• Sunday, March 03, 2024
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Under Alake, Nigeria’s solid minerals sector gets a makeover

Nigeria leads Africa’s mining sector resurgence

At a press conference on the policy direction of the Tinubu Administration in the Solid Minerals Sector, Oladele Alake, Minister of Solid Minerals, laid out the policy priorities for the sector, ISAAC ANYAOGU analyses the impact of these policies in view of where the sector is headed.

From Australia to Chile, countries with rich mineral resources are drawing up strategies to take advantage of the shift to critical minerals that will power the industries of the future that will deliver electric cars, renewable energy components, and lithium batteries. Nigeria, blessed with abundant mineral resources, seems set to stir from a long slumber.

Oladele Alake, minister of Solid Minerals, has unveiled a comprehensive policy directive from curbing illegal mining to formalising the sector.

Read also: Market formation framework seen as driver to solid mineral sector development

“A significant and interesting fact is that the solid minerals sector that was exploited by the colonial government for export contributed 4.5 percent to Nigeria’s Gross Domestic Product in the ’60s, and 5.6 percent by 1980 accounted for less than 2 percent of Nigeria’s GDP last year. To demonstrate the gravity, compare this performance to the records of less-endowed countries such as Senegal (20 percent), Mauritania (24percent), and Namibia (50 percent).

“How did a country with industrial, energy, metallic, construction, and precious minerals, including gold, manganese, bitumen, lithium, iron ore, lead, zinc, limestone, uranium, columbite, barite, kaolin, gemstones, coal, topaz, copper in massive proportions fail to use these resources to liberate the citizens? At the last count, our estimated reserves include Gold (1 million ounces); Limestone (568 metric tonnes), Lead/Zinc, (Baryte (15 million metric tonnes), Bitumen (N1.1 billion barrels), Iron Ore (3 billion Metric Tonnes) and Coal, (N396 million). How did a sector with over 2 million operators, including over 633 small-scale companies and 251 500 registered miners, struggle to give the economy capital and human development?

Read also: FG loses N1.3trn in solid mineral revenue annually

The reasons are self-evident. Inefficient geo-data, weak implementation and enforcement, poor environmental, safety, and health policies, fragility and conflict, unregulated artisanal mining, low technical capacity, lack of access to financing, weak inter-governmental and inter-agency co-ordination and weak federal/state relations over mining land as the severe barriers to the development of the sector,” he said.

Nigeria’s solid minerals sector suffers from over-dependence on crude oil. While other administrations have set up a sector roadmap, and created geoscientific data and intervention funding, a national commitment to develop the sector is missing.

Mandate

The minister said his mandate is to improve on the formulation and regulation guiding prospecting, quarrying, and mining; improve data gathering; monitor and organize more efficiently the sale and consumption of minerals and increase revenue accruable to the Federal Government from the issuance of permits, licenses, leases and the collection of rents, fees, and royalties.

To this end, he unveiled the policy priorities as :

● Nigerian Solid Minerals Corporation
● Joint Ventures with Mining Multinationals
● Big Data on specific seven priority minerals and their deposits
● 30-day grace for illegal miners to join artisanal cooperatives
● Mines Surveillance Task Force and Mine Police
● 6 Mineral Processing Centres to focus on Value-Added products

The paradigm shift in the strategy is re-positioning the sector in terms of the human and capital factors that can drive its transformation. This enables capital formation based on investment activity powered by precise geoscientific data that is transparent and accessible.

Read also: Solid mineral sector sees $500million proposed fund unlocking more investment

Alake’s strategy is to elevate solid minerals to the prestige enjoyed by oil and he is setting up a corporate body that plays in this field.

Consequently, the Ministry shall work towards the incorporation of the Nigerian Solid Minerals Corporation. This is a corporate body that will have subsidiaries doing business in the seven priority areas that require immediate intervention and focus: Gold, Coal, Limestone, Bitumen, Lead, Iron-ore and Baryte. Existing enterprises such as the National Iron-Ore Company and ongoing arrangements such as the Bitumen Concessioning Programme will be reviewed to fit into the new system, the minister said.

The proposed corporation will seek and secure partnership investment agreements with big multinational companies worldwide to leverage the attractive investment-friendly regime operating in the country to secure massive Foreign Direct Investment for the mining sector. The positioning of the national corporation as a guarantor and protector of the partnership agreements is expected to assure partners of our seriousness and fidelity.

It will support Nigerian businesses seeking funding abroad and help to authenticate their investment proposals to speed up the commitment of their partners to invest.

