OPINION: CRIMINALIZING EXPORTATION OF UNREFINED PRECIOUS STONES

Olamilekan Adegbite

As part of efforts to diversify the nation’s economy away from crude oil, the Federal Government, recently, said it has entered into a partnership agreement with the Central Bank of Nigeria (CBN) to buy off unrefined gold products from local miners. Consequently, in order to stimulate activities in the nation’s solid minerals sector, the government said it is coming out with a policy that will make it a criminal offence to export solid mineral deposits in their natural state without value addition. Minister of Mines and Steel Development, Mr. Olamilekan Adegbite, who disclosed this in Lagos during an interactive meeting with the media, said the policy comes as part of measures to encourage formal exploration and refining of an estimated 44 solid mineral deposits found in various parts of the country.

Under its Gold Initiative targeted at increasing revenue from the non-oil sector, job creation and encouraging local and artisanal miners, CBN will act as off-taker to purchase refined gold produced by indigenous miners in line with its policy to put about 10 per cent of the nation’s foreign reserves on locally produced gold, which currently commands a lot of value in the international market. Against this backdrop, the minister explained that the government has initiated several far-reaching measures to put structures in place to formalise much of the mining activities currently in the hands of illegal and artisanal miners around the country.

According to him, this would involve a comprehensive cadastral and geological mapping of solid mineral sites in states where they exist, which would ultimately act as a marketing tool for Federal Government’s bid to woo foreign investors. To ensure this target is achieved, Adegbite stated that the government has already issued two gold refining licenses whose production facilities would be located in Mowe, Ogun State, and Abuja, the Federal Capital Territory (FCT).

He said the government has also put the Nigeria Customs Service (NCS) and Nigeria Immigration Service high command on notice to arrest anyone attempting to export or sell unrefined solid minerals from the country without value addition. Meanwhile, the minister equally restated the Federal Government’s commitment to investing heavily in solid minerals exploration, having already earmarked a whopping N30 billion to the Ministry of Mines and Steel Development of which about N15 billion was being utilised on exploratory works on the seven strategic solid minerals including gold. He said, “We have started gathering data which we want to use to market for foreign investors and by the end of the 1st quarter, we would have concluded final work on data gathering. “We are getting good result because as I am talking with you now, a Canadian firm is already building its mines in Osun State with a view to commencing mining exploration in the state and by the end of 2021, it would start exporting refined gold from Nigeria.”

It would also be recalled that the Minister of Mines and Steel Development, Olamilekan Adegbite said about 35 million metric tonnes of unprocessed mineral products are exported annually. Adegbite who stated this in Abuja at a media session in Abuja said the development of the Nigerian Downstream Mineral Policy will stem the exports to create jobs and wealth. Represented by his assistant on Special Duties, Mr Sunny Ekozin, the minister said the policy strategy is to foster sustainable mineral development aimed at facilitating and promoting value-added mineral products for both local and international market while addressing access to finance and mineral sector investment climate. “We shall stem the exports of jobs and wealth by unwittingly exporting over 35m metric tonnes of unprocessed mineral products annually. “We shall open up this sector to genuine indigenous and foreign investors to actively participate in the downstream licensing of mineral plants,” he said. He added that downstream mineral policy will trigger the nation with a clear diversification blueprint in a sustainable manner, especially for revamping of the Ajaokuta Steel Company and the effective harnessing of the abundant mineral endowment across the country. He said the workshop which is in partnership with the Lagos Business School will help to sensitise stakeholders on the value chains in the sector to massive job generation and industrialization.

Moreover, President Muhammadu Buhari must directly oversee exploration of the nation’s solid minerals deposits if the new administration is to unleash that industry’s huge potentials. The president of the Progressive Miners’ Empowerment Association, Mr. Sunny Ekozin, made the call at a press conference in Abuja. Ekozin said like the petroleum industry, the president must be in control of the solid minerals sector if the potentials of the sector are to be harnessed. He called on the Federal Government to seek ways of unbundling the sector to help facilitate its growth. Ekozin disclosed that Nigeria imports N860 billion annually worth of solid minerals, out of the total annual imports of N1.3 trillion. “This is scandalous. Imagine the jobs that can be created annually from solid minerals with the injection of this huge sum. Nigeria must benchmark with other developing countries like Indonesia, which have successfully used policies on exports and imports to curb job losses too,” he said. He added that Indonesia has been able to galvanise about $18 billion in investment in processing plants in its industrialization efforts.

