Solid Minerals: Imperatives of Increased Regulation

Julius Nwangwu

There appears to be a  renewed interest generally, drawing the attention of critical stakeholders to the abysmal performance of the Nigerian Solid Minerals sector. There is also a genuine reason to believe that the neglected solid minerals sector is long overdue for deserved attention and the fact that the job of opening that gold mine goes to one of the President’s trusted allies, underscores the administration’s interest in revitalizing the sector. This time around, both the minister and the custodians of legislative oversight functions in the sector must work assiduously to navigate the sector through a paradigm shift away from the prevalent structural quagmire.

A number of very compelling factors have underscored the glaring imperatives for revolutionizing the Nigerian solid minerals sector, through new sets of regulatory and policy frameworks.

Quite interestingly, Chief Alake in his maiden ministerial press briefing, thunder-bolted the solid mineral space with an audacious target of raising the sector’s contribution to the nations GDP to 50 percent. This will imply an ingenuous drive towards a superlative multiplication of the sector’s current 0.6 percent contribution to GDP, and the 5 percent targeted contribution to GDP in 2025 by the previous administration.

While previous administrations have at one time or the other introduced some sets of policy frameworks to drive strategic objectives in various sectors, the success rates generally depended on the quality of implementations. To realize the stated optimism in the Solid Minerals sector this time around, will therefore require stronger regulatory and policy frameworks that ensure a dispassionate and pragmatic implementation of the initiatives. 

Central to Simon Kuznets theoretical assumptions on structural transformation is the limited possibility that the high rate of economic growth can occur without sustained increase in the contributions of other strategic sectors of the economy.  Also the United Nations Conference on Trade and Development (UNCTAD) Report of 2017, emphasized that structural transformation as a catalyst for economic diversification is a key rational option for developing countries. It is apparent that the inability of past administrations to diversify Nigeria’s economy to other high income and employment-generating sectors over the years has significantly slowed down economic growth and development. It has left the economy highly debilitated and at the mercy of the volatile international oil market prices.

Aside the perennial fluctuations in the international oil prices and the attendant consequences on national economic planning, there is also the issue of deliberate sabotage and vandalism on oil facilities which have impacted negatively on the nation’s oil output. Similarly, crude oil theft has also consistently impeded the nation’s capacity to meet her OPEC oil production quota.  With the growing recourse to cleaner and renewable energy as alternatives to the use of hydrocarbons, national economies that depend on oil as major source of revenue, now face monumental threats.

The nation’s drive for substantial increase in revenue from the solid minerals sector and in stemming the tide of insecurity, banditry and terrorism also underscored the urgent need for robust reforms. The recent revelation from NEITI 2021 Report that the Solid Mineral sector generated a cumulative sum of N814.6 billion in fifteen years 2007-2021; is a far cry from the huge revenue potentials of the solid mineral sector in Nigeria. The Senate in 2021 investigated alleged annual loss of $9 billion USD to illegal gold miners and smugglers; which the then Minister for Mines Chief Uche Ogar claimed were the illicit activities of private jet owners.

Evidently, the nation has incurred monumental loss of revenue from the solid minerals sector, to illegal miners and smugglers amounting to trillions of naira; which not only represents an economic sabotage but have also contributed significantly in acerbating insecurity and terrorism. In a related 2017 report of the Organization of Economic Cooperation and Development (OECD) it emphasized that there are strong nexus between illegal mining activities, illicit financial flows and increase in the activities of armed criminal non state actors. These to a large extent  provides insight into the un-abating insecurity, conflicts and killings in  Northern Nigerian states such as Katsina, kaduna, kebbi, Plateau and Zamfara; where  illegal mining activities are highly prevalent.

It is a welcome development that the present administration has identified key areas in the solid mineral mining ecosystem focusing on seven priority minerals that require very urgent intervention. The list, which is not exclusive, include minerals such as gold, coal, limestone, bitumen, lead, iron-ore and barite. The Tinubu administration can expand the scope to other high yield minerals. For instance, taking advantage of the country’s huge deposits of cobalt, manganese, lithium and nickel; being core raw materials for electric vehicle batteries. While this will attract foreign direct investments from the world’s automobile giants, it will catalyze technology transfer and ultimately generate significant level of domestic value additions that will translate into creation of millions of jobs, strong linkages effects and spillovers.

However, as new policies are initiated to regulate and expand mining activities in the sector, it is also imperative for the articulation and development of Solid Mineral Supply Chain Metrics.    This could be tailored towards Friedrich Schumacher economic localization theoretical assumption which emphasizes technology transfer of capital intensive technology from high industrialized nations to developing nations like Nigeria and others.

Evidently, the increasing global demand for solid minerals has reflected in the corresponding increase in global mining activities and have generated a number of ethical, environmental and human rights issues in host communities. To this effect, the United Nations Guiding Principles on Business and Human Rights, 2011 Report; emphasized protection of the rights of artisanal miners and host communities in line with global best practices. Nigerians do hope that the Minister and National Assembly will utilize their instruments of strong policy and regulatory frameworks, to revolutionize the solid minerals sector.