In the face of many government policies aimed at reforming the mining sector since its collapse decades ago, several age-old challenges still cage the sector, experts say.
Several artisanal miners cannot find finance for expansion and are unable to access intervention funds as the sector remains less attractive to deep-pocket miners. It still contributes less than 1 percent to the gross domestic product, with poor geosciences data and lack of formalisation hurting the sector.
Paul Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), said at the maiden edition of Nigeria Mining and Investment Summit in Lagos that several reforms and policies have been introduced by the government for the development of the mining sector since 1999, yet no significant breakthrough has been recorded so far.
Some of the reforms government had embarked upon include Nigerian Mineral and Mining Act (2007), Nigerian Mineral and Metals Policy (2008), and Roadmap for the Growth and Development of the Nigerian Mining Industry (2016).
Others include the expansion in airborne mapping of the country to sharpen knowledge of the mineral endowments, the creation of a modern mining cadaster system, and refinement of tax code, among others.
“Despite these reforms and policies, the sector still faces several challenges,” said Ruwase.
“Nigeria still has weak mechanism for gathering, disseminating and archiving critical geological data required by investors and policy makers,” he said.
Another challenge facing the sector, according to Ruwase, is insecurity around mining areas. Several mineral-rich communities in the country, especially in the northern parts, are faced with the issues of terrorism, banditry, kidnapping, ethnic and religious conflicts, which scare investors away, he said.
Nigeria has at least 44 known mineral assets that include precious minerals, base metals, gold, iron ore, barite, bitumen, lead, zinc, tin and coal, among others.
“Investments are going on, but the money being invested only represents 2 or 3 percent of what should be happening in this sector,” Babatunde Alatise, chairman, LCCI Mining Group, told BusinessDay on the phone recently.
“The question is, how do we help artisanal miners that make up 95 percent of this sector? We do not have commodity exchange, which makes it difficult to know exactly how bankers can check international prices of solid minerals,” he added.
Illegal mining is another challenge facing the industry. Illegal miners pose a great threat to both the mining communities and licensed miners, Ruwase said.
They steal from licensed miners and prevent them from gaining access to their mining site. They also create environmental problems to communities as they do not follow mining procedures.
“One of the first things we should do is to formalise the sector,” Shehu Sani, president, Miners Association of Nigeria, told BusinessDay.
According to Ruwase, another major setback in the mining sector is the multiplicity of government agencies, which creates delays and blockages for investors.
“There is a multi-agency regulatory structure in the sector. This creates unnecessary bottlenecks and duplications of functions,” he said.
He advised that the activities of the regulatory agencies be streamlined to foster efficiency and boost investors’ confidence.
The existing fiscal framework in the mining sector, particularly its long gestation period, is also not friendly to investors, according Ruwase.
On this ground, Nigeria will need to revisit the entire fiscal framework for the taxation of mining operation in order to attract mining majors and foreign investors.
“Operators across the mining value chain face a range of challenges from insufficient infrastructure to policy uncertainty, which undermines the confidence of potential investors,” he noted.
Ruwase said since the Nigerian mining sector is still growing, the Federal Government needs to intervene in various areas of the industry in order to address the operational and legal hurdles to boosting investors’ confidence and attract more private capital to the sector.
JOSEPH MAURICE OGU
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
