lecture on nigeria's solid minerals

8/9/2019 Lecture on Nigeria's Solid Minerals

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A LECTURE ON NIGERIA’S SOLID MINERAL RESOURCES

AND NATIONAL DEVELOPMENT

I am profoundly pleased to have been invited to

give this lecture on Nigeria’s solid mineral resources

and national development to the National Defence

College. My pleasure is even more compounded,

given the diversity of the audience and that the

invitation comes at a time in when Nigeria is seeking

to raise the profile and importance of its mining

sector.

I would like to start my lecture by discussing mining in

a global context and then come back to that of

Nigeria. In a moment of reflection, we would all be

amazed at how much of a direct relationship our

daily existence has to the mineral products that are



developed and processed from mines all over the

world. Our roads are constructed with bitumen, our

buildings with dimension stones, aluminum for our

cars, infrastructure and power, our power is

generated from coal, and our cement from

limestone, and on and on it goes. As a result of the

growing industrial demand for these minerals, the

global commodities markets have experienced a

period of historic increase in market prices, after thirty

(30) years of price stagnation, starting from 2002.

Consequently, the major international mining

companies (Rio Tinto, BHP Billiton and Anglo

American) have reaped a tremendous windfall in

their profit rates during this period, prior to the global

financial crisis. This growth in the demand and prices

of mineral commodities has been attributed to the



economic growth of the BRIC countries – Brazil,

Russia, India and China. China and India, in

particular, seem to have an unlimited need for solid

mineral materials, in spite of the current financial

crisis, and are expected to drive the recovery of

commodity prices in the short-term and higher prices

in the long term.

A consequence of the increased demand for

minerals is the increased status and attractiveness of

the continent of Africa as a nirvana for for those who

seek solid mineral products, as a result of its

significant proportional wealth of global mineral

reserves. Relative to total global reserves, Africa is

estimated to have 30 percent of bauxite, 60 percent

of manganese, 75 percent of phosphates, 85

percent of platinum, 80 percent of chrome, 60



percent of cobalt, 30 percent of titanium, 75 percent

of diamonds and 40 percent of gold. With the

exception of South Africa, Africa remains relatively

under-explored, relative to its solid mineral wealth.

Not only is the African continent blessed, but Nigeria

has been put on notice that it has serious

competition, in terms of promoting its mining sector.

The impact of mining on respective solid mineral

producer socio-economies runs the gamut from

negative to positive. At the negative end is the

example of Zambia and the Democratic Republic of

Congo, major mining countries that have suffered

from related social and economic issues. These

issues include inadequate economic rent recovery,

economic marginalization of immediate mining

communities, inefficient allocation of mining



revenues to social benefits, inadequacy of tax

receipts from mining as a function of investor

incentives, adverse environment impact.

Conversely, at the other end of the spectrum, we

have countries like Ghana, South Africa, Canada

and the U.S. that are doing very well exploiting their

mineral resources. In 2007, for Ghana, mining

contributed 5% to its GDP, accounted for 12% of

government’s revenue and 41% of total export

earnings and employed over 500,000 people; South

Africa, mining directly contributed approximately 7%

to its GDP, accounted for 12.4% of total company

tax, 25.2% of the country’s total foreign exchange

earnings and employed slightly under a million

workers; for Canada, mining contributed $42 billion or

3% to its GDP, with mining industry payments of $8



billion to the government, mining constituted 19% of

total exports, with direct employment of 363,000

people.

Clearly, not only does Nigeria have quite a ways to

go, to be classified as a mining country, its challenge

is also one that allows it to reap the benefits of

responsible exploitation of its mineral resources, such

as employment generation, community

development, tax contribution, infrastructure

development, foreign currency generation, while

avoiding the pitfalls previously described. I believe

that the stakes are too high for Nigeria not to.

Nigeria is a country that is extraordinarily endowed

with a range of solid minerals that include gold, iron

ore, coal, baryte, zinc, lead, bitumen, etc. To date,



over thirty-four (34) different solid mineral types

across the thirty-six (36) states of the Federation, plus

the Federal Capital territory, have been identified.

Of remarkable note is that there is not one state

without the presence of, at least, a solid mineral.

Conversely, there are states that have been

endowed with multiple solid minerals, such as Enugu,

Nasarawa, Kogi, and Kaduna.