“One of the sector’s major challenges has been that a cabal had taken it hostage and prevented it from developing enough to make the appropriate contributions to the economy of the nation, he said” The cabal, he alleged, has been deceiving successive governments and has pocketed various funds provided by the Federal Government and development partners, including the World Bank. “Rather than develop the sector, those involved have only enriched themselves to the detriment of the miners and the solid minerals sector,” he said. Ekozin also faulted the process of issuance of mining licenses by the Mining Cadastre Office (MCO), calling it “speculative”, and advised the MCO to, first of all, confirm the financial and technical capabilities of licence applicants, before issuing licences. On the Aluminum Smelter Company, which has a production capacity of 200,000 metric tonnes per year and is considered to be the biggest in Africa, Ekozin declared that the company had been “in the wrong hands all along.”

Furthermore, he said, about N860 billion in import bills can be saved in the solid mineral sub-sector from the decision of the Central Bank of Nigeria (CBN) to stop importers of 41 items from accessing foreign exchange from the nation’s foreign exchange market, an expert has said. The president of Miners Empowerment Association of Nigeria, Mr. Sunny Ekozin, said in a statement, that 27 of the 41 items were solid minerals-based on which the nation had been spending the equivalent of N860 billion in foreign exchange annually, over the years.

It is on record that, the Federal Government had disclosed that over one billion naira has been generated in the last year from the sale of mining leases through the Mining Cadastre Office (MCO). The disclosure was made by the former Minister of State for Mines and Steel Development Hon. Bawa Bwari, at the announcement and launch of a partnership between the Federal Government and Afrocet Montgomery towards the hosting of ConMin West Africa and the National Mining Summit in April 2017. According to Bwari, the money generated by the Ministry came through small scale mining leases and exploration licenses. He said over 300 licenses had been revoked for falling short of government’s conditions attached to the issuance of mining licenses, while notices had been placed on several others to ensure holders of various licenses are operating and committed towards the development of the sector.

In addition, the minister attributed the successes recorded by the ministry to the active participation and cooperation of the private sector, in ensuring that the sector is fully harnessed and exploited for economic development. “Over the last one year, we have observed different model of partnerships between private sector interests and government in executing world-class mining conferences that bring participants from all over the world, which would become regular fixtures in the global mining calendar to deliver shared value for all stakeholders”, he said. Bwari who reiterated government’s effort in making the country a popular mining destination said the National Mining Summit will be centred on the Nigerian Mining Road Map to introduce to the international mining community a regime of robust mining legislation and pro-growth policies that will create a globally competitive platform for stakeholders in Nigeria’s mining and mineral processing sector.

Meanwhile, the Minister of Mines and Steel Development, Arch. Olamilekan Adegbite has assured of the ministry’s support to the Micro, Small and Medium Enterprises (MSMEs) in the mining sector with funds from Solid Minerals Development Fund. Adegbite who was speaking when the chairman of Mining/Solid Mineral Group and Lagos Chamber of Commerce and Industry (LCCI), Otunba Babatunde Alatise and his team visited the ministry recently said, “The fund we have is to help the small scale miners to be able to achieve their goals. The fund is there, it has not grown. We have met with the board of Solid Minerals Development Fund (SMDF). We will look at the concept, so we can give out part of this fund.” He said the Central Bank of Nigeria (CBN) is willing to support the ministry with substantial fund that the industry will be proud of just as it supported the agriculture sector through Nigeria Incentive-Based Risk Assets Sharing Agricultural Lending (NIRSAL). Otunba Alatise urged the ministry to work with the CBN to possibly expand the mandate of NIRSAL to include mining minerals and metals trading or have the CBN set up similar structures for the solid mineral industry.

The Federal Government has launched a report designed to enhance the contribution of the solid minerals sector to Nigeria’s revenue and Gross Domestic Product, GDP. Speaking at the launch of the report, Improving Transparency and Governance in Nigeria’s Mining Sector, Executive Secretary of the Nigeria Extractive Industries Transparency Initiative, NEITI, Mr. Waziri Adio, said the sector, despite not being tapped to its fullest, had the potential to grow Nigeria’s economy, create jobs and address a number of social issues.

According to him, NEITI, in launching this report, is seeing how it can bring on board, what needs to be done and how it should be done, adding that it wanted to go beyond audits and do things that would impact lives of the citizenry. He said: “There is no doubt that Nigeria has lot of potentials in the solid minerals sector, but having potentials is not enough. Potentials by itself would not translate to improved revenue for improved fortunes for the country and for its people. “Our country definitely needs other streams of income, but we are not doing that. This sector is one that has all the potentials to generate more revenue for our country, create more jobs for our people, to even expand our industry base. Rather than continue to talk about the problems all the time, we want to do something that would build on ongoing reforms in the sector. “The Ministry Of Mines and Steel Development, MMSD, is doing enormous work to reposition the sector. To align with that, we want to see how we can bring certain perspectives, not just on the potential and problems, which we all know, but what needs to be done and how.”

