaks for the first three years of its operation is attracting miners to the country’s mining sector.
“Investments, mainly from foreign companies, are taking place in the sector right now. The reason is that the mining environment is getting more attention from the government and better too,” an investor who pleaded anonymity said.
Ayodeji Balogun, chief executive officer of AFEX, a Nigeria-based company operating a private agricultural commodity exchange, said he was planning to unveil products that will appeal to investors in the gold market.
“By the end of the year, we will be launching new product offerings such as derivatives and gold, that will allow both old and new investors to participate in the market,” Balogun said.
Oluwatoyin Akinlade, permanent secretary, the Federal Ministry of Mines and Steel Development, listed the setting up of mine clusters in each geopolitical zones in the country; the formalisation of gemstone market in Ibadan, the Oyo State capital and the training of Nigerians towards having skilled manpower as some of the reasons why the sector is gaining traction.
“It is now an offence to take our gemstones or solid minerals out of the country without the necessary documentation. We do not want our gemstones to become like oil that is refined from outside the country,” Akinlade said at an event.
Nigeria exported non-monetary gold worth $2.90bn in Q4 2021.
Data compiled by BusinessDay showed Nigeria has significant gold reserves, estimated at 300 million ounces. However, the country has only produced a small amount of gold in recent years. In 2021, Nigeria produced just 2,000 ounces of gold.
“The grade quality of gold found in Nigeria is one of the highest in sub-Saharan Nigeria, presenting a substantial growth opportunity, with gold continuing to remain in demand from the jewelry sector and extracts the highest price worldwide,” CSL Stockbrokers Limited, Lagos (CSLS), a wholly owned subsidiary of FCMB Group Plc said in a note.
On the economic viability of the gold sector, CSL said gold’s overall performance hinges on diverse demand drivers, including investors’ preference for safe-haven assets during uncertain market conditions, consumer demand for jewelry, and central banks’ gold purchase.
“Gold is likely to remain a strong hedge against currency movements and inflation as reflected in its demand more than doubling in the last three decades,” CSL said.
Last year, Dukia Gold & Precious Metals Refining Co. Ltd Nigeria and Philoro Global Trading AG Switzerland signed a working together agreement to collaborate in the development of the precious metals small-scale and artisanal gold mining value chain.
Nigeria is also expecting its first commercial gold mine, the Kiamalu project, to start production in 2023 and produce up to 100,000 ounces of gold per year. The project is being developed by Australian miner Resolute Mining, which has invested $100 million in the project.
The government hopes that the Kiamalu project will help to increase production and make Nigeria a more attractive destination for miners.
Read also: Nigeria’s agric export surges 39% in Q1 amid cash crunch
“The Kiamalu project is a significant milestone for Nigeria’s mining sector,” said Olamilekan Adegbite, immediate past minister of mines and steel development. “It is a clear sign that the government’s reforms are working and that Nigeria is open for business.”
The Kiamalu project is expected to create thousands of jobs and generate millions of dollars in revenue for the Nigerian government. The project is also expected to boost the local economy by providing goods and services to the mining company and its employees.
The government is confident that the Kiamalu project will be a success and that it will help to attract more miners to Nigeria. The government is also working to develop other mining projects in the country, including a copper project and a bauxite project.
“We are committed to developing Nigeria’s mining sector,” said Adegbite, adding that “We believe that the mining sector has the potential to be a major driver of economic growth for Nigeria.”
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