In view of this vast solid mineral blessing, the Ministry

of Mines and Steel Development has adopted a

strategy that places a special focus on seven (7) of

the minerals. The minerals of special focus are

bitumen/tar sand (estimated reserves of 27 billion

barrels of oil equivalent), coal (estimated resource of

2.7 billion tonnes), iron ore (estimated resource of 3



billion tonnes), Limestone (estimated resource of 2.23

trillion tonnes), Barytes (estimated resource of 14

million tonnes), Lead/Zinc Sulphides (estimated

resource of 1 million tonnes), and gold. In the case

of gold, coring done this year, by one of the junior

mining companies, to the depth of 3,000 meters, has

proved more than 300,000 ounces, with 2 million

ounces estimated. The importance of this already

stupendous piece of good news is best appreciated

within the context of the knowledge that Nigeria has

gold schist belts in the western half of the country

that are similar to those of Ghana. As you may know,

Ghana produces ten (10) percent of the world’s gold

and is the second largest producer of gold.



Ladies and gentlemen, the preceding information

was the good news. Unfortunately, mining in Nigeria,

which goes back to 1905, under the auspices of the

Royal Niger Company (NRC), currently contributes

less than one (1) percent to our Gross Domestic

Product (GDP). With the advent of the discovery of

oil in the late fifties and its primacy in Nigeria’s

economy, mining has suffered a drastic reduction in

its role, economically. Nigeria has gone from being,

at one time, the world’s largest exporter of

Columbite and the 6th largest producer of Cassiterite

(Tin), to a net importer of solid mineral material, for

industry. In this period of neglect, Nigeria’s mining

sector was beset with illegal mining, smuggling of

gemstones and other high value minerals, loss of

local and international expertise, related



environmental degradation, lost tax revenues, etc.

Furthermore, the government’s policy, concerning

mining fluctuated from encouraging private sector

participation to direct participation (hence, the

establishment of the Nigerian Mining Corporation)

and back to Nigeria’s current status of market-led or

private sector orientation. However, I must clarify that

the government’s direct participation was principally

driven by a need to fill the vacuum left by the exit of

foreign companies engaged in mining, due to the

civil war. Unfortunately, in the approximately forty

years of decline of the country’s mining sector,

Nigeria has missed out on the various opportunities to

capitalize on the upswing of commodity prices.



I stand before you today as a realist who recognizes

that Nigeria cannot continue to remain a mono-

product economy. While recognizing its blessing of

oil endowment, Nigeria must work very hard to

diversify its economy, as necessary to achieve its

vaunted 7-point Agenda. A recent study that was

done on the economies of the Gulf Cooperation

Council, which is comprised of Bahrain, Kuwait,

Oman, Qatar, the Kingdom of Saudi Arabia and the

United Arab Emirates (UAE), all oil producing

countries, concluded the following:

Mono-product or highly concentrated

economies are subject to greater economic

volatility from external shocks;



Volatility in concentrated economies may

spawn structural unemployment issues and

engenders systemic risks;

Poor economic diversity is linked to low

productivity and competitiveness; and

Diversification is a critical component of a

sustainable economy.

As a result of the above described situation,

Nigeria has a mixed blessing situation of relatively

virgin mineral fields and a lack of national

economic contribution of the same fields.

However, I am happy to say that, as a result of the

Federal Government of Nigeria’s recognition of

the previously specified conclusions and the

critical economic role of mining, happy days in the



mining sector are ahead. I must say that this

recognition is even more so, given the direct

relationship between with the government’s

objectives, relative to the Vision 20:2020

framework. Thus, the Federal Government, over

the last few years, has embarked on various

initiatives, as necessary to revive and revitalize the

mining sector.

Principal amongst these initiatives has been the

enactment of the 2007 Minerals and Mining Act.

The importance of this Act cannot be

overemphasized. The Act establishes the

foundation for the regulation of the sector,

addresses the fundamentally important issues of

mining title administration (such as ownership,



transparency, transferability and security of mining

titles), community development agreement,

mining environment considerations, investor

incentives, etc. Nigeria’s Mining Act is considered

to be superbly representative of international best

practices in mining legislation. Consequently,

review of the resultant mining regulations has

recently been concluded by its Ministry of Justice.

In the area of artisanal mining and small scale

mining; Nigeria is working assiduously to formalize

this segment of the mining community by forming

cooperatives, establishing buying centers and

providing extension services. In addition, in

partnership with the World Bank’s Sustainable

Management of Mineral Resources Project

(SMMRP), the Ministry of Mines and Steel



Development is providing grants, up to a ceiling of

$50,000, to the lower end of the ASM cadre.

