Charles Nwaoguji
Nigeria’s solid minerals and mining sector is still largely untapped despite its glorious past and abundant resources waiting for development. This includes also the high-value metallic minerals, industrial minerals, and energy minerals.
Its 0.33 per cent contribution to the Gross Domestic Product in 2015, was seen by most commentators as a practical reversal from the historically higher percentages (about 4-5 per cent in the 1960s-70s). However, following a decade of reforms starting in 1999, this contribution represents a cautiously optimistic restart of the development of the sector. In the ensuing reform, some of the changes witnessed by the sector include the passage of a new Nigerian Minerals and Mining Act (2007), a Nigerian Mineral and Metals Policy (2008), the creation of a modern Mining Cadastral system, the refinement of the tax code, and the expansion in airborne mapping of the country to sharpen knowledge of the mineral endowment.
Minister of Mines and Steel Development, Olamilekan Adegbite, during Interactive session with Business Editors and Correspondents, says one of the most critical factors towards creating an enabling environment for exploration and mining would be to improve investor perception.
He however lamented that the undue interference by communities and state governments outside the provisions of the law/regulations would cripple investments and development of the mining sector.
Excerpts:
Solid mineral sector contribution to Nigeria’s GDP
Yes, if we do little research, we would realise things have changed a lot. As at 2005 when the data started to be recorded, we were contributing less than 0.3 percent to the GDP; as at 2018, it increased to 0.5 percent. It was quite an improvement like about less than a billion naira as revenue for mining. In 2019, it was the highest in history; we exceeded N5 billion. In 2018, we had about N3.7billion, and 2017 was our highest, it was about N4 billion. But, please, take this figure as mere approximations. For 2019, we will have a higher figure soon, but it is definitely going to be over N5 billion. Since the government returned attention to the sector, there have been gradual improvements on its contribution to the GDP.
State of Nigerian mining sector
The world is looking away from fossil fuel. We are talking of climate change, the earth is warming up, and everybody is looking elsewhere. Some countries have set target in the near future where they will ban fossil-fuel vehicles; so, all vehicles that you will find before long will be electric vehicles. Nigeria needs to prepare well ahead of time for this, because there will come a time where you will not be able to sell your fuel anymore. It will no longer be attractive, nobody wants oil, and everybody will be using this mineral to power other things.
It was against this background that the mandate of Mr. President came for us to refocus the economy away from just oil and gas into mining and steel development and of course agriculture.
To do that, Nigeria needs the big player that have been left out as mining today is predominately artisanal. Artisanal miners are of three kinds: ‘illegal’ miners, artisanal miners, and peripheral or part-time miners who may shift back and forth from between formal, illegal, and artisanal mining work.
These minerals are in Nigeria in abundance, everywhere in Nigeria you will find one thing or the other, so most of this people are people who just till the land, not going so deep, they find some minerals they sell them in raw form. They make a living and then they go back and decide who continues the assignment next. These kinds of people are not formalised, because government does not get anything from them.
How solid mineral sector can compete with oil and gas
Nigeria is the second largest producer of….. but government hasn’t made sufficient effort to explore it, so what do we do? We need formalised mining in Nigeria, you need to bring the right investors to come and do mining and that is what we are trying to do.
We go out in different fora to attract the right foreign investors. We have them in UK, we have in Durban in South Africa, Australia, Taiwan, and so on. Eventually, miners all over the world, gather at these different fora where we go to sell Nigeria potential to them. Nigeria has a lot of things, so a lot of efforts have been going on.
At this point, I must acknowledge my predecessor in office who has been going out there to show what Nigeria has. We have got to a point now that almost everyone in the mining industry all over the world is aware that Nigeria has minerals. But the foreign investors are shy of the risks involved, they want to be sure that when they come into Nigeria, it will be profitable for them to make their money quickly.
