Nigeria is no doubt is large crude producer and exporter. But it will surprise you to know that the country has one of the highest concentrations of different verities of solid minerals in Africa. Well, most of the solid minerals in Nigeria has remained largely under-exploited, due to the over-reliance on crude oil for revenue by previous governments in Nigeria. Having seen the huge opportunities in the sector, the Goodluck Jonathan administration made some efforts to institute a new economic framework that should open up the solid mineral sector to help create alternative sources of generating revenue for the country. But like most similar Nigerian government policies, the efforts ended up in the waste paper basket.
What are Solid Minerals
The Nigerian Extractive Industry and Transparency Initiative (NEITI) defined solid minerals as naturally occurring substances that as the name implies, are solid and inorganic, representable by a chemical formula, usually abiogenic and has an ordered atomic structure.
Owing to the advancement in science and technology, industrialized nations spend billions of dollars annually on the importation of solid minerals for manufacturing purposes. Solid minerals are widely used as important raw materials in the manufacturing of component parts for products like mobile phone, computer systems, Aircraft, Nuclear power generation and other scientific equipment manufacturing.
Where can Solid Minerals be found in Nigeria?
It is worthy to note that Nigeria has superabundant opportunities for entrepreneurs who desire to create wealth in the mining sector. Apart from being one of the largest exporters of crude oil, Nigeria is greatly endowed with nothing less than 30 types of solid minerals and some of them can be found in commercial quantities in over 400 locations in the 36 states of the federation.
Below are some important deposits in Nigeria and where they can be found:
| LOCATION BY STATE | MINERAL DEPOSIT |
| Abia | Clay and Coal. |
| Adamawa | Coal, Gypsum, Magnetite and Clay. |
| Anambra | Kaolin, Coal and Clay. |
| Akwa-Ibom | Kaolin and Clay. |
| Bauchi | Kaolin, Rutile, Clay, Limestone, Columbite, Cassiterite, Fluorite, Wolframite and Gemstones. |
| Bayelsa | Clay. |
| Benue | Barite, Limestone and Clay. |
| Borno | Bentonite and Clay. |
| Cross-River | Barite, Tantalite, Rutile, Limestone, Cassiterite, Lead, Zinc, Columbite and Clay. |
| Delta | Silica Sand and Clay. |
| Ebonyi | Coal, Clay, Limestone, Fluorite, Lead, Silver and Zinc. |
| Edo | Coal, Gypsum, Clay, Limestone, Bitumen and Bentonite. |
| Ekiti | Tantalite, Mica, Kaolin and Clay. |
| Enugu | Coal, Clay and Iron Ore. |
| Federal Capital Territory, Abuja | Feldspar, Gold, Lead, Zinc, Iron Ore, Marble and Clay. |
| Gombe | Coal, Gypsum, Limestone and Clay. |
| Imo | Kaolin, Coal and Clay. |
| Jigawa | Silica Sand and Clay. |
| Kaduna | Rutile, Talc, Feldspar, Gold, Clay, Columbite, Kyanite, Bismuth, Wolframite and Gemstones. |
| kano | Coal, Feldspar, Silver, Casseterite, Wolframite and Clay. |
| Katsina | Kaolin, Gold, Manganese and Clay. |
| Kebbi | Kaolin, Feldspar, Gold, Clay and Manganese. |
| Kogi | Tantalite, Coal, Mica, Talc, Feldspar, Clay, Bentonite, Iron Ore Limestone and Marble. |
| Kwara | Tantalite, Mica, Gold, Columbite, Clay, Cassiterite, Marble and Gemstones. |
| Lagos | Silica Sand, Bitumen and Clay. |
| Nassarawa | Mica, Barite, Clay, Columbite, Cassiterite, Iron Ore, Lithium, Wolframite, Marble and Gemstones. |
| Niger | Talc, Gold, Clay, Lithium, Kyanite, Wolframite and Gemstones. |
Source: NEITI
The list above has clearly shown that Nigeria has one of the highest concentrations of different varieties of solid minerals in Africa. Most of the mineral deposits in Nigeria have remained largely exploited, due to the over-reliance on crude oil for revenue generation by previous governments in Nigeria.
