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As foreign exchange scarcity makes importation of inputs difficult and in some cases impossible, manufacturers say heavy investment is needed in the exploration and beneficiation (processing) stages of solid minerals to enable them get raw materials from local miners.
Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN) said this is the time for Nigeria to provide attractive incentives for global explorators and processors to enable them commercialise and free inputs for local manufacturers that often seek inputs from abroad.
“The solid mineral industry is yearning for exploitation, processing and commercialisation. These minerals can serve multi-sectoral purposes, including basic metal, chemicals, iron and steel, as well as motor vehicle and miscellaneous assembly,” Jacobs said.
Manufacturers need different classes of solid minerals as inputs. Ceramic makers require feldspar, iron, silica, quartz and clay for the production of bricks, pipes, clay pipes, floor and roof tiles, table wares, pottery products, spark plugs, sanitary wares, wall tiles and plates.
BusinessDay gathered that iron and steel companies need iron ore, coke, limestone or burnt lime and gemstones for production of steel pipes, roofing sheets, iron rods, jewellery, and nails, among others.
Cement manufacturers use gypsum, limestone, silica, alumina, among other others, for the production of cement and concrete, while chemical industries require silica brick and frit, among others. Importation of these inputs is becoming costlier for manufacturers, adding between 20 and 30 percent to production costs, manufacturers told BusinessDay.
Aliko Dangote, president of Dangote Group, said last week, that achieving this and many other objectives requires articulation of clear sector specific policies along with incentive packages that are commensurate with the risk inherent in each sector.
Local input sourcing among iron and steel makers rose from 54.2 percent by the end of 2014 to 67.5 percent in 2015. But there was a decline in local input preference among manufacturers in chemicals and pharmaceuticals in 2015. While local input sourcing was 46.3 percent by end of 2014, it was estimated at 41 percent in 2015. Local input sourcing among auto assembly plants was only 24 percent in 2015.
‘’There is lack of significant number of professionals with appropriate skills and expertise in beneficiation in Nigeria. We still lack knowledge of the chemical and mineralogical compositions, physical and mechanical properties of these solid minerals,” said Patrick Eguakhide Oaikhinan, professor of ceramics engineering and chief executive officer (CEO) of Epina Technologies Limited, a firm that advises clients on ceramics value chain.
Manufacturers are in a desperate search for foreign exchange to import inputs, as the price of oil drops and lack of FDI inflows cut dollar supply to Nigeria, which depends on crude oil for 75 percent of revenue and 90 percent of foreign exchange.
The poor structure of the Nigerian economy has sent too many importers seeking dollars to import what is naturally available in the country. But the FX crunch has made importation unattractive.
“The biggest challenge is to create an environment to bring in investments, especially foreign direct investments,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI).
Global miners such as Barrick, Astra, Newsmont and Mitsubishi Materials are avoiding throwing money into Nigeria, as a result of unclear and inconsistent policies, BusinessDay understands.
Also, many of them see Nigeria as an oil nation only, rather than a country with strong solid minerals potential, preferring countries such as South Africa, Democratic Republic of Congo, Ghana, Tanzania and Zimbabwe, known to have developed mining infrastructure.
The implication of this is that there is caution among miners, especially explorators, who would naturally explore and free solid minerals inputs for manufacturers.
“Once you are seen to have certain negative characteristics, nobody will come to your country,” said Ibrahim Garba, an expert in mining and vice chancellor of Ahmadu Bello University, Zaria, at the Kaduna trade fair.
ODINAKA ANUDU
