How solid mineral roadmap in boosting Nigeria’s revenue

Calls to diversify Nigeria’s economy has become a mantra over the years. In 2016, the Federal Executive Council (FEC) approved the Roadmap for the Growth and Development of the Nigeria Mining Industry to position the sector as an alternative to oil revenue. How has this policy document impacted the economy since it came into effect?

Experts have, for years, cautioned against Nigeria’s overreliance on oil and drew attention to its rich solid mineral deposits as an alternative.

The huge deposits have been largely ignored only to be exploited by illegal miners, often at great risk to their health and well-being, while shortchanging the country of precious revenues and employment opportunities.

The Roadmap for the Growth and Development of the Nigeria Mining Industry, approved by the FEC in November 2016, is an intervention meant to grow the industry and diversify the economy using solid minerals as one of the strategic pillars.

The document is also designed to enable the sector emerge as one of the best global solid minerals destinations in a few years, according to the then Minister of Mines and Steel Development, Dr. Kayode Fayemi.

However, since he resigned to contest elections in Ekiti, which he won, the Minister of State, Hon. Abubakar Bawa Bwari has championed the policy.

In the last four years, the ministry has made efforts to change the narrative as regards ease of doing business in order to encourage foreign investment in the sector. With improved funding, including a N30 billion intervention fund out of which N15 billion was for exploration projects to generate geosciences data to entice investors, the mining sector’s GDP contribution has risen from 0.33 per cent in 2015 to 0.6 per cent in 2018, according to the National Bureau of Statistics.

President of the Nigerian Mining and Geosciences Society, NMGS, Prof Silas Dada said the improved funding has strengthened the exploration potential of the country in line with the roadmap.

“This fund is very significant for the growth of the sector because without geological data, it is difficult to grow the sector,” he said. “I am sure that when the exploration is complete, Nigeria will boast of accurate data in terms of solid mineral reserves. We will also be able to discuss the grade of ores and analyse the component of ores more scientifically.

“Within the past three years, the sector has made significant progress. Before then, there was no accountability in terms of record keeping. In the past, there were too many artisanal miners working without guidance and direction, but this administration came on board and changed the narrative. To this extent, Nigeria has made enviable progress.”

Part of the fund was to scale up exploration on mineral resources to ensure the generation and dissemination of critical geoscience data in order to increase investor confidence and help reduce risk in the sector.  There is already the Integrated Exploration Programme (NIMEP) with the award of N15 billion contract to five exploration companies for the purpose of exploring priority minerals like gold, lead, zinc, iron ore and earth metals.

One area where this progress has been recorded is in terms of royalties and fees revenues generated by the ministry, which has risen from N2.08 billion in 2015 to N3.92 billion in 2017.

As at November 2018, over 50 companies exported minerals to Malaysia, China, UAE, India, Switzerland, Thailand, Portugal, Russia, Cameroun, United Kingdom and USA with royalties to government amounting to over N270 billion.

For years, the right of royalty valuation had been an issue. Hon. Bawa Bwari, while speaking to stakeholders recently, emphasized the ministry’s commitment to drive this growth by encouraging more investors to go into the mining sector while taking into cognizance the environmental impact, hence royalties for mineral trading exporters are pegged at 5 per cent to 8 per cent, with the extra 2 per cent to be deployed for environmental remediation.

Industry watchers have credited the leap in revenue generation in the last four years to the ministry’s focus on doing the right thing.

According to a Nigerian Extractive Industries Transparency Initiative (NEITI) report, between 2007 and 2016, the mining sector had made a paltry contribution of $1.78 billion to the $476.8 billion the sector recorded in the extractive industry, with over $475 billion contributed by the oil and gas sector within the last 10 years. This amounts to a meager 0.41 per cent from the solid minerals sector.

A National Bureau of Statistics (NBS) report in the fourth quarter of 2017 showed that coal mining has grown by 2.86 per cent in the fourth quarter (4Q) of 2017, from 38.49 per cent in 3Q of 2017 and 0.44 per cent in the 4Q of 2016, while metal ores grew by 31.86 per cent in 4Q 2017 from 10.70 per cent in 3Q of 2017 and 7.03 per cent in 4Q of 2016.

With the revenue profile of the mining sector in 2017 alone improving by 500 per cent over the preceding years, experts credit the changes to a clear policy document and the minister’s commitment to strict adherence.

This is the view of the Sole Administrator, Ajaokuta Steel Company, Engr. Sumaila Aka’aba. “Having a committed minister like Hon. Abubakar Bawa Bwari and the total implementation of the roadmap has helped to yield desired results. The vigour with which he continues to implement the roadmap is already unlocking significant values,” he said, adding that the sector needs consistency and continuity so as to meet its potential of becoming a labour guzzling, revenue generating sector.

“A remarkable difference between the solid minerals sector and the oil industry is that the oil industry has the capacity to employ few people while creating wealth, but the mining sector is able to increasingly employ several people as well as create great wealth,” he said.

It is in the spirit of consistency that the appointments of industry insiders like Simon Nkom, an experienced mining engineer, as the Director General of the Mining Cadastre Office (MCO) responsible for the issuance of all mineral titles and licenses and Dr Abdulrazaq Garba as Director General of the Nigeria Geological Survey Agency have been lauded.

The MCO, alone, has within the last three years, realized over N5 billion as revenue generated through processing and other licensing fees.

“There is a paradigm shift achieved in the area of licensing due to the significant improvement in the mode of operation of the Nigeria Mining Cadastre Office, which is a major impetus that will speedily develop the sector,” Mr Ayedun Fasina, Chief Executive, Multiverse Mining and Exploration Plc, said.

But despite the gains, the sector still must overcome certain challenges, analysts say.

For instance, the Ajaokuta Steel Company, generally adjudged the bedrock of Nigeria’s industrialization, is yet to take off fully, something the minister must pursue vigorously to fully help diversify the economy.

A major setback has been the need to construct external infrastructure, such as railways needed for transportation of bulk materials from the National Iron Ore Mining Company to Ajaokuta Steel Company, and finished products from the steel company for local use and export.

With this administration’s drive to construct various rail lines, analysts think that hinderance will soon be a thing of the past.

This will be timely with a new export guideline soon to come into operation to address issues of mineral exportation without due permits.

While drastic shortfalls in concise geosciences data constituted the biggest impediment to attracting major investors, the Mining Cadastre System is being upgraded with the introduction of online mineral title administration aimed at making the operations of the MCO more transparent, efficient and accessible. This, experts say, will cut mineral title processing from 45 to 15 days.

With the gains made and the right kind of consistency, analysts believe the solid mineral sector could be a major revenue earner for the country in the not too distant future. That future cannot come soon enough.