Despite factual claims that Nigeria is endured with huge mineral resources, the solid mineral sector remains largely underdeveloped or at best unregulated such that illegal harvesting has become the order of the day. However, the President Bola Tinubu administration has vowed to turn the sector into the nation’s economic powerhouse. FESTUS OKOROMADU in this report examines recent steps by the government and stakeholders to actualise the new vision.
Nigeria has a rich and glorious history of abundance mineral resources development dating back to the colonial era. The discovery of various minerals both solid and liquid led to the creation of the Mineral Survey Department of the Northern Protectorates by the British colonial government in 1903.
Barely a year later, the Southern Protectorate equivalent was established, to harness the mineral resources in the country for the benefit of the colonial masters. Thus, by the 1940s Nigeria was a major producer of Tin, Columbite and Coal. The extraction of these minerals made cities such as Jos and Enugu commercial hubs driving economic growth.
Unfortunately, or otherwise, the discovery of crude oil in commercial quantity in the Oloibiri community of present day Bayelsa State in 1956 and subsequent commencement of exploration in 1958 resulted in distraction. Worse still, the Nigerian civil war in late 1960s became the breaking point in hurting the government’s concentration on the extraction of solid minerals as oil became the goldmine after the war.
Although the near collapse of the solid mineral sector is generally attributed to the exit of many expatriates from the country during the Nigerian civil war, the fact remains that the government’s refusal to revamp the sector has continued to hamper economic growth.
However, the current administration under President Bola Tinubu seems to be all out to turn things around. To this end, the Federal Government through the Ministry of Solid Mineral Development has continued to express its commitment to rejuvenate the sector and make it the centre of the nation’s economic diversification programme.
“While assuring prospective investors of a conducive operating environment, the Minister said the government has perfected a new security architecture made up of a blend of formal agencies of enforcement with community safety organs to protect miners from any form of threat in their operations”
The Minister of Solid Minerals Development, Oladele Alake, who is saddled with the enormous responsibility of steering the sector at every given opportunity, stated the President’s vision as that of diversifying the Nigerian economy from dependency on crude oil to solid minerals.
Last week, Alake took the campaign for the revival of the sector to China where he addressed a Minister of Minerals Forum at the just concluded China Mining Week 2023 in Tianji.
Speaking at the event, the Minister reiterated the Federal Government’s commitment to creating a conducive business environment for investment opportunities to thrive in the mining industry, through the introduction of reforms aimed at separating genuine investors from adventurers.
He said the government would soon release a new mineral development roadmap designed to solve the lingering problems in the sector.
Alake also announced the government’s intention to establish the Nigerian Solid Minerals Development Company, which would mobilise domestic and international capital and technology to enhance the sector’s performance.
While assuring prospective investors of a conducive operating environment, the Minister said the government has perfected a new security architecture made up of a blend of formal agencies of enforcement with community safety organs to protect miners from any form of threat in their operations.
However, in what may be considered as a step in the right direction, in terms of creating additional value, the Minister advised prospective investors to include industrial processing of minerals in their business plans.
On the importance of geological data to mining finance and exploration, Alake pledged the President Bola Tinubu administration’s commitment to investing massively in critical data to attract investors, while putting in place social and governance standards to protect the environment.
Earlier in the month, the Minister while speaking at the close of the 8th edition of the Nigerian Mining Week in Abuja affirmed the resolve of the Tinubu’s administration to make solid minerals the most valuable resources in driving its economic reforms.
He stressed that the sector is being positioned to become the highest contributor to the nation’s gross domestic product overtaking crude oil as soon as possible.
Delivering the closing remark on behalf of President Tinubu at the forum held in Abuja, the Minister said the ministry is committed to revolutionising the mining sector for productivity.
“Nigeria has a surfeit of most sought-after critical minerals. The desired minerals in the world today, we have in abundance. What is needed is the methodology, the strategy, and tactics to ensure the efficient and proficient exploration, exploitation and expenditure of the accruable resources, therefore, the government cannot do it alone.
“Yes, we are doing our own part by creating an enabling environment, making sure that the operating environment is conducive to you, the players in the industry. But you are the players. Without your active collaboration and support, through ideas, suggestions, comments, views, and in fact, insightful penetrating questions, we will not be able to translate that vision into reality,” Alake stated.
The Minister appreciated the organisers of the forum stressing that the event witnessed robust engagement, cross-fertilization of ideas that will result in new methods of implementation and execution of policies by the government.
“On our part, I can assure you that the President has pledged to increase funding into the mining sector through the Federal Ministry of Solid Minerals Development. With such funding, we can then embark on those very significant steps that we need to take, going forward. Such as generating the big data – about the how and where of mineral resources, without which we cannot begin to talk about any serious implementation of policies or attracting the much-needed foreign investments.”
Speaking to the government’s commitment to transform the sector urgently, the Minister said, “We want to ensure that within the next couple of months, in the short term, and few years in the longer term, the mining sector contributes significantly to the gross domestic product (GDP) of Nigeria and it becomes the next critical resources of Nigeria’s economic survival. We want to ensure that the solid minerals sector takes over from oil as Nigeria’s major revenue earners.”
Projections versus reality
Laudable as the government’s projection on the solid minerals sector may be, the reality on ground indicates that Alake and his team have a tall mountain to climb to convert the sector to a leading contributor to the national Gross Domestic Product.
