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The trouble with Nigeria’s mining sector

By Oscarline Onwuemenyi

A few weeks ago, while hosting the Canadian Deputy High Commissioner to Nigeria, Mr. Jean Gauthier, in preparation for Nigeria’s attendance in the Prospectors and Developers Association of Canada, PDAC, Convention holding in Toronto Canada, the Nigerian Minister of Mines and Steel Development, Arc. Musa Mohammed Sada wondered aloud what was wrong with the nation’s mining sector that it was yet to attract investors to the sector.

His wonderment stems from his position that the country, and the government, has done everything possible “to create the right regulatory environment for private investors to come and do business in Nigeria.”

Speaking about Nigeria’s proposed participation at the PDAC, Sada noted, “We have been going and coming back for many years – many Ministers before me have attended – and when we look around we don’t see anybody. This time we want to go and meet with the right people, so that when we come back we shall expect a trail of the right kind of investors behind us.”

He therefore craved the advice of Mr. Gauthier, noting that, “We want to meet with you for advice so that we make sure that when we go to such international fora, we will do the right thing and attract the right investors.”

Indeed, as the Minister pointedly noted, many a delegation from the country to a mining conference – usually a large retinue of government officials and their aides, some of which have little or no business with mining – have almost, always missed the mark when it comes to attracting the right kind of investment into the sector. He joked that, oftentimes, due to the large gathering of people from all over the world to such conventions, government officials are left bewildered and have been wont to pitching to the wrong crowd.

He remarked that reports of insecurity in some parts of the country were hardly to blame for the poor turn-out of investors. “For many years, in spite of negative reporting about some events in the international media, we are yet to hear reports of any investor that has packed up and left due to insecurity. So we know the challenge is deeper that what many perceive it to be within the sector. We intend to go and tell the story, and we will be very glad to answer any question that might come up about our industry,” Sada stated.

It should be noted that the drastic decline of mining prominence and contribution to the economy started with the discovery of oil in the late 1950s. The country has gone from being one of the world’s largest producer of Columbite and the sixth largest producer of Cassiterite (tin), to a net importer of solid raw materials for our industries, often with serious consequences.

During the period of neglect, for instance, the mining sector was beset with illegal mining, smuggling of gemstones and other high value minerals. Also, the country suffered from the loss of local and international expertise, loss of revenues in taxes and royalties and the degradation of the environment.

Over the years, government’s policy on mining has fluctuated from encouraging private sector participation to direct government participation (hence the establishment of the Nigerian Mining Corporation) and numerous other government agencies to regulate the sector.

Officials have explained that government’s direct participation was principally driven by a need to fill the vacuum created by the exit of the foreign companies engaged in mining with the breakout of the Nigerian Civil war. However, what cannot be debated is that the once viable sector has been bogged down due to inefficient systems and practices and the immense opportunities missed to capitalize on the upswing of commodity prices.

However, over the past few years, government has shown its desire to revamp the sector and re-launch development of mineral resources as a viable option for the diversification of the economy. The Federal government has argued that due to its reform within the sector, the country is currently on the path to market-led or private sector orientation.

“As a result of the government’s recognition of the critical role of mining, the good days in the mining sector are coming. This recognition is even more so, given the direct link between solid mineral development and the Vision 20:2020 framework,” the Minister stated.


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