Nigeria’s mining industry despite the abundance of natural resources in the country is underutilized according to stakeholders in the mining space, which they say has limited its contribution to economic activities and its potential as a catalyst for economic growth.
This was discussed at a webinar hosted by the Mining Group of the Lagos Chamber of Commerce and Industry (LCCI) themed ‘Nigeria: Making a mining come back’.
Akin Akeredolu-Ale, Managing Director, Lagos Commodities and Futures Exchange (LCFE), said there is a lot of potential in Nigeria’s mining ecosystem as Nigeria has a lot of hidden treasures.
He added that Nigeria and Africa as a whole has about $1 billion worth of untapped resources underground including 42 billion tons of Bitumen, three billion tons of Iron ore, one billion tons of Gypsum, among other resources.
“Considering the large number of mineral resources in Nigeria, the contribution of mining to the GDP is low especially as the sector is still characterized by crude mining and illegal activities,” he said.
He noted that beyond interventions from the government and related agencies, Nigeria’s mining ecosystem requires huge investments and funds inflow, however if the numerous challenges are not addressed, it will constrain the possibilities of investments.
Highlighting major challenges, Akeredolu-Ale said the major problem is lack of funds for projects because mining is capital intensive as it requires heavy and expensive equipment, in addition the long gestation period of some evacuation and exploration process takes about three to four year to mature. He added that ethnic and inter-communal clashes which threaten security are also dominant.
“Infrastructure imbalance especially poor road networks to mining sites and epileptic power supply affects the sector while overregulation by various agencies and lack of necessary data to provide information on the commercial volume and value that can be gotten across various mining locations hampers its growth,” he added.
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“The transaction section of mining, especially solid minerals, requires a structural capital formation for miners, we need to figure out ways to move small scale artisanal miners to medium scale and position them to participate effectively and efficiently,” he said.
Urging the private sector for collaborative efforts, he said commodity exchanges will be required to play active roles in terms of formation on the issue of patient capital and wealth creation.
He asked that the government create an enabling environment for mining to thrive noting that the existing framework in the sector is not business and investment friendly.
Olamilekan Adegbite, Minister for Mines and Steel Development (MMSD) stated that the government is interested in the development of the sector which has prompted the implementation of some policies that will serve as incentives to mining stakeholders.
Speaking about data availability, Adegbite said The National Integrated Mineral Exploration Project (NIMEP) program aims to make improvements and also de-risk the sector, adding that out of the five projects, two report are already available on gold and barite,
“This would promote local production and attract investors and the ministry would solicit more funding for exploration projects in other mineral resources,” Adegbite, represented by Oluwatoyin Akinlade, Permanent Secretary, MMSD said.
The minister added that discussions and efforts are ongoing to discourage the export of raw resources as the country lose out on various ends noting the possibility of high royalty charge on primary commodities.
In his remarks, Seun Olatunji, chairman, mining and solid minerals group, LCCI said there is a growing awareness in the global mining community that Nigeria is fast becoming a viable mining destination despite the challenges, especially dark illegal export channels, which poses great benefit for economic growth.
“There is absolutely no doubt Nigeria is making a mining comeback with the Federal Government’s commitment to credible data generation through funding of the National Integrated Minerals Exploration Project (NIMEP) program,”
He urged the government and related agencies to provide adequate funding and friendly policies which will attract legal investments and also help players in the mining space function effectively.
He noted that data from the CBN’s Economic Reports on Nigeria’s Non-Oil export earnings shows that proceeds from solid minerals export contributes significantly which make a strong case for special focus on Nigeria’s mining sector and its potentials.