In furtherance of the Ministry’s partnership with the

World Bank project, there is a program of on-going

institutional capacity building. Accordingly, the

Ministry is formulating policies that will, not only

stand the test of time, but ensure for the robustness

of the sector; the Ministry is also streamlining its

services to ensure for efficient and expeditious

service delivery; and Ministry personnel are being

trained to ensure that they attain the expertise

necessary for providing the regulatory and policy

guidance for the sector, consistent with the

Ministry’s new role as regulators, rather than as

direct participants in the sector.



A fundamental requirement for investors in the

mining sector is access to geosciences data,

relative to the location and estimates of the

minerals. Mindful of this fact, the Ministry has

recently completed the airborne magnetic survey

of the entire country, with the results currently

being interpreted. The Ministry is also diligently

working geological, mineral, and geo-chemical

mapping of the country. One area of recent

activity, which is of significant personal interest, is

the focus that the Ministry is bringing to bear on

Nigeria’s gemstones. Under the SMMRP activity,

the Ministry is putting in place a gemstone

certification process, which also encompasses the

various steps and processes distribution. In

addition, the certification process is being



complimented by an awareness building program.

In pursuit of bringing greater awareness to

Nigeria’s gemstones, some of which are quite

unique, the Ministry has reached an arrangement

with an internationally renowned Nigerian-born

jeweler, to design a jewelry line, using Nigerian

gemstones exclusively. It is expected that this line

of jewelry will be displayed at both international

and domestic fashion events. The Nigerian

government believes that heightened awareness

of its gemstones has the principal benefits of

creating a market for ASM producers and

mitigating the illegal smuggling of the country’s

gemstones.



The Ministry, over the course of the year, has

embarked on a major investor outreach program,

the pinnacle of which was the recent forum, titled

“Creating a Durable and Investor Friendly

Framework for Mining in Nigeria,” that was held at

the London Stock Exchange last month – a first of

its kind. In other to convey the importance of

these investor outreach activities, it is important

that context be provided. I will start by using an

analogy. Due to the vast mineral richness of the

African continent, Nigeria’s situation is similar to

that of being one of many beautiful marriage-age

daughters in a family. As a result, Nigeria must

strive that much harder to ensure that the suitors

come directly to its door. The other issue is that

mining is heavily capital intensive and requires



cutting edge technology and expertise.

Unfortunately, these are resources that Nigeria

does not readily have access to, domestically. As

such, Nigeria must seek investors, exploration,

development, and production companies from

international sources, with the objectives of foreign

direct investment, technology transfer and local

capacity building. Unfortunately, Nigeria cannot

attain these objectives by staying home and

simply trumpeting its vast mineral endowment.

As Nigeria soldiers on, relative to the various

initiatives that have been previously described,

and as it moves from the direct participation

model of yester-years to that of market-led or

driven model, as part of the reform of the nation’s

mining sector, it is mindful that no model is perfect.



As such, Nigeria must strive to ensure that it avoids

all the negative consequences of market-led or

private sector driven mining, in the Ministry’s new

role of regulators and establishing the environment

requisite for a robust mining sector.

As to the question, “Where does the future of

mining lie in Nigeria,” I must state that from my

vantage point, it is a very bright future. However,

the brightness of that future is predicated on

Nigeria’s ability to maintain the enabling

environment necessary to attract the capital that

is fundamental to the development of the sector.

Understandably, there is an indirect relationship

between capital investment and risk. Mining

investment is no different. From the Ministry’s



perspective, it is beginning to see some dividends

of the reforms that have been previously

described. More and more, as Ministry personnel

travel out for investor outreach programs, they are

receiving significant interest from individuals and

companies that are interested in mining the

country’s minerals directly, as well as partnering

with local Nigerian miners. In addition, the Ministry

is building the capacity of local miners, which is

critical to the pyramid structure of mining

development. Given that it takes 7 to 9 years for

successful development of a mine, I have every

confidence that the mining sector will take its

rightful role in positively contributing to Nigeria’s

sustainable development, thereby, ensuring for the

attainment of the objectives of its Vision 20:2020.



Again, I thank you for your invitation and wish you

all good luck in your studies.

lecture on nigeria's solid minerals

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