Towards a New Approach to Solid Minerals Mining in Nigeria

Key stakeholders in the solid minerals sector have adopted a new attitude to business, which holds great potential for efficiency, reports Chineme OkaforT

The mining of solid minerals has not really benefitted Nigeria, despite the country’s huge mineral deposits. The country is blessed with a variety of solid minerals, which include gold, iron ore, coal, uranium, and bitumen.

Nigeria operates as a single mining jurisdiction governed by the national constitution, which makes mining governance an exclusive preserve of the federal government. This governance structure is seen as the biggest hindrance to the development of the country’s solid minerals sector.

 

Underdeveloped

 According to the 2014 audit report of the Nigeria Extractive Industries Transparency Initiative, the solid minerals sector contributed only about N55.82 billion to the federal government, accounting for a mere four per cent of the country’s total national export earnings for the period. Similarly, the sector, which is dominated by unskilled artisanal small scale miners, and largely unorganised mining activities, according to the NEITI audit, contributed just 0.11 per cent to the Gross Domestic Product within the period.

The report also regretted that government agencies responsible for the management of the solid minerals sector had been unable to account for billions of naira that should have accrued to the country from the sector. It stated in its valuation of the sector that solid minerals had the potential to contribute far more than it did.

 

New Attitude 

To chart a new way forward for the sector, the federal, state, and local governments, as well as communities that host mining activities met last week in Abuja for the first time. The maiden edition of the National Council for Mining and Mineral Resources Development summit had in attendance relevant ministers of the federal and state governments, traditional rulers, host communities’ representatives, and experts in the solid minerals mining sector.

The NCMMRD summit sought to assess existing reforms in the sector, brainstorm on them, and proffer credible solutions to the challenges that have held the sector down.

The two-day meeting considered 36 memoranda under five thematic areas, including minerals sector governance, illegal mining operations in the country, mineral export challenges, security challenges and economic sabotage, as well as regulatory and legal frameworks in the sector. And parties agreed on several actions that could unlock the sector’s potential.

Of the actions and positions adopted at the summit, one stood out, as experts said it could become the game changer for the sector. That was the decision that governments at all levels and relevant stakeholders should collaborate to build a single partnership framework for the sector’s development.

According to the communiqué from the summit, which THISDAY obtained from the Federal Ministry of Mines and Steel Development in Abuja, the parties agreed, among other things that: “There should be synergy among federal, state governments and local government areas through the instrumentality of Minerals Resources and Environmental Management Committee (MIREMCO) as provided for by Section 19 of Nigerian Minerals and Mining Act, 2007; as well as a synergy between the Ministry of Mines and Steel Development and the state governments to improve operational collaboration and enhance communication for effective execution of the roadmap for the growth and development of the mining industry.”

Experts say partnership between the federal, state, and local governments with regard to the mining sector would go a long way in breaking down existing barriers to the sector’s development and profitability.

Under the extant laws, the responsibility of licensing and regulating mining operations in the country resides solely with the federal government. This has created unhealthy developments, such as illegal mining activities, poor revenue collections from mining operations, and systemic hostility to private mining operators by states.

The new collaborative efforts would open up new opportunities for the federal, state, and local governments to brainstorm and take decisions on mining operations with limited frictions, and a lot of goodwill.

To buttress the impact of the partnership, especially on the issue of consent for titles, the communiqué stated, “Council took cognisance of the provision of the Constitution of Federal Republic of Nigeria 1999 (as amended), Section 100 of the Nigerian Minerals and Mining Act, 2007, and various stipulations of Minerals and Mining Regulations of 2011, and on that basis, expresses support for the ministry’s stated intentions to explore feasible administrative models to involve states in the process of issuance of consent only for the granting of minerals titles.”

Similarly, parties at the summit decided to concretise the new partnership with the setting up of a forum of state commissioners responsible for mineral resources development in their respective states, to constantly engage the federal government on crosscutting areas in mining activities.

