Nigeria earned N416.32 billion from solid minerals in 12 years
The Nigerian government earned ₦416.32billion from the solid minerals sector from 2007 to 2018, an analysis by the Premium Times Centre for Investigative Journalism [PTCIJ] and Centre for Democracy and Development (CDD) has revealed.
Over half of that amount was earned between 2015 and 2018.
The figure emerged from data analysis, industry review, and review of documents obtained by PTCIJ and CDD from the Nigeria Extractive Industries Transparency Initiative (NEITI) through a Freedom of Information (FOI) request.
The figure is not eye-turning when compared to what Nigeria earned over the same period from the oil and gas sector. But experts and operators in the mining sector say its huge potential means much more would accrue if Nigeria properly harnesses its vast solid mineral resources.
The report shows a remarkable increase in revenues accruing to the Federation from the solid minerals sector over the years.
A breakdown of the accruals shows that in 2018, the total contribution by the sector to the revenue of government was N69.47 billion, up from the 2017’s total contribution of N52.76 billion.
The just released NEITI report also exposed the fluctuations in revenue earnings from the sector during the 12 years. For instance, in 2015, N64.46billion accrued to the federation, while in 2016, the earnings dipped to N43.22billion. It will be recalled that 2016 was the year Nigeria slid into a recession.
The contribution in 2018 was N69.47 billion, the highest since NEITI commenced reconciliation of payments in the sector. The figure shows an increase of N16.71 billion, representing 31.67 per cent, over the 2017 revenue of N52.76 billion.
Nigeria’s Mining Sector
Nigeria is blessed with commercial deposits of many solid minerals from tantalite to barite, limestone, gold, bitumen, kaolin, topaz, etc. The quantity of the deposits in more than 500 locations across Nigeria suggests that the solid mineral sector, if well harnessed, can compete favourably with the oil and gas sector in the country.
The British colonial government created the Mineral Survey of the Northern Protectorates in 1903 and the Southern Protectorates in 1904. Nigeria started major production of coal, tin, and columbite in the 1940s. In 1956, when oil was discovered, the focus shifted from mining to oil and the mineral industries suffered. In the 1960s, the civil war led to mining experts leaving the country and mines being abandoned. Mining regulations drastically changed, and productivity declined. Following the rapid decline in solid minerals production, successive administration formulated a plethora of policies to reactive and revive the sector, including the creation of public-funded mining institutions in the 70s and 80s and subsequently followed by privatisation of those institutions in the 90s. In the late 1990s, the government started selling the institutions to private investors because of the failure to revive the sector .
The relatively low production output of Nigeria’s solid minerals constitutes a major challenge to the economy, particularly because this key sector offers such great potential for the diversification of the Nigerian economy. Prior to the 1960s, mining was a mainstay of the economy, contributing up to 50 per cent of the GDP.
But this high level of contribution declined precipitously, starting from the 1960s after the discovery of oil and gas which diverted the interest of both the government and investors from the mining of solid minerals.
Annual Royalty payment to FG
According to NEITI, the materiality threshold for 2007-2011 was one million naira and data from the agency showed that in 2007, total royalty earned was N340.3 million from 65 companies. The same number of companies made a payment of N446.6 million as royalties to the federal government in 2008 and N499.2 million in 2009.
In 2011, N572.4 million was earned in royalties from 66 companies.
A total of 69 reporting companies out of the 720 companies that paid royalties in 2018 met the materiality threshold of ₦3 million royalty set for the report.
Many troubles of the mining sector
The Nigerian mining sector is bedevilled by a number of problems, chief among which are shady practices that have been identified by various stakeholders and in previous NEITI audit reports. An analysis by Premium Times in January revealed that the Nigerian government might have lost about N4 billion in three years, owing to illegal practices and corrupt activities of companies operating in the sector.
The many schemes through which these companies have defrauded the government include non-remittance of revenues, unlicensed mining and evasion of taxes, illegal practices, and incessant smuggling of solid minerals out of the country.
Illegal mining scourge
Most of the mining in Nigeria is carried out illegally. Indeed, the gold deposits in Zamfara State and the tantalite deposits in Kogi State are largely being mined illegally by a ‘cartel’ that mines and carts away the minerals in collaboration with ignorant and vulnerable members of the host communities.
Beyond Zamfara, active illegal mining is going on in Osun, Oyo, Kogi, Jigawa, Plateau, Kwara and Nasarawa States today.
The December investigation showed that when the federal government ordered a stop to illegal mining in the north-west state of Zamfara in April 2019, most of the non-licenced miners simply moved about 700 kilometres southwest and relocated to Ilesha, Osun State to continue their illegal business.
Illegal miners were still operating, joined in the illegal business by foreigners, especially Chinese nationals.
On Sunday, the Osun government announced the arrest of 17 Chinese men and some Nigerians including a traditional ruler for illegal mining.
