Investigation: Why Nigeria Earns Low Revenue From Solid Minerals

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…Lawyers Call For Constitution Amendment To Remove Mining From Exclusive List

Nigeria has continued to earn poor revenues from the solid minerals that abound in the country.

LEADERSHIP findings revealed that the major reason for this anomaly is that solid minerals exploration is on the exclusive list, which means that taxes and royalties from mining go to the federal purse rather than states and communities who suffer the many implications of mining. As a result of this, state governors have not been keen to devote their resources to develop the mining activities in their states.

Records from the Ministry of Mines and Steel Development reveal that Nigeria is blessed with 44 identified minerals spread across the various states of the federation – and still counting as more exploration continues to reveal the hidden wealth the nation is blessed with.

Unfortunately, despite these huge evident resources, the sector remains one of the lowest contributors to the national purse at less than 0.5% of the total gross domestic product (GDP).

Factors hindering development in the nation’s minerals and mining sector have been blamed on several factors like illegal mining, environmental degradation, poor investments and funding, including the allegations that there is “a cabal behind the mining woes that are currently thwarting development in the solid minerals sector.”

Consequent upon the above, lawyers in the country have called for the amendment of the 1999 Constitution to ensure that the mining laws are now included in the Concurrent Legislative List, contrary to the existing situation whereby mining operation is restricted to the Exclusive List. By so doing, state governments can then be accommodated in mining

But Chief Mike Ahamba, a senior advocate of Nigeria (SAN), who was a member of the Constitutional Conference, revealed that the movement of mining from Exclusive to the Concurrent List was not recommended in the confab report. The delegates, according to him, recommended that mining should remain on the Exclusive List.

For Malam Yusuf Ali, SAN, there is no way states can venture into solid minerals extraction unless the constitution is amended.

Malam Abubakar Malami, SAN, spoke in similar vein: “There has to be constitution amendment and the process of amending the constitution is very dynamic and time consuming but it is not something that cannot be done.”

President of the Progressive Miners Association, Mr Sonny Ekozien, had lamented that the solid minerals sector yields very little despite having been funded with billions of Naira since a full government ministry was created for the sector.

Ezokien told LEADERSHIP in an exclusive interview that “it was a shame that a sector, which had gulped almost N.1trillion since its formation into a ministry in 1995, contributed only N1.7 billion annually to the federation’s account.

“The problem in the sector is a problem where you have few persons who have held the sector captive and this same set of people have been around for the past 20 years. In every major committee you will find them; they have made the mining sector a closed enclave such that people who want to break in with new initiatives to catalyse development in the sector are not allowed to come in. You see a situation where they will deliberately want to physically assault you, to stop you from coming in.”

Speaking on the opportunities in the sector, Ekozien said it “is pregnant and can generate over two million jobs within the four years of any regime and can contribute, on annual basis, a minimum of N1trillion annually if given the opportunity.”

Meanwhile, a source who spoke to LEADERSHIP on grounds of anonymity debunked Ekozien’s allegations, saying the sector had made obvious progress.

According to the source, “it is mischievous to say the sector is unproductive and well funded, considering that the sector is usually not funded beyond N3billion annually.”

He said that the N3billion was not only grossly insufficient but was made to cover 10 parastatals as well as the states’ mining offices across the country.

“In 2014, in fact the sector got only N500 million as its capital budget,” he noted.

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Similarly, a stakeholder and managing director, Anthills Concepts Ltd, Dr Emeka Okengwu, in a telephone interview said “anyone that says the sector which is divided into the minerals – steel and metals – sector is run by cabals is without a true knowledge of the sector and spreading falsehood.

“In view of recent legal reforms in the sector, only those who do not have an understanding of the sector will say that nothing is happening in the sector, as the fiscal regimes in the past seven years has turned relations between the government and miners into Operator/Regulator as well as Owner/Administrator created world class legal regimes, conducive laws and institutions.”

Emeka argued that it was unrealistic to claim that the sector was operated by a cabal considering it operated a transparent cadastre system “which operated a ‘first-come first-served’ principle and lacked the financial windows necessary for mining development.

“$120 million loan taken from the World Bank was meant to develop four major components aimed at increasing the capacity of managers of mineral resources and management staff,” he said, “and the fund was judiciously used for that purpose, including the creation of the Mining Cadastre Office, putting in place effective legal regimes, and the refurbishing and reformation of the Institute of Mining in Jos, among several other reforms.”

Emeka opined that those who carried negative stories about the sector were often not miners who owned mines and paid taxes, but were often the artisanal and illegal miners who paid no heed to the environmental safety, but were just out for their selfish profits.

LEADERSHIP findings meanwhile show that every state had a record of at least two minerals, with several states having multiple minerals. However, with very little done to take advantage of these resources, informal and illegal miners have taken over activities in the sector.

The existing minerals are divided into metallic – which include gold, iron ore, cassiterite, columbite/tantalite lead/zinc and copper ores; industrial (minerals) – such as limestone, baryte (used by the oil industry), kaolin and other clay metals such as ceramic tiles.

Energy minerals such as coal and bitumen also exist in proven quantities, according to the CEO/MD, Zuma Coal, Dr Innocent Zuma.

He said, “My company alone has proven coal resource of over 380 million tonnes.”

Also in abundance in various parts of the country include exotic gemstones and dimension stones used in jewellery making and building construction respectively.

LEADERSHIP findings revealed that an index of Nigeria’s key mineral resource endowment show a reoccurrence of iron ore across Nigeria with large mid-grade deposits found in the central part, particularly in Zamfara, Yobe, Kaduna, Benue, Katsina and even the FCT. 2014 records available show a proven reserve of 360metric tonnes of reserve.

It further revealed that coal occurs in the North East, North Central and Eastern parts including Sokoto, Bauchi, Yobe, Borno, Adamawa, Gombe, Plateau, Nasarawa, Benue, Ebonyi, Anambra, Delta Kogi and Enugu, among others.

Barite occurs in Zamfara, Adamawa and Benue while aluminium is found in Akwa Ibom.

Clays (Kaolin, common clay and bentonite, etc) appear in several states including Kano, Bauchi, Borno, Adamawa, Gombe, Plateau, Kaduna, Bayelsa, Niger,Oyo Kwara, Kogi, FCT and Taraba.

Lead zinc is found in the North-East and Eastern parts including Zamfara, Bauchi, Gombe, Plateau, Nasarawa and Ebonyi while limestone is found across Nigeria, but particularly in Sokoto, Yobe, Gombe, Nasarawa, Cross River, Ogun, Kwara Edo and Kogi states respectively.

In fact, records show that there is no state of the federation with not more than five mineral resources, whether commercial quantity or not.

Despite the challenges in the development of this sector, there is no doubt that the sector has huge potential, because less than 30% of the earth’s hidden wealth has been assessed as a result of the above- mentioned issues.

Mining began in Nigeria over 2,400 years ago, with Nigeria being a major producer and exporter of columbite and tin and coal which were mostly used locally.

Royalties, fees and rents at that time formed a significant part of the national revenue while the sector provided jobs.

The collapse in the sector has been blamed on the discovery of oil and the nationalisation policy of government in the 70s which led to the departure of major mining companies, neglect by successive governments, influx of informal/illegal miners as well as non-payment of taxes.

There is no doubt that, with the notable collapse in the price of international crude, Nigeria has a second chance in developing its solid minerals, and it has to be now, because there is no better alternative to rescuing its economy from total collapse than the sector.

Culled from http://leadership.ng/news/447370/investigation-why-nigeria-earns-low-revenue-from-solid-minerals

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