Saturday, 9 January 2016


Dr. Kayode Fayemi, Minister of Solid Mineral Development
Since­ 2011, continued fall in the price of oil and natural gas, and, more recently other minerals, are threatening to turn tailwinds into headwinds for many extractive sectors in Nigeria and other African countries.

According to the Executive Secretary of the United Nations Economic Commission for Africa (UNECA), Carlos Lopes, declining demand in major emerging economies coupled with continuous fragility in developed economies, as well as volatility in the currency and shrinking confidence all call for a reality check.

From Nigeria to Angola, South Africa and Zambia, the decline in commodity prices is deflating growth and the ripple effect is affecting the reality of lives on the ground, thus necessitating the need to explore alternatives through the mining sector.

Already, to aid the realisation of African Mining Vision (AMV), especially in the Economic Community of West Africa States (ECOWAS) region, the United Nations Economic Commission for Africa (UNECA) has mulled plans to harmonise policies in the sub-region to aid the management of mines and natural resources.

The Africa Mining Vision is Africa’s own response to tackling the paradox of great mineral wealth existing side by side with pervasive poverty. It focuses on integrating mining much better into development policies at local, national and regional levels; that means thinking about how mining can contribute better to local development by making sure workers and communities see real benefits from large-scale industrial mining and that their environment is protected.

It also means making sure that nations are able to negotiate contracts with mining multinationals that generate fair resource rents and stipulate local inputs for operations. And at regional level, it means integrating mining into industrial and trade policy.

According to stakeholders, Nigeria is endowed with huge solid mineral deposits, with about 34 products identified in commercial quantities in different parts of the country.

The US Geological society ranks Africa as the largest or second-largest reserve of bauxite, cobalt, industrial diamonds, manganese, phosphate rock, platinum group metals and zirconium. The products produced from these minerals are found in everyday life such as plastics, tiles, steels used in construction among others.

However, the failure of Nigeria, since independence in 1960, to put in place a structure that will make the benefits of the exploitation available to all Nigerians has been the bane of the country.

A study by the Word Bank on the shortcomings of African territories in the eyes of miners revealed a need for infrastructure, stable legal systems, a predictable fiscal regime, profit repatriation guarantees, and
access to foreign exchange.

“The low activity in the solid mineral sector is not yielding the desired financial revenues as there are scanty records of payment of taxes and royalty to the government. Nigeria is losing lots of resources from the untapped mineral deposit as well as from the little that is being mined mostly by illegal miners who smuggle the products out of the country”, says the Managing Director of the Nigerian Export-Import Bank (NEXIM Bank), Roberts Orya.

Orya indicated that Nigeria could make the exploitation of solid minerals the mainstay of the economy. He queried how the country could be earning paltry revenue and dividends
with all the huge solid mineral reserves while in South Africa, the mining industry remains a cornerstone of the economy; making a significant contribution to economic activity (accounts for about 18 per cent of GDP – 8.6 per cent direct, 10 per cent indirect and induced), job creation (one million jobs – 500 000 direct and 500 000 indirect); and foreign exchange earnings creates (more than 50 per cent of all foreign exchange earnings).

Using the Australian perspective as a reference point for Nigeria, Australian High Commissioner to Nigeria, Jon Richardson explained that a well-managed minerals sector could increase revenue flows; improve employment, income and enterprise opportunities; and foster other industries.

With the decline in global oil prices, he noted that Nigeria needs to embrace the African Mining vision and encourage a transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development.
Richardson noted that his country is willing to partner with Nigeria by sharing its expertise and collaborating with the government in aiding the development of the nation’s mining sector.

He said: “Investment will go to where the return is the best and minerals will go into the same global market at the same price. Science and technology need to be applied in geology, processing, engineering, automation, logistics as mining has gone beyond digging up dirt even as there is emphasis on sustainability effects of mining. Investors also want a conducive environment before accessing a market. Nigeria needs to address that.”

On his part, Director-General, Nigerian Geological Survey Agency (NGSA), Alex Nwegbu explained that good investment for explorations will be a key to incentivising mineral investment that will return many folds in the form of improved economic growth.

He added that the ultimate goal for the country is to grow and sustain the economy by consuming mineral resources and not by exporting them. Similarly, Director-General, Nigeria Mining Cadastre Office, Mohammed Amate, while speaking on the nation’s mining licensing process stated that the system has so far improved tremendously the speed with which mineral titles are processed and granted, adding that a transparent, efficient and independent mineral title administration is considered key to attracting and maintaining mining investments in the country.

“The Mining Cadastre Office will thus strive to ensure the continuous administration of Nigeria’s mineral titles using the principles of “first come, first served” and “use it, or lose it”, he emphasised.

Although Chinese demand for African commodities and investments continues to grow largely due to the Chinese attitude of limited political interference as well as value-added investments associated with mining projects, the question remains if Nigeria and other African countries will continue to wait for other countries to exploit their resources when such can be used to hasten development and growth?

“Awakened by the commodities super cycle downfall, time is right for Africa to accelerate its commodity-based industrialisation, as promoted by the Economic Commission for Africa. It promotes an industrialisation policy that leverages the continent’s abundant resources and changing organisation of global production process. This entails adding value to commodities, improving its backward integration, and expanding global value chain linkages to other areas of the economy.

“Apart from providing employment, income, price and non-price benefits, African countries, by adding value to their raw materials locally, could also bring about diversification of technological capabilities, an expanded skills base, and deepening of individual countries’ industrial structures”,
Lopes added. (Source: Guardian)