30 November 2014, Abuja – As at 1940 when organised solid minerals mining in Nigeria gained global credit with the mineral survey of the Northern protectorates in 1903 by the British colonial government and a year later of the Southern protectorates, the country had by that time become a major producer of such valuable solid minerals like tin, columbite and coal.
Coal production for instance was reported to have peaked up to about 565,681 tons before the turn of the civil war in 1967 to suggest that the country’s solid minerals industry was until the discovery of crude oil in 1956 thriving and impacting well enough on her Gross Domestic Product (GDP) ratio.
Notwithstanding such very healthy contribution to the national economy, Nigeria’s swift focus on crude oil, her new-found resource, did not just hurt the solid mineral extraction industries of the country but further ensured that the contributions it made continued to dwindle until they came close to nothing in the long run.
And in a rather unfortunate account of the dwindling fortunes of Nigeria’s solid mineral industry, the National Bureau of Statistics (NBS) stated that the solid minerals sector had in 2012 contributed less than one per cent to Nigeria’s GDP calculations; this was against its erstwhile 10 per cent contribution to the GDP prior to crude oil exploration in the 1960s.
The NBS statistical analysis also showed that while South Africa relied on its solid minerals sector to contribute as much as nine per cent to her 2011 GDP, it equally created about one million jobs from the sector in the form of 500,000 direct and 500,000 indirect jobs within that timeframe. In addition, up to 50 per cent earnings in foreign exchange was gleaned by South Africa within the considered period and another 20 per cent of direct and indirect investments in the solid minerals sector was also recorded by the country.
South Africa from indications may not command the measure of solid mineral deposits that Nigeria has, yet it gains good value from what it has. Nigeria on the other hand with its over 40 million tonnes deposits of talc in Niger, Osun, Kogi, Ogun and Kaduna States; one billion tonnes of gypsum deposits spread over many states; three billion metric tonnes of iron ore deposits in Kogi, Enugu and Niger States as well as an estimated 15 million tonnes of lead/zinc deposits spread over eight states appears to still jitter at any slight drop in global crude oil price.
Also, with over 600 million tonnes of proven reserves in coal; 700 million tonnes of baryte; 42 billion tonnes of bitumen; 1.5 million tonnes of rock salt deposits; an estimated reserve of three billion tonnes of good kaolinitic clay and proven reserves of both alluvial and primary gold in the schist belt of the country’s South-western region, Nigeria has yet to find a way to overcome the economic challenges often tied with every tumble in global oil price. Like a twist of fate, Nigeria’s socio-political fortunes have remained inextricably tied to the whims and caprices of crude oil prices with attendant consequences that are often unsavoury.
As expected, recent downward trend in global oil price has as usual further opened up Nigeria to the pains of her absolute reliance on crude oil. Just ahead of the 166th General Meeting of the Organisation of Petroleum Exporting Countries (OPEC) in Vienna Austria, the International Energy Agency (IEA) had in a rather cautious analysis stated that weak crude oil demands, a strong dollar and booming oil production in the United States could mean that a new chapter in the history of the oil markets is beginning to turn up.
IEA further noted that this new development in oil markets could affect the social stability of some countries whose major economic mainstay is crude oil produced and exported to global market spots. No doubt, oil prices have declined by around 30 per cent since peaking in June 2014. Brent crude, which serves as the major benchmark price for purchases of oil worldwide has also crashed considerably below $80 in early November.
Indeed, the heat from falling crude oil price has been made harsher by the growing oil production and supplies capacity of the US which traditionally was until recently the major destination for Nigeria’s crude oil but IEA’s warning cannot be said to be new, especially in the light of earlier warnings by the Nigerian Export Import (NEXIM) Bank on the need for diversification of the country’s revenue sources.
An Earlier Call for a Game Changer
Instructively, NEXIM had before the recent global oil price crash, underpinned the need for Nigeria to as a matter of urgency take up the development of her non-oil sector, including the solid minerals industry which has the potentials to give her some level of sound reprieve in times of such unhealthy gale in commodity prices.