Despite these potentials, the mining sector still largely underdeveloped
According to the NEITI’s occasional paper on Improving Transparency and Governance for Value Optimisation in Nigeria’s Mining Sector, Nigeria is enriched with over 34 commercially viable solid minerals deposits across the country.
From 1903, the country had modest exploration and exploitation with intermittent growth, up to 1960. Tin, columbite, coal, and so on, were the early solid minerals that contributed significantly to Nigeria’s economy but declined due to the oil boom that started in 1970 till date.
The recent return and attention to solid minerals were necessitated mainly by international oil politics, and the need to diversify Nigeria’s economy.
In comparison with other countries with similar potential, Nigeria’s mining sector is still largely underdeveloped. This is despite the sector’s promising performance a few decades ago, and despite huge proven deposits of valuable minerals across the country, the potential of which is comparable to other moderately to highly endowed nations.
Until recently, when there was a slight improvement, the sector’s contribution to Nigeria’s Gross Domestic Product (GDP) was not more than 0.5 per cent. This contribution is a reversal from the historically higher percentages of about 4-5 per cent in the 1960s and ’70s.
Though Nigeria’s economy is highly dependent on oil as the main source of revenue, the country has over 34 natural resources cut across the thirty-six states of the federation and the Federal Capital Territory.
These resources include limestone, gold, coal, gypsum, kaolin, sapphire, granite, copper, iron ore, sand, clay, laterite, bitumen amongst others.
According to a report, the natural resources sector of Nigeria loses N50 trillion annually to untapped resources.
With the obvious challenge of the Nigerian government to meet its financial obligations and achieve its long term economic diversification plan, the long-forgotten minerals and mining sector is now thought to be the new frontier of salvation, with its potential, according to government records, to generate N8 trillion naira annually.
Nigeria’s federal officials estimate that the current commercial value of seven of the country’s solid minerals [iron ore, coal, lead/zinc, bitumen, gold, limestone and barite] run into hundreds of trillions of dollars. Indeed, Nigeria’s office of export promotions claims that the country loses about $40 billion annually in unexploited gold alone (168.29 per cent of Nigeria’s 2017 budget of N7.28 trillion); higher than oil revenue in 2015 ($37billion), and far higher than the 2016 oil revenue of $26 billion.
NEITI in one of its occasional report highlighted how Ebonyi is generating revenue from solid mineral. According to the report, the state government through the creation of the Ministry of Solid Minerals has developed modalities for identification and focusing on mineral corridors to create clusters where facilities can be developed to achieve economies of scale.
Information obtained from the state’s official website revealed that the Ministry has in the short period of its existence achieved the following:-
- Attracting investors to the state.
- Resolution of disputes between the host communities and the investors.
- Sensitization of mining and quarrying operations in the state through radio jingles.
- Inspection visit to mineral deposit sites.
- The Ministry has registered new investors on mineral development.
The current state of the Nigerian Mining Industry
In comparison with other countries with similar potential, Nigeria’s mining sector is still largely underdeveloped. This situation has risen despite the sectors promising performance a few decades ago, and despite the huge proven deposits of valuable minerals across the country, the potential is still low compared to other moderately to highly endowed nations. Until recently, where there has been a slight improvement, the sector’s contribution to Nigeria’s Gross Domestic Product (GDP) had not been more than 0.5%. This contribution is a reversal from the historically higher percentages of about 4-5% in the 1960s and 1970s.
The mining sector is currently picking up from its ailing status. Currently, the mining industry is responsible for about 0.33% of employment, 0.02% of exports, and 0.3% of the country’s GDP. (NEITI Occasional Paper Series, Issue 4. February 2019) This contribution is considerably lower than other African countries like Cote’d-voire, South Africa etc. also taking into consideration, an equally comparable level of actual mineral endowment in these countries.
The Nigerian Minerals and Mining Act is the principal legislation that regulates the mining sector. The Act vests the control, regulation and ownership of all mineral resources in the Federal Government of Nigeria (FGN). The Minerals and Mining Regulations and the National Minerals and Metals Policy also govern the sector. The Ministry of Mines and Steel Development (“MMSD” or “the Ministry”) oversees the mining sector in Nigeria and administers the provisions of the Nigerian Minerals and Mining Act. The Minerals and Mining Regulations specifies the royalties, fees and compensation payable by holders of the mining rights.
