Gold and other minerals worth billions of naira are stolen from Nigeria yearly and vast swaths of mining fields with proven mineral deposits are overrun by armed bandits, developments that serve to indicate that the new minister of Solid Minerals has his work cut out.
As many want to point out, a minister’s job is to provide direction and get out of the way of civil servants who implement government policy. However, the success of the ministry largely depends on the competence of the minister.
Dele Alake, a former newspaper editor and media manager at his ministerial screening impressed the lawmakers that many commended his mastery of communication. Shortly after he took the oath of office on Monday, he told journalists that he had asked the president to assign the Solid Minerals ministry to him.
“The Ministry of Solid Minerals Development, as you know, is in a sensitive position in this period of economic renewal. So, that position was one that I specifically asked Mr President to give me, and he obliged. The ministry is key to the administration, and the president wanted someone that he trusted and believed would deliver effectively.”
His ideas for developing this sector he asked for would come under close scrutiny. Despite Nigeria’s vast solid mineral potential, it continues to underperform, accounting for less than 0.85 percent of GDP in 2022. Considering that this was a 32 percent year-on-year growth over 2021 data, suggests that it is on an upward trajectory. The minister’s key priority is to sustain the momentum.
A recent KPMG report said Nigeria currently boasts over 44 priced solid minerals in the mining space, with huge deposits scattered over different parts of the country.
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“However, more efforts are required to set the sector on a faster growth trajectory, to compete with that of the oil and gas sector, as the main revenue earner for the country and facilitate our diversification agenda.”
According to KPMG, mining still embeds great potential to boost economic development, diversification and industrialisation. However, the realisation of these goals hinges on the FG’s continued political will to revamp the sector and avail it with the requisite machinery to function effectively.
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It called for the provision of accessible and affordable funding, expediting amendments to mining laws, regulations, and policies, access to reliable geodata, provision of tax incentives and/or rebates, and enhancing security measures to safeguard mining operations.
This is where Alake’s expertise would be highly sought after. The minister provides blueprints and guidance on policy to achieve the overall goals of the administration.
Countries around the world are retooling their strategy to leverage anticipated growth in the minerals of the future. They will be used to produce car batteries and other clean energy technologies including Nickel, Aluminum, Phosphorus, Iron, Copper, Graphite, Lithium, Cobalt, and Manganese.
Australia’s success with mining, leading to an 8 percent contribution to its GDP, reveals what is possible with an effective strategy for the solid minerals sector. The government’s strategic purpose is to secure its position as a powerhouse in the global critical minerals supply chain, thereby protecting the nation’s future prosperity and national security interests.
Recently, Chile clarified mining rules with a new public-private partnership model, leading to more than 50 companies from around the world jostling to negotiate lithium deals in a country that represents 30 percent of global lithium production.
Nigeria has vast deposits of some of these minerals including Iron ore, Copper, Manganese, and Graphite but developing them has not been on the priority list of successive governments. Only iron ore features due to the industrialization potential steel can offer the country.
In 2017 Nigeria’s mining and minerals investment brochure was developed when Kayode Fayemi was the minister of mines and steel development. It seeks to develop seven out of the dozens of minerals found in many states across Nigeria. These are Coal, Bitumen, Limestone, Iron Ore, Barites, Gold, and Lead/ Zinc.
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Olamilekan Adegbite, the former minister of mines and steel development, initiated reforms to encourage local development of mineral resources but they have been either ignored or mostly exploited by artisanal miners.
To encourage private sector participation, the ministry provided incentives including waivers on customs and import duties for plants, machinery, and equipment imported for mining operations and tax holidays of between three to five years for businesses as applicable.
Other incentives in the strategy planned till 2025, include free transferability of funds and permission to retain and use earned foreign exchange, capital allowances of up to 95 percent of qualifying capital expenditure, deductibility of Environmental Costs (money meant for environmental remediation now tax-free), and 100 percent ownership of mineral properties.
The challenge for the new minister is how to ensure that these incentives are strategically directed at the minerals of the future. Recent discoveries of huge lithium deposits by Thor in Oyo State show where energies should be directed.
