Menu Style

Cpanel

19September2017

Like with agriculture, the focus on the development of the solid mineral sector wanes upon the discovery of oil


Prior to the advent of oil and the subsequent affliction of Dutch Disease of mono-product dependence by Nigeria, solid minerals sector was one of Nigeria’s key sectors, contributing quite significantly to the economy. Until the 1960s, coal and tin were mined in places like Jos and exported on a large scale. Poor management by state-owned enterprises however led to a decline in existing operations. Today, the solid mineral sector contributes less than 0.5% to national output, from a peak of about 2.7% in the 1970s.

Major solid minerals that Nigeria has in commercial quantities include Talc, Gypsum, Iron Ore, Bitumen, and Coal. The geological map of the country developed between 2003 and 2007 identified specific areas and location across the country where these minerals are concentrated in commercial quantities. The activities in many of them including Gold have however been largely artisanal and crude. The principal legislation regulating mining activities in Nigeria is the Nigerian Minerals and Mining Act, 2007 as amended. The sector is one of the most under-reported in Nigeria despite the huge potential for supportive economic activities locally and exports.

Expectedly, public sector dominance of the solid mineral sector portends its greatest challenges

The primary challenges to the growth of the solid minerals sector include the unwieldy public dominance of the sector backed by the erstwhile Solid Mineral Act that rendered mining activities the exclusive purview of government and private ventures illegal. In addition, given that modernised commercial mining activities require huge investment outlays, the sector has remained unattractive in the light of the unclear regulatory environment. In effect, activities have been dominated by artisans employing crude methods and illegal small scale operators. Hence, there remains a dearth of mining and solid mineral exploration skills in the country.

The President Obasanjo Administration committed N2 billion toward a solid minerals deposit survey. The survey was an integral component of a 7-year action plan as enunciated in a Presidential Committee Report on Solid Minerals Development submitted to the government in 2002. The survey aimed to assess the commercial viability or otherwise of proven deposits. It also formed a major plank in the formulation of the new national Solid Minerals Development policy which aims to push accelerated and orderly exploration and exploitation of the country’s known deposits through private sector leadership. Currently, about 56% of the Nigerian land mass including the Niger Delta has been covered by high resolution airborne magnetic and radiometric surveys under this project. The British Geological Survey (BGS) has also assisted Nigeria in the geochemical survey of some parts of Nigeria.

In 2007, the government also set in motion the Sustainable Management of Mineral Resources Project in partnership with the World Bank. The project led to the development of a new legal and regulatory framework- the Mineral and Mining Act 2007, which legally refocused the solid mineral industry for private sector investment. The efficient and transparent grant and management of mining titles in line with international best practices also evolved supported by public sector expertise and infrastructure. This includes the Geological Information Gathering (GIG) for investment and national planning infrastructure. A structure benefitting the mining communities was also put in place, in addition to the introduction of the import substitution policy for selected solid minerals to protect investments in these areas.

But government needs only to provide an enabling environment including necessary infrastructure to attract private investment to the sector

The government reforms and policy thrust thus far appear appropriate, at least theoretically. But, there is still more to be done by the government to attract foreign and private direct investment into the sector. Considering that the average size of investment required in the sector is huge, all elements of risk must be duly addressed by the government and incentives provided where necessary. The dearth of infrastructure especially transportation and power may discourage private investment in the sector. It is imperative that there is suitable road and rail transportation to the hinterlands where substantial deposits of these minerals are located.

Other incentives such as taxes and import protection would also provide additional support for private investment.

Connect

Newsletter