Economic diversification: The solid minerals option

No Comments » March 22nd, 2016 posted by // Categories: Nigeriawatch



 

ECONOMIC CONFIDENTIAL

Economic diversification: The solid minerals option

By “> / in Editors PickNews / on Monday, 21 Mar 2016 01:40 PM / 0 Comment / 0 views

Nigeria’s economic history shows that the solid minerals sector was a major player in the country’s economy before the discovery of oil, contributing about 12 per cent to the Gross Domestic Product (GDP). Can the sector restore Nigeria to economic boom? ADINOYI FRANCIS KADIRI reports

Solid-mineral

Economists recall that the solid minerals sector used to be a major player in Nigeria’s economy before the discovery of oil, contributing more than 12 per cent to the country’s Gross Domestic Product (GDP). They observed that then, the exploitation of different solid minerals deposits in commercial quantities in every state of the federation guaranteed jobs and enormous revenue in taxes and royalties.

Among key mineral deposits in the country are tin, iron ore, columbite, limestone, gold, gypsum, kaolin, lead, zinc and bitumen, among others.

Analysts, however, note that the discovery of oil and the massive inflow of foreign currency in the70s altered Nigeria’s economic priorities and relegated the solid mineral sector.

According to them, the neglect results in the nation’s economic statistics indicating that the solid mineral sector is currently contributing less than 0.3 per cent to the GDP.

For instance, the Nigeria Extractive Industries Transparency Initiative (NEITI) recently reported that the sector contributed only N113 billion to the nation’s coffers in five years.

With the reality that the revenue from crude oil is no longer reliable for effective budget planning, analysts have continued to insist that Nigeria must diversify its economy by repositioning the solid mineral sector.

In the light of this, Dr Kayode Fayemi, the Minister of Solid Minerals, emphasised the urgent need to revive the solid mineral sector to serve as a reliable revenue yielding alternative.

He observed that Canada, Australia and South Africa, among other countries, had explored such endowment to meet their economic needs.

He also said that the Federal Government recently approved the demand for states to be allowed to exploit mineral resources in their areas.

Fayemi stated that states could link up with private investors to form partnerships to realise the objectives of the Federal Government in that regard.

Analysts observe that the initiative will open avenues for royalties, add more companies to the tax net and create massive jobs.

Commenting on the development, Alhaji Sani Shehu, President, Miners Association of Nigeria, said he was happy about the special place given to the mining sector and mining activities in the 2016 budget, expressing optimism that the solid mineral sector would get a boost.

He said he was impressed that government was working towards enhancing crude mining after it observed that so much wealth was lost to inability to exploit the potential in the sector.

“The mining sector has the potential for massive jobs, greater GDP and huge exports but a greater amount of Nigerian miners are artisanal small scale operators, who conduct explorations of minerals without adequate equipment,’’ he said.

For sustainable development of the solid mineral sector, Malam Mohammed Amate, the Director-General, Nigeria Mining Cadastre Office, said that the Federal Government, through the office, has planned to revoke 500 mining licences out of the 1,400 issued in 2015.

He explained the reasons for the revocation bordered on non-activity and non-compliance of the affected mining agents with the provision of the mining laws.

“Some of them got mining licenses for mineral exploration but embarked on extracting minerals; these are two different things,’’ he said.

He said with the renewed commitment to the mining sector, only very serious companies would be given licence to explore the resources.

He explained that such companies would also be closely monitored to ensure that they contributed immensely to the economy through taxes, rates, royalties and employments.

Commending the initiative, Alhaji Abdullahi Abbas, Commissioner for Mineral Resources in Plateau, described it as massive window for wider economic activities.

“The solid mineral sector used to be in the exclusive legislative list; now that it is on the concurrent list, we shall take full advantage of it to widen our scope in the search for more alternative revenue sources.

“ I have visited some of the mining companies and even sighted development agreements among some companies and the host communities, but one area that I find unacceptable is the fact that most of the employees are foreigners.

“ The law says that 70 per cent of the work force should be from the host communities, but I have found that 95 per cent of the workers are foreigners; this is certainly not good for the state.

“Now that we have the backing of the Federal Government, we shall insist that the right thing is done in the area of employment, royalties and taxes,’’ he said.

Sharing similar sentiments, Gov. Aminu Masari of Katsina State promised that his administration would pay special attention to policies and strategies that would address challenges faced by small and medium enterprises in the mining sector.

He recently convened many stakeholders’ conferences to strengthen the capacity to manage the mining and development of solid minerals.

“We are aware that deep-rooted shortcomings in the design and implementations of key policies have effectively left mines operators to supervise themselves.

“This has fueled pervasive lawlessness in the mining activities and constituted serious environmental harm to mining communities; we must take steps to check such harms while maximising the potential of the mining sector,’’ he said.

The potential of solid mineral sector notwithstanding, Mr Kalu Iroakazi Kalu, an Environmentalist, calls for the need for environmental impact assessment of the host communities before any mining activity to reduce environmental hazards.

He argues that the use of safety devices such as ear muff, safety boots, safety glasses and helmets should be encouraged to protect those on mining fields.

“Mining activities are associated with environmental hazards including the destruction of the ecosystem, air and water pollution in case of coal mining and solid waste disposal problem.

“But these hazards can be reduced when environmental impact assessment is carried out before the beginning of mining activities.

“The environmental impact assessment ensures that the hazards are identified and measures are put in place to reduce its effect on the environment,’’ he said.

Apart from this, Mr Bamidele Agbadua, a lecturer at the Federal Polytechnic, Auchi, believes that the renewed interest of the Federal Government on the solid mineral sector must be well structured.

“Currently, Nigeria is losing lots of resources from untapped mineral deposits as well as from the little that is being mined mostly by illegal miners. We must check that,’’ he said.

He also calls for more efforts to secure crises-ridden areas in the northern parts of the country, pointing out that local and foreign entrants into the mining sector had been discouraged by security issues in the areas.

He observes that between 80 and 85 per cent of current mining activities are done through artisanal and small scale mining usually not captured in GDP calculations.

“There is an urgent need to formalise the artisanal and small scale mining sector by formulating policies aimed at integrating them.

“There is also the need to provide them with training and the right equipment; they should also be enlightened on safe mining practices,’’ he suggests.

He solicits the establishment of mineral buying centres and lapidaries across the relevant zones in the country to encourage the artisanal miners to sell solid minerals in the country according to rules and regulations.

Source: Blueprint 

 

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