The report presented by its Editorial Consultant and Professor of Geology, University of Ibadan, Mr. Gbenga Okunlola, disclosed that in comparison with other countries with similar potential, Nigeria’s mining sector was still largely underdeveloped. The NEITI report stated that until recently, when there had been a slight improvement, the mining sector’s contribution to the GDP had not been more than 0.5 per cent, a reversal from the historically higher percentages of about 4-5 per cent in the 1960s and 1970s.
The report noted that the misfortune of the solid minerals sector started with the Indigenization Decree of 1972, which saw massive withdrawal of foreign investments in the mining industry from the country, leaving the bulk of private sector mining operations in the hands of small-scale local miners. According to the report, these factors were largely responsible for production decline in the sector, particularly in the metallic minerals sub-sector, starting in the late 1970s. The NEITI report noted that today, the mining industry has the potential to sharply contribute to the country’s GDP, but was currently under-performing, responsible for 0.33 per cent of employment in Nigeria, 0.02 per cent of the country’s exports and 0.3 per cent of the country’s GDP. The report, however, called for policy consistency in the sector, stating that this would help boost Nigeria’s score in the global Policy Perception Index, thereby, removing the barriers to investments in the sector.

It argued that mining policies should also guarantee predictability and consistency of applications of rules, noting that any sudden change of rules might cause a 10-year lull in foreign investments inflow into the industry, as investors take that number of years to observe an economy and assess its rules before investing. To this end, to improve transparency and governance issues in the mining industry, the NEITI report advocated the sustenance of a robust regulatory framework, revamp of the institution and technical structure; ensuring a more conducive finance and business environment; plugging of loopholes between production and revenue; communities and stakeholders participation among others.

It would be recalled that, the Nigeria Extractive Industry Transparency Initiative, NEITI, has said Nigeria earned N69.2 billion from the solid minerals sector in 2015, an increase of 24 per cent on the N55.8 billion earned from the sector in 2014. NEITI, in a statement on its latest independent audit report of the solid minerals sector released weekend, also disclosed that the value of solid minerals exports from Nigeria in 2015 stood at $9.733 million, which was 1.45 per cent of non-oil exports. It noted that lead and zinc dominated Nigeria’s solid minerals export with 79 per cent valued at $7.7 million, while 175 ounces of gold valued at $122,000 were exported during the period.

The NEITI report showed that the solid minerals sector contributed 0.12 per cent to Nigeria’s Gross Domestic Product (GDP) in 2015, a marginal increase of 0.01 per cent on the 0.11 per cent contribution of the sector to GDP in 2014. The report noted that the total production of solid minerals in the country stood at 39.27 million tons, representing a reduction of 17 per cent from the 47.1 million tons produced in 2014.

NEITI attributed the drop in production in 2015 to insecurity in parts of the country and the more stringent approval process for explosives used in mining. However, the NEITI report noted that while mineral production reduced, government revenues went up in the same year. It said, “This increase in revenue was due to the growth in taxes collected from the sector and review of royalty rates paid by companies which came into effect within the year under review.” NEITI said its previous solid minerals audit reports had recommended upward review of Nigeria’s royalty rates to align with prevailing industry and present day realities.

The NEITI report also highlighted the specific contributions by companies and states to the sector revenue growth and development. According to the report, cement manufacturing companies were the major revenue contributors to the sector, accounting for over 60 per cent, while construction companies and real mining companies contribute about 31 per cent and 8 per cent respectively. “For instance, three states- Ogun, Kogi and Cross River and the FCT accounted for about 70 per cent of the production volumes in 2015. However, Ogun state topped the table with 36 per cent,” the report noted. The report further noted that a total of 4,305 mineral titles were valid in 2015, adding that of this figure, 204 were mining leases, 657 were for small scale mining, 1,865 were for quarrying licenses while exploration licenses accounted for the remaining 1579. It also noted that 1,220 of the 4,305 mining titles were issued in 2015 alone.

Commenting on the report, Executive Secretary of NEITI, Mr. Waziri Adio, said, “This report shows evidence that the contribution of the solid minerals sector to government revenues and macro-economic indicators is beginning to improve, even if marginally. “The sector could definitely contribute more to revenues, job and wealth creation, exports, imports substitution, industrial development and overall national growth. “But there is a sign of progress already. What we need to do is to build on, deepen and sustain this early promise to ensure that the country returns to being a major mining destination and maximizes the abundant opportunities offered by the sector. “Faithful and sustained implementation of the roadmap developed by the Ministry of Mines and Steel Development and of the recommendations in this report will be necessary.”

There is no doubt that the government is working hard to diversify the national economy and solid mineral sector has a key role to play in the whole process.

*** Written by Jide Ayobolu