NIGERIA-ECONOMY: Taking a New Look at Neglected Minerals

By Toye Olori Reprint | | Print |

Toye Olori

LAGOS, Jul 23 1996 (IPS) - Nigeria’s government has been moving to generate investor interest in its solid minerals and curb illegal mining in the sector which, for years, had been virtually abandoned to unlicensed miners.

The drive to turn the previously neglected minerals into money- spinners started last year with the creation of the Ministry of Solid Minerals, which has been taking steps to regulate the sector and attract investors to it.

“We have, during our short time of existence, discussed investment in the mineral sector with both foreigners and indigenes,” Minister of Solid Minerals Kaloma Ali said recently.

Geoscientists say Nigeria has about 32 solid minerals, including gold, coal, lignite, baryte, bituminous tar sand and limestone. According to Ali, gold has been found in commercial quantities in nine of Nigeria’s 30 states, although the size of the total deposit is still unknown. Coal reserves have been estimated at 1,294 million tonnes, lignite at 250 million tonnes and limestone at 600 million.

Most of the minerals have been untapped. Others are mined illegally, especially gold and diamonds.

In areas where deposits of the precious metals have been discovered, thousands of men, women and children have become full- or part-time garimpeiros. Danladi Abdulahi, a Lagos civil servant, told IPS that his village, Gidan-Kwanu, located in central Nigeria’s Plateau state, was one community that had been bitten by the gold and diamond fever.

“Most people in my area have joined the business of mining for precious stones,” Abdulahi told IPS shortly after returning to Lagos from a vacation in Gidan-Kwanu.

“Women in the area spend more time in mining than they do in other activities. School children share their time between class work and mining while civil servants spend the whole of their vacation mining,” said Abdulahi, who admitted that he did some prospecting himself during his holidays.

He said he made a “substantial” amount, although he refused to say how much, by selling the gold he found to the businessmen and women who flock to the mine pits near Gidan-Kwanu to buy the metal, and also diamonds, off the miners.

“It is a lucrative business and I am thinking of resigning to join the trade,” said Abdulahi.

But his dreams of going into mining full-time could be shortlived given the plans the state has for minerals previously considered of negligeable importance in this West African nation that depends on petroleum for 90 percent of its hard-currency earnings.

It was concern about the country’s excessive dependence on oil, the instability of petroleum prices and environmental problems in oil-producing areas that led the government to turn its attention to minerals other than oil.

In 1995, it set up the ministry of solid minerals to spur the development of the largely unexploited sector by creating an environment that would attract both local and foreign investors.

Late last, Ali formed a 32-member committee led by economist Pius Okigbo to draw up policies in line with those of countries with well-developed mining industries such as Canada, Brazil and South Africa to encourage investment in the sector.

Incentives proposed by the committee, which submitted its findings in March this year, include tax holidays, the provision of reliable geological and geophysical data on solid minerals to private investors and the introduction of more stringent controls and stiff penalties for illegal miners.

“Efforts of the ministry to fully develop and exploit the sector would come to naught unless investors feel confident that laws would be clear and objectively applied to all corners and that security of investment is guaranteed,” Okigbo said when he submitted his committee’s report.

Under laws governing solid minerals, passed in 1977, prospectors must apply for licences from the state to go into mining. However, since the laws set no penalties, illegal miners have been operating with impunity. According to Ali, a decree making unlicensed mining a penal offence will soon be promulgated.

Sources at the Ministry of Solid Minerals say most of the committee’s recommendations have been accepted and that the ministry has started reviewing the 1977 laws.

In fact, it has already increased licence fees: the cost of individual mining licences for non-precious minerals has been raised from the equivalent of 19 U.S. dollars to 63 U.S. dollars and those for precious metals have been doubled to 250 U.S. dollars.

The government has also been moving to rehabilitate the coal industry, which has declined steadily since the oil boom in the 1970s. Coal output was 323,001 metric tonnes in 1972. Last year it was about 22,000 tonnes.

The sum of about 6.2 million dollars has been allocated in this year’s budget to revitalise the coal sector. The government expects to earn about 25 million dollars yearly from two existing mines for which equipment has already been bought.

“Nigeria’s coal has great potentials not only for export because of its low sulphur and other qualities, but also for domestic industrial utilisation in the iron and steel, tyres, cement, electricity, chemical industries as well as substitute fuel for firewood,” says Greg Iwu, Managing Director of the Nigeria Coal Corporation.

Israel, Brazil and South Africa have reportedly shown interest in buying Nigerian coal and, according to Ali, prospects for other minerals are also good.

“We are thinking of one to five years during which the solid mineral sector would be able to display a balance sheet that would show an appreciable contribution to the nation’s economy,” he says.

The sector accounts for just one percent of Nigeria’s 93- billion-dollar gross domestic product. According to Ali, its share should increase to 15 percent in five years’ time.