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Nigeria’s N400 billion mining sector is suboptimal compared to its African counterparts, largely due to the regulatory environment and poor access to funding in the sector, experts and players say.
The Ministry of Mines and Steel Development recently created the Investment Promotion and Mineral Trading (IPMT) department mandating pre-shipment inspection agents (PIAs) to have access to confidential and private trade agreements entered into by mineral exporters and their buyers.
Key players believe this is a breach of the fundamental right to confidentiality and against the spirit of entrepreneurship.
Major stakeholders say that the Ministry of Mines and Steel Development is slow to give approvals and make decisions, citing non-approval of coal fields to interested investors as a case in hand.
One steel firm located in Ogun State told BusinessDay that it applied to take over coal mines in Enugu State two years ago but is yet to make any headway till today, saying that the mines are still lying fallow in Enugu when they could have been put into better use.
Players also cite the ministry’s inability to find an investor for Ajaokuta Steel Company Limited as evidence of sluggishness.
The Federal Government launched a N30 billion mining fund last May and another N5 billion in August managed by the Bank of Industry (BoI) for artisanal and small –scale miners, but players have not been able to access the funds due to the stringent conditions attached to them, which involve presenting liquidity assurances, players say.
They accuse Ebonyi and Lagos of demanding more money from miners and hurting sand miners, thereby frustrating investments made over the years by the players.
“The proposed participation by state governments in the roadmap as investors whilst retaining the environmental regulatory function needs to be reviewed. Global best industry practice holds that no party should serve as operator and regulator simultaneously. Thus, we call for a review of the environmental regulatory framework as presently crafted in the Roadmap,” Babatunde Alatise, chairman of Mining and Solid Minerals Group of the Lagos Chamber of Commerce and Industry (LCCI), said in Lagos on Thursday.
Alatise said the industry lacks bankable data, which is preventing investments, stating that presentation of the data by the Nigerian Geological Survey Agency (NGSA) in readily usable formats by exploration companies is a matter requiring urgent attention.
Nigeria has 44 minerals but 38 of them are in viable deposits in sustainable export quantity, including iron ore, tin, and tantalite. The sector contributes 0.4 percent to GDP.
The country earned N69.2 billion from the solid minerals sector in 2015 and $9.733 million from the export of solid minerals the same year.
Tony Nwakalor, CEO of Sound Core, a player in the mining sector, said as oil prices are close to $70 per barrel today, tantalite is $159 per kilo and Nasarawa, Kwara and Osun have it in minable quantity.
“If you watch what is happening from outside as a foreigner, you won’t put your money in the sector. Local investors are ignored and there are lots of square pegs in round holes directing the policy framework,” Nwakalor said.
Seun Olatunji, president, Association of Metal Exporters of Nigeria, said the policy guideline states that exporters of mineral commodities must beneficiate and/or process all mineral ores before it is eligible for inspection by the Federal Mines Officer (FMO) of the relevant state of origin.
His concern is that the FMOs lack capacity to evaluate (assay, weight and seal) production volume especially in locations with high number of active mines and high production budget.
“Nigeria prefers to provide funds to those that will return it three months after. They do not understand mining because the money can take up to five years,” said Oyewola Owou a geologist.
ODINAKA ANUDU
