A Review of the Nigerian Energy Industry

Illegal mining reduces Nigeria’s take from mineral resources

Oscarline Onwuemenyi

02 August 2012, Sweetcrude, Abuja – Nigeria is a nation rich in natural resources – both in solid minerals and hydrocarbons: with large reserves of natural gas, petroleum, tin, iron ore, coal, gold, limestone, niobium, lead and zinc. Until the Federal government’s recent promotion drive for foreign investment in its solid mineral sector, the nation derives most of its income from exports of oil and gas resources.

But government’s efforts to increase the GDP through the mining and minerals sector, however, may be seriously undermined by factors including inadequate technology, non-transparency and ineffective regulations guiding activities in the sector. Perhaps, most damaging to the mission to reform the sector is the activity of illegal miners, who are often described as informal or artisanal miners. The challenge posed by activities of illegal miners has remained intractable in spite of the administration’s efforts to streamline their ‘operations’ by encouraging the formation of co-operatives.

In different remote locations in the country could be found this ‘miners’ engaged in one form of mining activity or the other often in collaboration with ‘briefcase investors’ who act as middlemen between the ‘miners’ and the end buyers of the products, which are mostly precious jewels like gold, tourmalines, topaz, sapphire, emerald, amethysts, and others found in different parts of the country. Poor regulation of activities by this category of miners – which number in hundreds of thousands – have effectively ensured that government’s stake in the exploitation of these natural resources is sidelined, and government revenue through taxation and royalties are denied.

Thus, at a recent workshop on the mining regulations in Abuja, many stakeholders expressed amazement that after more than a hundred years of minerals and metal exploitation in several parts of the country, there are no effective regulations or laws to protect the exploitation of minerals which has led to loss of billions in revenue that should have accrued to the Federal government, even as the environment suffers degradation.

A mining expert and Chief Executive Director of Rapids Mineral Resources, Mr. Ben Richards, notes that, “Minerals and metals exploitation is a massive industry, that brings in billions of dollars in revenue for many countries of the world, including Canada, Australia, and even South Africa, where they have effective regulations to guide people’s involvement in the industry. Nigeria is yet to enjoy the huge patronage that its metals and minerals sector deserves because of poor and ineffective regulations.”

He points out that despite efforts in the past few years to streamline mining activities in the country, a lot of things are still in a state of disorderliness, which has not helped the appropriation of revenue from these natural resources for the benefit of the country. “A lot of illegal and informal mining is still carried out in different parts of the country, and government has not acted aggressively to challenge this form of mining activity in the country,” he added.

According to him, “the growth of illegal mining, especially in many parts of the North, has gone unchecked. Government has coddled these activities and has sought to re-brand them as informal or artisanal mining, but highly unregulated nature of their operations has not bode well for the collective economy nor for the environment. A case in mind is the outbreak of lead poisoning in some communities in Zamfara state, which is primarily an outcome of unsafe and illegal mining practices adopted by wholly illegal miners in the areas.”

According to Richards, the Zamfara incident, as well as many other unreported mining disasters across the country, could have been avoided if mining in the country was done by ‘professionals’ and corporations.

“The irony of this situation is that villagers in the Niger Delta who go out of their way to steal oil or refine crude, are called thieves and bunkerers, but this is the same exact activity going on with solid minerals and precious stones in several parts of the North that government has turned blind eye to.”

Stakeholders further bemoaned the widespread distortions in the mining rules as it concerns the exploitation of metals and minerals in many parts of the country. Presently, what obtains is a state of dysfunction and disorderliness, whereby any villager could walk into a ‘field’ and start digging up the ground in search of minerals and precious stones.

This highly unregulated system has given room for illegal exploitation of these resources by even foreigners, including the Chinese, who take advantage of the porous regulations.

Many stakeholders are demanding the establishment of a National body or organization in the mold of the Nigerian National Petroleum Corporation, NNPC, to ensure that government’s interest is protected and promoted, especially with regards to the revenue that accrues from the mining of solid minerals.

Besides the loss of billions in revenue to activities of illegal miners in different parts of the country, the financial and environmental impacts of illegal mining in the country have reached an alarming level and demands crucial intervention by the government if the returns from mineral resources can be maximised.

Illegal mining, like oil theft, siphons off the main source of the Nigerian economy for private gain before taxation or crediting to the national account. Various experts have estimated billions of dollars in lost revenue to the Nigerian treasury every year. Individuals benefitting from the exploitation and sale of illegally mined minerals do not necessarily re-invest in mineral exploration or production.

While some of the revenues may filter down to inhabitants by way of pay-offs, the bulk of earnings are diverted outside the country into the international bank accounts of the beneficiaries.

Causing environmental damage
Meanwhile, unregulated mining activities across the country have caused some of the greatest environmental damage to the environment, according to environmental activists. Vast mining areas of the the country have become saturated dangerous chemicals and other poisonous materials. Alternative jobs, however, have not been created for the largely unskilled and poorly educated residents of the impacted areas.

The negative environmental impacts of mining are often touted as the greatest impediment to growth in host communities. Acid drainages, acid rain from flares, polluted water sources; drilling induced erosion and mine holes among others, affect arable farmlands, destroy fishing habitats, pollute potable waters, leaving citizens of impaired communities with impaired livelihoods, health challenges and little or no improvement to their socio-economic environment.

According to the Country Director of Global Rights in Nigerian, Abiodun Baiyewu explains that, “The implication of this is many folds. Because these people carry out their activities in the most unprofessional manner, they have caused huge environmental pollution in the areas they operate. We had a major incidence in Zamfara state, which we are still coping with; but with what we are seeing today due to the activities of these illegal miners, the situation may be twice the destruction of environment in Zamfara and oil producing parts of the country.

“These people move into very remote locations to drill holes in the ground, and many of them use all sorts of explosives to blast through rocks, of course without a license from the regulatory authority. They go in and take what they want and leave the environment oozing with polluted chemicals often from their rustic processing of the materials.

It is similar to activities of those that engage in illegal refining, because of the crude method that they use, they just take crude oil put it in a drum and boil; whatever boils off it is what they take, which often times is less than 25 percent of the entire product. The remaining 75 percent they don’t need they dispose into the environment, causing huge environmental problems for us.”

Baiyewu explains that giving results of research that showed that some of the chemical waste can stay on the ground for decades, the waste from illegal mining activities can last for generations before the land could be recovered for productive activities. “These people are looking for quick money, but they are causing damage that may last for generations. So, we need the support of the government in tackling this menace of illegal mining in parts of the country,” she noted.

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  • Nigeria’s ineffectual leadership is contented to retain the status quo ante which thrives on rent seeking – provided what comes to the centre for sharing is not radically threatened, the leadership feels okay carrying on business as usual.