 

Beyond Collaboration 

Stakeholders at the forum also identified some actions with immense potentials to drive the development of the sector. The communiqué recommended that a private sector driven single export window policy should be adopted to enable the country ascertain the right values for its minerals that are exported. It explained, “Modalities should be put in place at every exit point and ports in the country for quantity and quality analysis. This will monitor and record all mineral exports and ascertain appropriate royalties and certifications, including the installation of weigh bridges, credible international inspection outfits and the likes. This will also promptly address the mineral revenue leakage that occurs through the exit ports.”

Stakeholders similarly suggested that the federal government should focus on minerals revenue collection and plugging gaps in data collection that cause revenue leakages in the sector.

They stated, “In issuance of the certificate of origin, the federal and state governments should collaborate through MIREMCO in analysing and tagging of minerals at source with a view of determining appropriate royalties; government should encourage value addition plants from ores to concentrates with appropriate and reasonable incentives.”

Considering the critical role of the Central Bank of Nigeria, the customs, and immigration in mineral exports, stakeholders at the meeting requested that they be included in all policy formulation and strategies to enable the country attain seamless processing of mineral export.

To address the menace of mineral theft and revenue loss from illegal mining, stakeholders at the meeting said, “The on-going formalisation of the artisanal and small scale mining groups into cooperatives should be maintained and continuously invigorated.”

They added, “The curbing of illegal mining activities should be pursued continuously and existing framework to curb minerals smuggling should be activated by relevant agencies, existing audit and control mechanisms for monitoring of mineral exports to curb under-declaration of mineral exports should be strengthened.

“The repatriation of proceeds, royalties and taxes accruing from exported minerals through the appropriate government procedures and channels should be vigorously pursued.”

On respect for the fundamental human rights of people and host communities within mining belts, which the Gwom Gwom Jos, Da Jacob Gyang Buba, emphasised at the seminar, the communiqué stated, “Effort should be made to acknowledge the issues of human rights in the policy framework and protect the citizens’ right to clean and sustainable environment.”

Parties equally agreed that all mining activities should be operated under the minimum health and safety standards stipulated by the International Labour Organisation.

In his remarks at the meeting, the Minister of Mines and Steel Development, Dr. Kayode Fayemi, said he was optimistic that the new partnership, which the council represented, would help to accelerate growth in the sector through adequate oversight and guidance, as well as strategic input from states and host communities. Fayemi said the sector had witnessed unprecedented growth in the last two years, stressing that the partnership would accelerate the growth and pursuit of shared wealth and job creation for Nigeria.

“I am convinced that Nigeria’s mineral resource endowments can be optimally exploited for the benefit of Nigerians through collaborative governance of the mining sector by governments and communities at all levels – this event is a huge step in that direction and we appreciate you for being a part of it,” the minister told the stakeholders.

He added, “Already, we achieved a 300 per cent increase in revenue (royalties and fees) between 2015 and 2016, and as at July of this year, the sector had already surpassed the entire revenue of N2 billion generated for the whole of 2016.

“To stem the illegal trading of minerals, the ministry has registered over 30 mineral buying centres, and enacted the revenue and reporting compliance agreement with the Nigeria Customs Service, which has improved the policing of mineral exports.”

Fayemi said, “With the successful hosting of the inaugural edition of the NCMMRD, we have covered a major milestone in the implementation of the roadmap for the sector, and at the same time set in motion a chain of positive outcomes.”

 

N15 Billion for Mineral Exploration

To further emphasise the country’s commitment to the sector, Fayemi disclosed in a recent interview with Reuters that the government would spend N15 billion over the next one year to explore minerals and attract investors into the sector.

He explained, “Because we are starting from a low base, we want to have a portfolio of exploration activities in place that could whet the appetite of the average investor who wants to come in.”

The minister stated that through government’s intervention in baseline exploration data, investors would be able to “drill down when they have that baseline information.”

He said minerals like gold, bitumen, iron, barite, limestone, lead, and zinc, would be accorded priority, stressing that about N60 billion of private investment is expected from those minerals. 

“Nigeria is one of the lowest spenders on exploration as far as mining activity is concerned. This government is determined to turn the tide on that, because we’re quite convinced of the opportunities,” Fayemi said.