Uche Usim, Abuja
The Nigerian Extractive Industries Transparency Initiative (NEITI) has released its audit report, revealing that the solid minerals sector contributed N43.22 billion to government coffers in 2016.
A breakdown of the figure shows that taxes collected by the Federal Inland Revenue Service (FIRS) accounted for N40.38 billion or 93.43%, while fees collected by the Mining Cadastral Office stood at N1.15 billion or 2.66%.
The Mining Inspectorate Department (MID) recorded N1.64 billion as royalty payments, an increase of 30.15% over the N1.27 billion reported as royalty payments in 2015.
These are some of the highlights of the 2016 audit report of the solid minerals sector released today by NEITI.
The audit conducted under the EITI principles and standard reconciled payments made by mining companies in terms of taxes, royalty and rents against receipts of such payments by relevant government agencies.
From the report, total minerals production for 2016 was 41.87 million tons valued at N34.09 billion, representing 33% increase on the N25.56 billion reported in 2015.
However, tax collection and payment of other fees for 2016 reduced by 32% when compared to the figure of N63.98 billion for 2015.
The report further disclosed that while six hundred and fifty-one (651) extractive companies made royalty payments in 2016, only fifty six (56) companies that met the materiality threshold of N3 million and above were considered for reconciliation. The companies that met this threshold accounted for 86.87% of the total royalties paid.
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On state-by-state minerals production, Ogun State contributed 33.49% to the total production to top the table, followed by Kogi State with a contribution of 19.7%, while FCT came third with 6.20%.
From the report, minerals production by companies shows that three companies – Dangote Cement Plc, West African Portland Cement Plc, and United Cement Company of Nigeria Limited (UNICEM) contributed 70% of total production in 2016. This shows that the cement sub-sector is still dominant in solid minerals production activities.
Further analysis of production by minerals types shows that limestone was the most produced mineral and accounted for 49.35% of the total solid minerals production in 2016, followed by granite with 31.32%. The least contributions were made by gypsum, iron, talc and amethyst with 0.1% each.
The report also revealed that the solid minerals sector’s contribution to exports in 2016 stood at ₦11.16 billion, representing 3.38% of the N330.01 billion for non-oil exports and 0.13% of total export of ₦8.53 trillion.
From the report, China was a major destination of Nigeria’s solid minerals in 2016, accounting for 53.63%, followed by Spain and India which accounted for 26.48% and 8.90%, respectively.
The report put the Free on Board (FOB) value of the solid minerals exported in 2016 at $40.934 million while the overall contribution of the sector to the country’s GDP was put at ₦87.61 billion representing 0.13 % of the total GDP of N67.9 trillion.
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The sector has witnessed a steady, even if marginal increase in its contribution to the GDP from 0.11% in 2014, 0.12% in 2015 to 0.13% in 2016. The sector also contributed 0.3% to national employment in 2016.
The report also disclosed that a total of 4,575 valid minerals titles spread across the various states of the federation were recorded in 2016. This comprises 1,751 Exploration Licenses, 208 Mining Leases, 1,563 Quarry Leases, and 1,053 Small Scale Mining Leases.
Out of the total valid titles in the MCO register, 1,465 titles were issued in 2016 while 1,030 were revoked and 14 were transferred. The report further stated that 315 Exploration Licenses were issued in respect of the priority minerals identified by government. The priority minerals are gold, lead-zinc, baryte, iron-ore, bitumen, limestone, and coal.
The report revealed that some title holders entered into MOUs with other companies without duly informing the relevant government agencies. As a result, out of the 651 operators that paid royalties, 312 companies representing 48% were not recorded in the MCO register either as valid, revoked or transferred titles for the year.
A striking feature of the report was that the sum of ₦9.923 billion was shared by the three tiers of government in 2016, being the accumulated revenues from 2007 to 2014 from the solid minerals sector.
A breakdown of the figure shows that the Federal Government got N4.547 billion while states and local governments shared N2.306 billion and N1.778 billion respectively. The sum of N1.289 billion was also shared as derivation.
Further breakdown shows that Ogun State received the highest share of N369.84 million while Kogi and Cross River states received N317.66 million and N237.10 million respectively.
Other states among the top five recipients are Kano and Oyo states which received N208.83 million and 200.45 million respectively while Ekiti and Bayelsa got the lowest share of N91.25 million and N76.66, respectively.
The release of the 2016 report by NEITI brings to seven in the series of independent reports on the solid minerals sector published as part of efforts to ensure transparency as well as bring local and international attention to the revenues and investment potentials in the solid minerals sector.
The 2016 Solid minerals audit was conducted for NEITI by Tajudeen Badejo & Co, an indigenous accounting and auditing firm.
The independent audit is consistent with NEITI’s mandate and in fulfillment of Nigeria’s obligation to the global Extractive Industries Transparency Initiative (EITI) as an implementing country.