Nigeria government has invested in exploring solid minerals sector prior to my coming to office.,
For instance, President Muhammed Buhari released a sum of N30billion from the natural resource fund to the ministry as intervention fund between 2017 and 2018. Out of this amount, almost half, about N15 billion, has been committed to exploratory work on identifying solid minerals in various parts of the country
It is for NIMEP project exploration where seven strategic minerals including coal, bitumen, limestone, iron ore, barite, gold, and lead have been selected across the country. These minerals are the seven minerals that have been identified at that time that we need to promote for the investors to come in. Now, these seven minerals are being explored where they occur. What we are trying to do with this NIMEP project is to establish data which we can present to investors. We can tell them that we have got gold in this area and in such quantity. Basically, it is what the NIMEP project is doing and it is a good investment, which started before I came into the office. We should be having the final data result very soon. With this data, we can now convince our would-be investors to come into Nigeria and build on this data that we have done.
They will need to do just a little more work to get to the bankable stage in excess of the risk in the sector. We are telling them and assuring them that these minerals exist in these locations and at the depth and extent we have indicated, so this will reassure the investors to come into Nigeria.
Reactivating Ajaokuta Steel Complex
You placed the Aladja and the Ajaokuta Steel Complex the other way round.
Yes, it was an integrated system. Everybody relies on Ajaokuta; it was supposed to produce steel for Aladja to manufacture other products. The same thing applies to Oshogbo, Jos and Katsina.
Those ones were built along with Ajaokuta; although Ajaokuta will produce the raw material which can converts to other goods, and that is the basic thing. But when everything went down, some of these things went about been privatised and they are no longer with us. But Ajaokuta is the mother that produces, and this industry of course will be a major pillar for the country’s revenue generation.
For instance, Aladja is in private hands now and the people who bought it came to my office. They want to import billet to produce in Aladja and they found out that they couldn’t work out the business case. You can’t bring in billet into Nigeria and start producing reinforced steel products. Your cost is already beyond the market price for steel, so you can’t compete.
Consequently Ajaokuta is the way out because by the time Ajaokuta produces the raw materials for all this industry including Aladja which is now a privatised, of course Ajaokuta will deal with them commercially- Osogbo, Jos, Katsina, all these people and also people that will come after that.
Ajaokuta is meant to be the supplier of primary materials for this people and not the other way round, so it is been integrated.
State of bitumen in Nigeria
Bitumen project is something we are working on this year. We have got plenty of bitumen between Ondo and Ogun states and we use a lot of bitumen in the country as well. We use bitumen in the construction of roads; it is also the major ingredient in making your ash pot and other things. We are trying to develop that by bringing investors. Just like other minerals, we need to establish certain data so that investors will be comfortable. The Federal Government will be focusing more on bitumen this year, and hopefully, more investors will come in to explore the mineral so that Nigeria can stop importing it. The potential is great and I believe we will get there.
How Nigeria-Russia project can be funded
The African Export–Import Bank (Afreximbank) is bringing $1 billion to the table and the Russia export centre will be bringing $460 million to the project.These are the amount so far. It is a slow process because we are dealing with governments.
The funny thing was that while we were in Sochi, the agreement was reached between Presidents Putin and Muhammadu Buhari. Immediately after the meeting we contacted the office at home, we drafted an MOU quickly and gave to the Russians, and they said it is not done that way. So, I had to give the MOU to our own Affairs Ministry, which is the way they do government to government business.
We couldn’t do it quickly, so we brought it back home, took it to the Foreign Affair Ministry who will send it to the Foreign Affairs Ministry in Russia who will now send it to the ministry. So, it is a foreign concept but it is better for us. Definitely we will get there; we have done things commercially in the past which never worked. I think we should be patience about this government to government thing, it will work for us. At the end of this month, it should be signed.
Priority to downstream sector
Previously our downstream sector was not properly regulated because what we had was a lot of people engaged in all manner of illegal mining. A lot of this artisanal miners and if I may say, few illegal miners go out there to mine and whatever they got from the mine they export in raw form. In fact, people are exporting iron ore, lead, zinc, tin and all that, without any value added.
But we are now developing a downstream policy to encourage everybody so that investors can come in to build a more formidable industry. When you mine gold, you don’t have to export it like that, but that gold can be refined in pure form and then it can be sold as gold bars. And I must say that there is a Presidential Initiative at this point where the Central Bank of Nigeria (CBN) will be buying gold produced in Nigeria.