According to the National Bureau of Statistics, the mining and quarrying sector consisting of crude petroleum and natural gas, coal mining, metal ore, quarrying and other minerals sub-activities contributed 6.58 percent to the overall GDP in the second quarter of 2023.
The said contribution was reported to be lower than 8.20 percent recorded in the corresponding period of 2022 and as well lower than the previous quarter at 6.73 percent.
By implication, the sector’s contribution to the GDP has been on a declining trend in recent times.
Overall, the sector was reported to have grown nominally by -7.11 percent (year-on-year) in Q2 2023.
However, the Minister’s optimism may not be out of place as the NBS report revealed that metal ores, a key product in the solid mineral subsector, exhibited the highest growth rate of all the sub-activities at 186.40 percent during the period, followed by quarrying and other minerals activity at 60.83 percent.
Thus, even though crude petroleum and natural gas dominated as it was the main contributor to the sector with a weight of 85.80 percent in Q2 2023, the solid mineral sector is already positioning as one to watch out for in not-too-distant time.
Operators’ perspectives
The chief executive officer of Lithium King Limited, David Cohen, is an American from Southern California, whose interest is in lithium and a player in the Nigerian mining industry.
He seems to have confidence in the government’s initiatives.
“The Ministry of Solid Minerals under the leadership of Honourable Dele Alake has shown a strong willingness to facilitate a conducive environment to attract foreign investment into our mining sector.
“Mining companies in Nigeria including Lithium King Ltd will all thrive in this new environment,” Cohen said.
Speaking on his venture into Nigeria, he said, “I travelled to several countries and determined Nigeria to be the best strategic landscape to develop a viable strategic minerals mining company. We have secured several areas of interest in the mining sector. Lithium King Ltd is the corporate governing body for all our mining interests.
“We are very excited to have acquired several licenses on extremely promising sites. Our extensive site investigations, including 43-101 reports, indicate lithium rich sites in our Kaduna, Oyo, and Bauchi tenements—we are excited to enter the development phase.”
On how he sources funds, Cohen said, “We have been financing all our projects internally and as interest in lithium has grown internationally, we are inundated with investment offers. In order to provide opportunities to the international investment community, we created a new digital currency called Liti Coin. This digital currency is a real-world asset (RWA) which is backed by our significant mineral resources. As the EV revolution comes to dominate the transportation sector, the value of our Liti Coin can only increase.”
On his part, the director, Rapidlink Resources Limited, Bassel Mourad, says the solid mineral subsector is the alternative resource for the future of the Nigerian economy.
“Most developed economies are planning to do away with fossil fuel. The solid mineral space provides this alternative to crude. This sector is very important. In addition, as the company that worked on the rare earths in the NIMEP (National Integrated Mineral Exploration Project), we have generated data that has brought a lot of interest in lithium today.”
His firm, Rapidlink Group is a player in the solid mineral prospecting, exploration, mining and consultancy services.
Mourad, who believes that the Federal Government is on the right track in restoring the potential of the mining industry to Nigeria’s economy, insists that more still has to be done.
He identified the place of data gathered in the industry as prominent saying, “The government should increase funding of the sector for the continuous provisions of geoscience information and data to would-be investors.
“Our budget as a country in generating this data is less than 10 percent of what is spent in other countries we are trying to emulate. There are models that have worked in other countries. No need to reinvent the wheel; let’s just emulate and improve on it,” he said.
Mosra Energy Limited is an indigenous mining company focusing on mining of coal, iron ore and limestone.
The Managing Director of Mosra Energy, Olukayode Ramos, said the mining sector is absolutely the key for the future of Nigeria’s economy.
“All over the world, a lot of the governments that have mineral resources, like Nigeria, the US, Australia and Canada, actively encourage industrialists to develop the sector. It is not the government’s responsibility to develop the mining sector; it is the responsibility of investors”
He is however of the view that the government should focus on providing the enabling environment but not participating as a player.
“All over the world, a lot of the governments that have mineral resources, like Nigeria, the US, Australia and Canada, actively encourage industrialists to develop the sector. It is not the government’s responsibility to develop the mining sector; it is the responsibility of investors,” Ramos said.
Emphasizing the importance of the solid mineral sector as key to transformation of the country’s economy, he quoted Andrew Carnegie, “iron ore is the backbone of modern civilization and steel is its bleeding heart, from foundations to roads, towering skyscrapers, vehicles we drive, railroads, roads and bridges, power plants, everything that we manufacture. Iron ore and coal have shaped the world we know. We cannot deny the importance of coal power in industrial growth and providing energy security.”
According to him, the greatest challenge that local players in the industry face is finance.
“The interest rate is very, very high in this part of the world. Now, the banks are looking at between 28 and 30 percent interest rate and that is quite challenging.”
He commended President Tinubu’s administration’s decision to focus on the sector stressing that the government should help tackle the concern of indigenous operators in the area of accessing cheap funds.
“The government of Nigeria is doing the right things at this time to attract investment into the mineral resources of Nigeria,” he said.
Referencing a recent statement by the Minister, he said, “At this point, the government of Nigeria is focusing on seven critical minerals, which include coal, iron ore, limestone, lead, zinc, barite, and bitumen. With all these pronouncements that the government has made through the Minister of Solid Minerals, Dele Alake, I strongly believe that the government is on the right path and doing the right things to attract investment and exploit the country’s mineral wealth.”