Nigeria Earned N69.47bn from Solid Minerals in 2018, Says NEITI

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By Ndubuisi Francis

Nigeria’s solid minerals sector contributed N69.47 billion to the federation account in 2018, the highest so far since the Nigeria Extractive Industry Transparency Initiative (NEITI) commenced reconciliation of payments in the sector.

The sector also contributed over N400 billion in the last 12 years.

The N69.47 billion earnings in 2018 show an increase of N16.71 billion, representing 31.67 per cent over the 2017 revenue of N52.76 billion.

The N69.47 billion earnings also accounted for 16.69 per cent of the total revenues of N416.3billion which accrued to the sector between 2007 and 2018.

The latest audit report of the solid minerals sector released by NEITI reconciled companies’ payments and government’s receipts from the sector in 2018 as well as tracked production volumes and trends of revenues from the sector to the federation account from 2007 to 2018.

According to NEITI’s Director, Communications & Advocacy, Dr. Orji Ogbonnaya Orji, a breakdown of the receipts showed that taxes to the Federal Inland Revenue Service (FIRS) accounted for N65.69 billion (94.56 per cent of the total while fees and royalties paid to the Mines Inspectorate Department (MID) and Mining Cadastre Office (MCO) accounted for N2.21 billion (3.18 per cent) and N1.57 billion (2.26 per cent) respectively.

“Nigeria has published eight cycles of solid minerals audit reports since it signed up to the EITI. The sector has contributed ₦416.32billion in revenues to the federation in 12 years. Over half of this figure or (N279.0 billion) was earned between 2015 and 2018,” NEITI said, adding that this was a demonstration of a remarkable increase in revenues accruing to the federation from the solid minerals sector over the years.

The just released report further highlighted that the sector had over the years, also witnessed fluctuations in revenue earnings. For instance, in 2015, N64.46 billion accrued to the federation, while in 2016, the earnings dipped to N43.22 billion.

It was in 2016 that the Nigerian economy slipped into recession.The report disclosed that the main sources of revenue flows from solid minerals remains various categories of taxes, royalty, permits, annual services and sub-national payments, stressing that sub-national payments and other taxes accounted for ₦1.54 billion, representing about 2.23 per cent of total government revenue from the sector.

On production, the NEITI 2018 Solid Minerals Report disclosed that 46.68 million metric tons of minerals valued at N47.87 billion were produced in Nigeria during the period. “The production data was based on minerals either used or sold during the year”.

A breakdown of the production volumes showed that limestone and granite accounted for about 8 of the total minerals produced. Limestone alone contributed 54.85 per cent while granite accounted for 23.88 per cent of minerals mined.

On state-by-state production, the report disclosed that in 2018, most of the mining activities in the country took place in Ogun State. The state accounted for 12.66 million metric tons (27.13%) of the total volume produced during the period under review.

Ogun State was followed by Kogi and Benue states, each accounting for 22.88 per cent and 10.10 per cent respectively.

However, on the bottom of the table are states like Enugu and Borno states which contributed 0.02 per cent and 0.001 per cent respectively.

The report also revealed that Dangote Cement Plc and Larfarge Africa Plc dominated activities in minerals produced by companies. The two companies contributed 57.22% of the total minerals produced in 2018. From the report, while Dangote cement accounted for 46.38 per cent , Larfarge Africa was responsible for 10.84 per cent.

The report disclosed that the sector’s contribution to employment in 2018 was 9,873, with more Nigerian nationals employed by the sector.

In relation to gender, 96.53 per cent of jobs were occupied by men, while women took 3.47 per cent . Only six physically challenged persons were recorded as being employed in the sector in 2018.On the contribution of the solid minerals industry to Nigeria’s gross domestic product (GDP,) the report aligned with the National Bureau of Statistics’ (NBS’) figure of N224.79 billion representing 0.18 per cent of the country’s GDP.

A breakdown of this figure shows that quarrying and other minerals accounted for 0.16 per cent , while coal and metal ores accounted for 0.01 per cent each.

One other feature of the solid minerals report for 2018 is the focus on the performance of the strategic minerals identified by the Ministry of Mines and Steel Development. The minerals are coal, lead zinc, limestone, barites, bitumen, gold and iron ore.

The seven strategic minerals mined in 2018 contributed 49.7 per cent to royalty payments declared in the year.

The report further revealed that forty-seven companies exported ores, concentrates and metal ingots worth $144.38 million in 2018. Ores and concentrates accounted for $34.02 million with China identified as the principal destination of Nigeria’s mineral exports. China received 52,500.51 metric tons of the ores and concentrates valued at $27,926,897.05 which is 79.52% of the total minerals exported in 2018.

The report also disclosed that Germany, South Korea, Poland, Spain, Belgium, Netherlands and Benin Republic were other top destinations of Nigeria’s minerals, adding that in 2018, 1,516 mineral titles were issued by MCO,

The report added that in a bid to boost reserves and improve production in the sector, 634 exploration Licenses were issued within the year under review. The country’s strategic minerals accounted for 448 or 70.66 per cent of the exploration licenses issued.

The report further explained that out of 720 entities covered by the exercise, only payments by 69 companies were reconciled. The 69 companies were entities that met the materiality threshold of N3million and above and paid a total of N1.7 billion which represented 86.93 per cent of the total royalty paid within the year. In 2017, 59 companies that met the materiality threshold paid a total of N1.3 billion, while N1.4 billion was paid by 56 companies which met the threshold in 2016. While all payments made by companies were covered in the report, not all were reconciled.

On collections accruing to the solid mineral revenue account, the report disclosed that the balance in the account as at December 2018 was N12.59 billion.

“The sum of ₦16.78billion was the accumulated revenue from Solid Minerals sector as at 30th September 2019. Out of this amount, the sum of ₦8.7 billion was distributed among the three tiers of government in October 2019, leaving a balance of ₦8.08 billion,” the report disclosed.

It underlined the importance of a comprehensive action plan to shift attention from oil to the development of the solid minerals sector in the face of dwindling oil revenue. It also noted that there have been significant reforms and development in the sector. Among the many recommendations by the report is the call on the government to develop strategies for monitoring and penalizing extractive companies that fail to sign and or implement community development agreements. It also advised that the newly introduced initiative on national gold purchase scheme be strengthened.

The independent audit of the solid minerals sector was conducted by Tajudeen Badejo and Co. and is consistent with NEITI’s mandate under the NEITI Act 2007.

It is also in fulfillment of Nigeria’s obligation to the global Extractive Industries Transparency Initiative (EITI).