Experts make case for solid mineral policy

22 January 2015, Abuja – The solid minerals sector is acknowledged as a viable alternative to oil & gas sector for foreign exchange earnings. The commercial value of the nation’s solid minerals is estimated to run into trillions of dollars annually, with 70 per cent of it said to be buried in the bowels of Northern Nigeria alone.

Solid minerals

Solid minerals

The Minister of Solid Minerals Development, Dr. Kayode Fayemi, admitted this much during his first meeting with media practitioners when he said the solid minerals sector, when properly structured, has the capacity to provide no fewer than a million direct jobs and contribute as much as the oil and gas sector into the national economy.

According to recent report by the National Bureau of Statistics (NBS), the contribution of the solid minerals sector to the Nigerian economy, which stood at one per cent as at 2014, has the potential to increase to 10 per cent by 2020.  The report further stated that the sector is capable of creating millions of direct and indirect jobs.

The NBS report stated specifically that 44 solid minerals are found in commercial quantity and are spread across the 36 States and the Federal Capital Territory (FCT), Abuja. Out of these, seven strategic solid minerals are currently prioritized and promoted for private sector participation and investment by the Federal Government. They are gold, coal, bitumen, limestone, iron ore, lead/zinc and barytes.

To fully exploit the immense potential in the sector, experts say there is need for a solid minerals policy to ensure an orderly development of the country’s mineral resources. Such policy, they noted, would among others, provide clear rules for predictable behavior by the authorities, and a clearly prescribed pattern of developments with roles of the different actors clearly defined.

Before now, previous administrat-ions had made it a priority to encourage investors to venture into the solid minerals sector in order to diversify the economy. This led to the introduction of the Nigerian Minerals and Mining Regulation 2011 to streamline procedures for granting licenses to investors (both local and foreign) and guarantee access to mining sites with minimal encumbrances.

The regulation provided for the right to search for, or exploit minerals in Nigeria, and is obtained through any of the following mining titles: Reconnaissance Permit, Exploration License, Small Scale Mining License, Mining License, Quarrying License, and Water Policy.

The legislation guarantees among other things, security of tenure through mining lease, transparent procedures for granting access to mining titles on a first come first serve basis by Federal Ministry of Solid Mineral Development.

Others are a pledge to give internationally competitive mining incent-ives and also provide comprehensive geo-science data of mineral deposits and their locations in Nigeria.

A comprehensive package of incentives have also been put in place to create a favourable environment for investment, some of which are deferred royalty payments, capital allowances of up to 95 per cent of qualifying capital expenditure, exemption from customs and import duties for plant, machinery and equipment for mining operations.

In addition to three to five years’ tax holiday as applicable; and tax concessions, possible capitalisation of expenditure on exploration and surveys, there is expatriate quota and resident permit in respect of the approved expatriate personnel and personal remittance quota for expatriate personnel, free from any tax imposed by any enactment for the transfer of external currency out of Nigeria.

In addition to the above fiscal incentives, the Nigeria Investment Promotion Council (NIPC) Act 16 of 1995 allows for 100 per cent ownership of investment, while the Foreign Exchange Miscellaneous Act 17 of 1995, guarantees 100 per cent repatriation of capital, profit and dividends through authorised means.

Apart from the seven strategic solid minerals that have been prioritized and promoted for private sector participation and investment by the Federal Government, other solid minerals that are found in commercial quantity, making Nigeria haven for investment, include rock salt, gypsum (an important input for the production of cement), gemstones, kaolin, and tantalite.

Experts speak

Experts have advised on the need to have added value to the numerous minerals in the country. They noted that most of the minerals are sold in raw form without any value addition, depriving the nation of the much needed foreign exchange. They argue that to derive more revenue from the products and create more employment opportunities, there has to be value addition.

The Kaduna Chamber of Commerce, Industry, Mines and Agriculture (KADCCIMA) declared that the solid minerals sector has greater capacity to generate revenue than oil Its President, Dr. Abdul Bello, said Nigeria has large solid mineral deposits in most of the 36 states of the federation. He, however, lamented that the sector had been largely neglected in the wake of the oil boom.

Dr. Bello said in view of declining revenue from oil, government now has no option than to diversify the economy by focusing on the solid minerals sector.

KADCCIMA Second Deputy President, Hajiya Muheeba Dankaka, agrees with him. She said the reduction in global crude oil prices is not expected to cease, at least in the short run. While noting that this has necessitated the need to diversify the economy, she said one key sector that offers great potential in achieving this is the solid minerals sector.

Dankaka and other stakeholders however, pointed out that an industry such as the solid minerals sector that has the potential to be a major cash cow unfortunately lacks adequate regulation and a proper structure.

They asked government to address the lack of synergy between state Ministries of Mines and the Federal Ministry of Mines and Steel and to create a relationship between mining host communities and the ministry.

They canvassed the removal of mining from the Federal exclusive list to allow states regulate mining activities in their domain.

They also  asked that strict adherence to laws guiding environmental pollution and degradation in mining communities should be instituted while ensuring that Environmental Impact Assessment (EIA) is carried out before mining licenses are given to artisanal miners. Government’s efforts

Dr. Fayemi said the main focus of his ministry is to reposition mining activities in the country and ensure that the sector contributes immensely to economic growth within a decade.

He said opportunities abound in the solid minerals sector to actualise the current administration’s vision of using the sector to diversify the economy and create jobs.

According to the minister, any current holder of mining licence who failed to use it would forfeit such from March when the ministry would start enforcing the ‘use it or lose it’ doctrine as enshrined in the Nigerian Minerals and Mining Act.

While unveiling the roadmap, which the ministry intends to achieve in the short, medium and long term, the Minister pointed out that the country’s solid minerals sector currently makes up about 0.34 per cent of gross domestic product (GDP), which translates to about N400 billion in value to the economy.

Dr. Fayemi, a former Governor of Ekiti State, said: “While this is a significant role, it is smaller than the true potentials of the sector. In fact, what has been happening is that the sector has been operating sharply below capacity, with many mining operations manned by small scale miners as opposed to large scale players.”

He, however, said when properly structured, the sector has the capacity to provide no fewer than a million direct jobs and contribute as much as the oil and gas sector into the national economy.

Although the minister noted the global decline in prices of mining products, he said the good news is that Nigeria has a great deal of domestic demand for industrial minerals and metal. “So we will focus on working with other Ministries, Department and Agencies (MDAs) to ensure the demand is met by Nigerian miners and processors,” he added.

To achieve the ministry’s set goals, Fayemi said certain steps would be taken in the short term, including undertaking an external audit of revenue receipts in the solid minerals sector for the past years.

He said the ministry would focus on jobs creation, block all leakages to shore up its revenue generation; build an industry that would support the country’s industrialisation and become sustainable, transparent and environmental friendly.

“We also want to build an industry that integrates states, communities and existing miners into mining ecosystem. If we deliver on this vision, then we can build a mining sector that Nigerians can be proud of in 30 years or more from now. This sector should deliver double digit growth over the next decade with important direct and indirect economic impacts on households,” he stated.

The Minister also said the ministry would enter into strategic partnership with the banks to develop interest in the sector and assist investors as well as the National Assembly for legislation and other ministries, National Security Adviser (NSA) and the Nigerian Custom Service (NCS) among others.

 

 

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