Illegal mining in Osun state is not new. However, the influx of new entrants, including the Chinese, has taken the dangerous mining activities to the level of endangering the environment. Their activities are aided by corrupt local chiefs and the police who capitalise on regulatory failures..
Slack federal control and leakages
Section 44 (3) of the Nigerian Minerals and Mining Law of 1999 vests the ownership and control of all minerals in Nigeria in the federal government, which is mandated to manage such natural resources in a manner as may be prescribed by the National Assembly.
The Ministry of Mines and Steel Development is responsible for granting licences to operators. Any operator without a licence from the ministry is deemed to be carrying out illegal activities. However, there continues to be questions as to how well the ministry has fared in issuance of licenses and its ability to curtail illegal mining activities.
A policy expert, Patrick Okigbo, attributed the lack of strict measures to curb illegal mining to the way Nigeria is managed on all fronts. He said the reason why the solid minerals sector has not been able to earn Nigeria much revenue was because of too many leakages.
“The sector is dominated by artisanal miners, people who with no licenses from government, with no government involvement, go into the various areas, pay off the local leaders and they have access to mine the resources and they take the resources out of the country without paying any royalties, without paying government any taxes, without the government getting a share of natural resources.
“So if you go to a state like Nasarawa, and even Kaduna and so on, we have a lot of artisanal miners who mine all kinds of precious metals. The mines are sold to individuals by the locals, the government does not get much out of it.
“The challenge of the sector is basically the same challenges that we have across the board in all the other sectors where individuals are making money, and it becomes difficult for the government to take control of the sector, especially again when you are working with both the bureaucracy that has more incentives of turning a blind eye, especially if some of the money is signed away into private pockets.
“But I think what is going to happen now is, with oil out of the door or maybe heading out of the door, the government will have no other choice but to do the heavy lifting required to fix the sector and ensure that it gets the royalties.
“Is it going to be easy? No. But I think if we realise that our backs are against the wall, then it forces us to do the needful, it forces us to go in there no matter what the challenges are, resolve these challenges and then we move,” Mr Okigbo told PREMIUM TIMES.The Nigeria Investment Promotion Commission (NIPC) in a report estimated that the current commercial value of seven of the country’s solid minerals [Iron ore, Coal, Lead/Zinc, Bitumen, Gold, Limestone and Barite] runs into trillions of dollars. Indeed, Nigeria’s Ministry of Mines and Steel Development claims that the country loses about $40 billion annually in unexploited gold alone [168.29 per cent of Nigeria’s 2017 budget of N7.28 trillion budget; higher than oil revenue in 2015 ($37billion), and far higher than the 2016 oil revenue of $26billion.]
Potentials of Nigeria’s solid minerals sector
Though Nigeria’s economy is highly dependent on oil as the main source of revenue, the country has over 50 natural resources deposited in commercial quantity across its 36 states and the Federal Capital Territory. These resources include limestone, gold, coal, gypsum, kaolin, sapphire, granite, copper, iron ore, sand, clay, laterite, and bitumen.
According to a report, the natural resources sector of Nigeria loses N50 trillion annually to untapped resources.
The Nigeria Investment Promotion Commission (NIPC) in a report estimated that the current commercial value of seven of the country’s solid minerals [Iron ore, Coal, Lead/Zinc, Bitumen, Gold, Limestone and Barite] runs into trillions of dollars. Indeed, Nigeria’s Ministry of Mines and Steel Development claims that the country loses about $40 billion annually in unexploited gold alone [168.29 per cent of Nigeria’s 2017 budget of N7.28 trillion budget; higher than oil revenue in 2015 ($37billion), and far higher than the 2016 oil revenue of $26billion.]
Kabiru Mohammed, the President of Miners Association of Nigeria (MAN), in an interview said solid mineral can help the government in diversifying the economy. He lamented that the federal government did not appear to realise the huge potential in the sector.
How best to improve royalty operations
In previous years, NEITI had called for a comprehensive action plan to shift attention from oil to the development of the solid minerals sector in the face of dwindling oil revenue. Experts also argued that the current royalty collection regime can be improved upon.
Mr Mohammed of MAN said “the methodology of royalty collection has not been a very effective one, and that is why recently the current minister of mines and steel development put up a committee where we can look into the way the royalty is being collected and then come up with an improved way of doing the collection.
“Definitely, there should be adequate revenue for the government. The only thing that we want is that the royalty being paid should be commensurate to reasonable adjustment in the response of the government to our feelings and yearnings.
“The package is being put into a single structure which then I believe the minister will now recommend to the federal government for possible approval. Then, based on the committee’s assessment and agreement, it will now be placed into the arena of the mining circle where each and every mineral will now be attracting rent as deemed fit.”
Mr Mohammed said to stop miners evading royalty payment, the method of collection of royalty should be fine-tuned.