Nigeria’s Mining Sector shows growth prospects, despite low credit provision

, Magazine

The production of solid minerals in Nigeria hits 55.85 million tonnes in 2018, according to the State Disaggregated Mining and Quarrying Data which was recently released by the National Bureau of Statistics (NBS).

The Bureau’s data shows that compared to the 45.79 tons of solid minerals produced in 2017, solid minerals production increased to 55.85 tons in 2018, representing a 22% growth between the two periods.

Basic Highlights 

  • Production in Nigeria’s Mining and Quarrying sector grew by 22% in 2018
  • Mining and Quarrying receives the lowest bank credit to the private sector
  • Ogun State produced the highest tonnes of solid minerals
  • Bayelsa State produced least tonnes of solid minerals in 2018
  • Limestone production was the highest in the year
  • Garnet and Ruby are the least produced solid minerals in 2018

Production in the sector grew by 22%, recording the highest growth in Limestone at 95%

The Nigerian mining and quarrying sector recorded 22% growth in the production of solid minerals in 2018. The break down shows that Limestone recorded the highest with 27.19 million tonnes produced.

Increase in limestone production – The volume of production in limestone further shows that compared to the preceding year of 2017, limestone production grew by 95% in 2018. In the year 2017, 13.9 million tonnes of limestone was produced, while it rose to 27.19 million tons in 2018.

In total, the production of limestone represents about 49% of the total tonnes of minerals produced.

Granite and Laterite followed closely with 9.63 million tonnes and 5.07 million tonnes produced, representing 17% and 9% of the total tonnes of minerals produced in 2018. However, Garnet and Ruby are the least produced solid minerals in 2018.

At the state level, Ogun produced the highest tonnes of solid minerals 

Ogun State produced the highest tonnes of solid minerals among the 36 States and the FCT. The State produced 16.49 tonnes of solid minerals representing 30% of the total tonnes of solid minerals produced in the year under review.

Kogi and Cross River States followed closely with 15.13 million and 3.49 million tonnes of solid minerals produced representing about 27% and 6% of the total tonnes of solid minerals produced.

However, Bayelsa and Borno States produced the lowest – The two states the produced the least are Bayelsa and Borno States with zero and 8,403.30 tonnes of minerals produced respectively.

The Mining Sector shows growth prospects despite low bank credit provision

The Nigerian mining and quarrying sector has shown growth prospects despite the low bank credit given to the private sector in 2018.

Recent data shows that mining and quarrying received the lowest allocation of credit to the private sector with N20.69 billion, representing a meagre 0.14% of the total bank credit to the private sector. Shortchanging an important sector like mining and quarrying is obviously not good for the economy.

This is the Progress made so far

Late last year, the Nigerian Government awarded a mining contract to ten exploration consulting firms, a move that was described as part of the country’s efforts to develop the mining sector.

Early in this month, the Federal Government launched a report designed to enhance the contribution of the solid minerals sector to Nigeria’s revenue of Gross domestic product, GDP.

During the lunching, the Executive secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Mr. Waziri Adio stressed that the mining sector has not been tapped to the fullest despite its potential to create jobs, address social issues and grow the entire economy. According to to the NEITI secretary:

“THERE IS NO DOUBT THAT NIGERIA HAS A 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.”

Some downsides despite rich mineral resources

Nigeria is considered a global haven for 54 unexploited mineral resources strewn across 22 states of Nigeria. Despite the rich resources, poor policy perception and the absence of specialized technocrats have plagued the sector.

In its latest 2019 NEITI’s report titled “Improving Transparency and Governance for Value Optimisation in Nigeria’s Mining Sector,” NEITI identified low perception index, weak regulatory architecture, and the absence of mining majors as the bane of the sector.

A section of the report reads:

HOWEVER, DESPITE NIGERIA’S EXTENSIVE AND GLOBALLY COMPETITIVE REGULATORY FRAMEWORK, NIGERIA’S MINING INDUSTRY IS LARGELY UNEXPLOITED AND CONTRIBUTES VERY LITTLE TO THE COUNTRY’S INDUSTRIAL OUTPUT. AS AT 2016, THE MINING INDEX FOR NIGERIA WAS STILL COMPARATIVELY THE LOWEST AT 84.1 PERCENT, IN COMPARISON WITH THAT OF THE USA AT 133.9 PERCENT, AUSTRALIA AT 131 PERCENT OR EVEN SOUTH AFRICA AT 98 PERCENT. THIS IS EXPECTED, SINCE THESE ARE KNOWN DESTINATIONS WITH LONG-TESTED MINING CULTURES, AND CONSISTENCY IN THE FORMULATION.”

Why FG should invest more in the Mining Sector sector?

About two weeks ago, Canada launched ambitious mining and metals plan to improve sector competitiveness. Canada’s Minister of Natural Resources, Amarjeet Sohi, remarked:

“IN A WORLD INCREASINGLY LOOKING FOR SUSTAINABLE AND RESPONSIBLY SOURCED MINERAL PRODUCTS, CANADA IS UNMATCHED. AS GLOBAL DEMAND FOR SUSTAINABLY DEVELOPED RESOURCES GROWS, CANADA MUST CONTINUE TO CAPITALIZE ON ITS NATURAL AND HUMAN ADVANTAGE TO ENSURE OUR COMPETITIVENESS IN GLOBAL MARKETS.”

This implies that the growth opportunities that await Nigeria in the mining sector cannot be overemphasised.

Just Recently, the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) and the sector’s stakeholders, stated that the volume of Nigeria’s iron ore alone can generate over $60 billion on a yearly basis if well managed.

Against the foregoing, therefore, the Federal Government of Nigeria needs to build and implement a robust regulatory framework for the mining sector. Also, FG must revamp the institution and technical structure; ensuring more accessible funds for stakeholders to improve the sector’s business environment.