Locally, the corporation will engage the Nigerian financial system, which has demonstrated palpable reluctance to support mineral prospecting and mining because of the long-term gestation of value generation by developing a Fund to facilitate investments in mining at interest rates that will be mutually agreed.

The emergence of the Corporation in the business of mining will enable the Ministry to focus more on its core regulatory and promotional mandates of sanitizing the sector and developing ideas, processes, and institutions that facilitate the ease of doing business in the industry.

Read also: Solid Mineral revenue appreciated by 21% with N52 Billion earned in 2017- NE‎ITI

Gathering Big Data

Alake noted that while a lot of funds have been expended on gathering data on the occurrence or incidence of minerals across the country, however, as resourceful as this is, it is grossly insufficient to make investment decisions.

“An investor is not just interested in the location of a particular mineral. They want to know the quantum in depth and area before deciding on the cost and profitability. This lack of precision of our current data has impeded investment. It has turned licensees into star gazing, uncertain, unsure entrepreneurs praying for luck to strike the amount of deposits that can offset their investments instead of confident, assured risk takers sure that the accurate, scientific data at their disposal are reliable enough for their investment projections. Without robust, precise, and accurate data internationally authenticated by the geoscience community and transparently published for easy verification and adoption, international investment will be a pipe dream.

He said the Ministry of Solid Minerals shall soon propose to the Federal Executive Council a precise investigation of selected deposits of the seven priority minerals – Gold, Coal, Limestone, Iron-ore, Bitumen, Baryte, and Lead/Zinc – to scale this hurdle. Other minerals will feature in subsequent investigations under the National Integrated Mineral Exploration Project, NIMEP.

Investment drive

“We shall organize country visits and tours, exhibitions, conferences, advertisement campaigns, and presentations to tell significant stakeholders in the global industry that Nigeria is the next profitable destination for investment.

Further actions envisaged by the minister includes reviewing the draft Nigerian Mining Act to unlock Foreign Direct Investment in Mining by introducing international best practices.

The ministry is exploring how to secure local content in the emerging industry to ensure a fair deal for Nigerians by reviewing the reports of the Nigerian Extractive Industries Transparency Initiative on the Solid Minerals Sector.

It would also secure investments by tackling illegal mining. Many farmers and traders who take up mining activities like a second occupation in areas where deposits are found would need to formalise their trade as the ministry plans to foster their human capacity development through training in modern mining methods or technical competencies in information communications technology, mechanical and electrical repairs of mineral exploration machinery and business methods and book keeping.

Read also: FG restates commitment to investment in solid minerals 

Furthermore, the strategy has led to institutional formalization through the construction of various markets by the Ministry. Such markets include the International Gemstone market, Ibadan, Oyo State, Kaolin Processing Centre, Alkaleri, Bauchi State; Lead/Zinc Processing Centre, Ubulu, Abakaliki, Ebonyi State; Baryte Processing Centre, Ogoja and the Gold Souk, Kumbosto, Kano State.

For those who refused to join government’s efforts to formalise the sector, he has this warning. “For the last time, let me declare that the Ministry is giving such persons 30 days grace to join a miners’ co-operative or find another vocation to do. On the expiration of the period, the full weight of the law will fall on anyone seen on a mining site without a determinable status. This message will be interpreted into Nigerian languages and broadcast on the radio to ensure no one is ignorant of this directive,” he said.

Under a new security plan, the mining sector will get its own police sourced from the Nigeria Police and specially trained to detect illegal mining and apprehend offenders. The new Mines Surveillance Security Task Force will coordinate the Mines Police and pro-actively address high risk incidences of breach of Mining Laws. The Federal and State governments will also be encouraged to allocate the prosecution of cases against illegal miners to competent courts.

A regular source of conflict and insecurity is the management of community relations by mining licensees. While the Mining Act recognizes minerals under the ground as the exclusive property of the Federal Government, it also elaborates on the need to engage communities whose hitherto peaceful and orderly environment may be disrupted by investors about to activate a mining license.

A review of similar strategies by mining countries showed that Nigeria’s solid minerals strategy mirrors what is obtainable globally. In comparison with Australia’s new mining strategy unveiled in June, Nigeria lacked a research and innovation component. Mining nations are keen to drive private sector participation as seen in Chile, where the government has unveiled a new PPP project with heavy incentives for the private sector.

The race for who will harness the minerals of the future has started in earnest with other countries having a head start. Nigeria has to play catch up, but it’s better than refusing to start at all.