As early as 2011, the Managing Director of NEXIM Bank, Mr. Roberts Orya, prophetically sounded at a press briefing: “Crude oil was a depleting asset…that a time shall come when Nigeria’s oil would either dry up, or there would be crude oil in abundance but there would be no market for it because a lot of African countries were beginning to strike oil reserves as well.” Subsequently, in 2012, Orya in a meeting with the Miners’ Association of Nigeria (MAN) in Abuja, disclosed that the bank was deliberating with MAN on a strategic framework that will allow it take advantage of the wealth creation potential in the solid minerals sector.
Orya explained that standard partnership structure that could attract sustainable investments to the solid minerals sector was being developed by both partners and NEXIM, in its strategic initiative and market focus, considers the solid minerals sector as cardinal in Nigeria’s trajectory to sustained economic development.
He also noted that the bank under its manufacturing, agriculture, solid minerals and services (MASS) plan to increase the efficiency of the non-oil sectors, has committed more than N2.5 billion or approximately nine per cent of its total funding portfolio to the solid minerals sector since 2009. Current key performance indicators however posits that NEXIM Bank has financed projects in the solid minerals sector worth N6,233,078,147.17 billion, representing six per cent of its total funding portfolio for Nigeria’s non-oil sectors.
While this is limited to the funding requirements of the solid minerals sector, it is however worthy to note that the intervention of NEXIM Bank to help the sector regain its status in Nigeria’s economic matrix is already a pathway that should be embraced by Nigeria in opening up the sector for greater yields in advantages and benefits that could be gleaned from it.
Statistics from the Mining Cadastral Office and Nigerian Geological Survey Agency has after all explained that Nigeria could deliberately plan an economic life outside of crude oil with more than 33 commercially viable mix of solid minerals deposit across her length and breath.
“Solid minerals mining is a high capital intensive area and requires strong government intervention to unlock its huge revenue and job creation benefits for the country,” Orya had explained when he called for proper remodeling of the operational structure in the mining sector to increase funding and attract investment capital that could add up to move the sector forward from its current state.
Time to Change the Solid Minerals Conversation
Because of the advent of the Minerals and Mining Act 1999 to provide robust legislative framework for Nigeria’s solid minerals sector, specialised financial institutions like NEXIM Bank have found it quite comfortable funding solid minerals mining operations in the country.
“NEXIM Bank’s intervention in the solid mineral sector is structured as is the case with other three sectors of focus. We combine funding with capacity-building. We engage stakeholders to identify obstacles to the growth of the solid mineral sector. And we look at efficient ways to remove the barriers,” Orya said on the bank’s policy thrust in the sector.
He further noted: “Once we have the initial local private investment in place, with government approval, I am pretty confident that foreign capital will follow. Like the oil and gas sector, we can attract global companies to come here and invest in the solid mineral sector.”
Incidentally, the NBS in one of its review of the economic potentials in the country’s solid minerals sector, noted that when the necessary infrastructure is put in place and abandoned mines are reactivated and modernised, Nigeria’s coal export can yield her about $1 billion per annum in revenue.
The NBS also noted that such revenue projection has remained viable because of the high demand for Nigerian coal, which low sulphur and moderate ash content makes it one of the most sort after in the global coal market.
An active solid minerals sector in Nigeria will, in addition to guaranteeing internal and external revenue from exports and use in domestic industries, also see to the emergence of new industrial activities, increased employment, sustainable technology transfer as well as rapid infrastructure development across board.
While Nigeria considers her next plausible economic move in times like now when oil price continue to impact heavily on her balance sheet, it will not be out of place to ask that the conversation on her solid minerals sector be changed.
Far-reaching interventions in the shape of what NEXIM Bank is doing in the solid minerals sector can as well be taken up at different levels of engagement and sustained for the country’s non-oil sector to eventually become a genuine alternative in her revenue generation and national development. If considered, Nigeria with her solid minerals abundance might as well be on the path to building her economic future with minimal reliance on crude oil.
– Chineme Okafor, This Day