Gradual return of Nigeria’s solid minerals sector
Ajaokuta Steel Company Limited is Nigeria’s largest steel plant located in Ajaokuta, Kogi State.
The plant, which has been described as the larger than all the refineries in Nigeria, is all set to begin production after being moribund for several decades.
Of recent, increased emphasis has come to be placed on the potential importance of the solid minerals sub-sector to the Nigerian economy.
The recent return and attention to solid minerals was necessitated by the need to diversify Nigeria’s economy.
Nigeria is rich with over 34 commercially viable solid minerals deposits that spread across the country, but only little of these resources are being utilized in the country.
Solid minerals contributed immensely to the economic development of Nigeria in the pre-independence years. During this period, Nigeria was known for the production of coal as an energy source for electricity, railways and also for export.
Tin, columbite, lead and zinc were exported. The earnings from solid minerals were used to develop key social goods such as roads, education, hospitals etc.
The decline of the solid minerals industry started as a result of the nationalization policy of the military government in the 1970s and got aggravated with the attendant oil boom at that time.
Due to gross neglect, Nigeria subsequently turned mono product economy, highly susceptible to international oil politics.
The neglect of the solid minerals industry also led to disorder in the minefields, resulting in widespread illegal mining activities characterized by inefficiencies, illicit trading of highly priced minerals, severe ecological degradation and huge loss of revenue to the government through smuggling and nonpayment of taxes.
For example, while Nigeria’s total revenue from crude oil in 2017 was N7.3 trillion, the solid mineral sector only contributed N3.5 billion in revenue to the Federal Government.
Activities in the solid minerals sector would pick very soon if what the Sole Administrator of the company, Sumaila Abdul-Akaba said about the Ajaokuta Steel Company is anything to go by.
While submitting Technical Audit reports to the Minister of Mines and Steel Development, Abubakar Bawa Bwari, Abdul-Akaba had expressed his happiness over the renewed vigour by the Federal Government to move the steel plant project forward.
He said: “The 2018 Technical Audit of the Ajaokuta steel plant was undertaken fully by Ajaokuta Steel Company Limited Engineers, Technicians and other professionals.
This is in line with the policy of the present Federal Government on the utilization of maximum local content
possible in the execution of sundry public works in the country”.
He explained that the steel plant had been in the custody of these Professionals most of who were involved in the construction and erection, which enable some obscure details to be known.
“The Ajaokuta steel plant had been under the care of these Professionals over the years, some of who even partook in the construction and erection.
It was therefore an opportunity to know hidden details, which no outside contractor could get.
It also afforded the Company the opportunity to assemble raw information on the plants and equipment which can form the basis for future assessments and decisions if need be.
This advantage was not there in the previous exercises that were wholly carried out by foreign Contractors”.
Dwelling on how to increase the contribution of the solid mineral sector to economic growth, Partner and Mining Leader at PwC Nigeria, Cyril Azobu, said the development of the solid minerals sector is hampered by the lack of adequate funding to cater for the different stages of the life cycle of a typical mining operation.
Before returns can be generated from a mining operation, the activities need to go through the five stages of exploration, development, mining, processing, marketing, a cycle which takes between two to 10 years or more.
According to him, most mines in Nigeria are typically green fields (in the exploratory phase), thus not necessarily attractive for funding by the traditional commercial banks.
He said that the establishment of a solid mineral development bank will provide investor friendly loans, specifically designed to cater for the various stages of the mining life cycle.
These, he noted, will have interest rates and repayment terms specifically designed around the mining life cycle, making funding more accessible to miners, and repayment terms more reflective of the realities in the mining industry.
Azobu said despite these challenges, the Nigerian Government is making giant strides towards diversifying the economy, adding that mining is critical to this ambition.
The Executive Secretary of NEITI, Mr. Waziri Adio, said that the solid mineral sector could definitely contribute more to revenues, job and wealth creation, exports, imports substitution, industrial development and overall national growth.
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