The sector faces several challenges including inadequate geosciences data and information, industry participants, poorly understood institutions & limited enforcement of regulations, deepening a business-friendly enabling environment and limited engagement & leverage of industry stakeholders amongst other challenges faced. In addition to these challenges listed, undue interference by communities and state government with expectations outside the provisions of the law/regulations also cripple investments and the development of the mining sector.
The challenge of the existence of multiple regulations is one of the main factors that is reducing investor confidence in the mining sector as the requirement to adhere to these regulations have contributed to a seemingly lack of interest in the industry.
One of the major challenges experienced in the sector particularly by the miners in raising funds is the ability to establish worthy collateral for the intending financiers. The previous government had achieved a 100% aerial geophysical survey of the country, with data existing at the ministry of mines and steel development for the would-be miners. However, this does not provide reliable details of the estimated quantity of the nation’s solid minerals which can only be achieved by more detailed geoscience data gathering (MMSD MinDiver publication, August 2019, Vol 1 No 1). Funding challenges have also been identified as the reason for the inability to embark on detailed geoscience data gathering.
The development of the solid minerals sector is also hampered by the lack of adequate funding to cater for the different stages of the life cycle of a typical mining operation. Before returns can be generated from a mining operation, the activities need to go through the five stages of exploration – development – mining – processing – marketing, a cycle that takes between two to ten years or more. Most mines in Nigeria are typically green fields (in the exploratory phase), thus not necessarily attractive for funding by the traditional commercial banks.
Government Position & Intervention
The mining sector is one of the most promising sectors that can facilitate the diversification efforts of the Government and reposition the Nigerian Economy. To this end, the government is continuously aspiring to diversify the nation’s economy using solid minerals as one of the strategic pillars. This is evident by the improvement in the most critical challenge facing the sector which is poor funding. To demonstrate this, the sum of Naira 30bn was approved as an intervention fund for exploration projects, to generate the needed geosciences data and to provide the necessary regulatory framework to enable sectoral growth (MMSD press briefing, 2019)
Under the soon to be released Mineral Export Guidelines, the lingering issue of evading payment of royalties has been dealt with and all mineral exports are now being inspected by Government-appointed independent pre-shipment inspection agents. Also, to promote and encourage more mineral exporters to go into mining, royalties for mineral trading exporters is set at a reduced rate to between 2.5% and 4.5%.
The N5 billion Nigerian Mineral Development Corporation (NMDC) Fund
Recently the House of Senate has given a nod to a bill seeking to establish an N5 billion worth Nigerian Mineral Development Corporation (NMDC). The Senator representing Nasarawa South, Tanko Al-Makura, stated that NMDC would help diversify the economy and create jobs through the development of Nigeria’s mineral resources. He argued that the solid mineral sector has been identified as next to agriculture with the potential to compete and eventually replace crude oil as a major source of foreign exchange earnings.
According to him, Nigeria is blessed with an abundance of solid minerals but all these resources remain largely untapped and unexplored. Hence, following the establishment of the corporation, initial funding shall be by way of a sovereign guarantee covering the sum of N5 billion only for a successful take-off of the operation including all initial capital and operating expenditure.
It is proposed that the federal government of Nigeria will pay up its 70% equity contribution and the institutional investor shall pay their respective equity participation to the corporation.
However, the subsequent funding of the NMDC is proposed to be through the Nigerian Mineral Development Fund (NMDF).
According to Sani Musa, the senator representing Niger state, the agency would also make international miners confident, because they know that whatever they want to invest will be protected. The agency will also help the nation in generating employment for so many youths and reduce the security risk facing the country, thereby making Nigeria less dependent on oil.
The bill has passed the second reading and has been referred to the Senate committee on solid minerals for further consideration.
One of the non-oil opportunities that exist in Nigeria is the mining sector. The global volatility in the oil sector can only be contained by Nigeria through economic diversification and mining is a major way to go. Nigeria needs to take decisive steps in ensuring the reforms in Nigeria are geared towards improved governance and transparency in the mining sector.
