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Focus on mining sector
Mon, 16 Jan 2012 11:51

Exploitation of Nigeria’s vast and largely untapped solid mineral reserve has the potential
to solve chronic energy crisis and boost the industrial sector.

Nigeria is blessed with enormous mineral wealth. As the country is well-known as one of the world’s biggest producers of oil, this seems like a statement of the obvious. What is less well known is that Nigeria has vast reserves of solid minerals: 34 types at 450 sites.

Ancient history records that there has been mining in the region for almost as long as there has been human settlement. The iron-making Nok people of 300BC, the bronze works of the Igbo-Ukwu in the eighth century, the extensive trade in gold undertaken by the Hausa 300 years later, and the incomparable bronzes produced by Ife and Benin in the centuries that followed – all of these bear testimony to the availability of minerals throughout the area of modern Nigeria, and to the skill of the various cultures who worked with them to create tools and artworks.

By the early part of the 20th century, Nigeria was an exporter of several minerals, most notably coal, tin and columbite. The dictates of the colonial economy meant that minerals left Nigeria in their raw state. Very little was done to add value; to use the minerals for the establishment and growth of an industrial sector.

The discovery of huge oil reserves in the late 1950s seemed to make these concerns redundant. Why spend time and effort dragging minerals out of the ground when black gold would make the country rich? Although a number of international firms, mostly British, continued to run mining operations, the federal government decided to nationalise all mines in the aftermath of the civil war which ended in 1970. Booming oil prices (and a severe falling off in the prices of commodities) masked the damage to the economy of this decision in the short term. The long-term effects are now very evident: there is too much dependence on oil and gas industry and a big effort is required to diversify the economy.

State mining was a flop. No investments in technology were made and production levels plummeted. Coal production today (63 503 tonnes) is far lower than in the 1950s while tin and columbite are yielding less than 1% of their 1960s levels. Solid minerals as a whole contribute 0.29% of the nation’s gross domestic product (GDP).

Forty years on from the decision to nationalise, the federal government has a hard task persuading corporations to return to help the country extract its mineral wealth in a time of high commodity prices and intense global competition to secure access to strategic resources. Companies in long-term enterprises like mining crave stability and state efforts to create an enabling environment have shown that legislators are aware of this – to some extent.

A new Minerals and Mining Act was passed into law in 2007,  which makes it clear that the federal government’s role in the sector will be strictly regulatory, and that the business of extracting and processing of minerals is the province of the private sector.

State goals

The Federal Ministry of Mines and Steel Development has identified seven priority minerals: coal, bitumen, iron ore, barite, limestone, lead/zinc and gold.

The long-term strategic goals of the federal government with regard to the mineral sector are clear: coal must be extracted to feed power stations to provide the much-needed electricity; iron ore extraction must bolster downstream industrial manufacturing; minerals that can bolster agriculture (in the creation of fertiliser for example) must receive priority. With a regular power supply and a reliable source of steel, the economy would then be in a position to live up to its potential. Investors are actively sought to achieve these major goals.

The second strand of state policy seeks to formalise, regulate and improve the efficiency of the small-scale (artisanal) mining sector, with a view to reducing poverty. Fully 90% of mining is done by very small groups or individuals.

They have little or no equipment, contribute no tax, and often mine in ways that damage the environment. The World Bank’s $120-million Sustainable Management of Mineral Resources Project aims to empower small-scale miners, encouraging them to form cooperatives and offering training. The project’s other thrust is to support the government in drawing up improved fiscal and legal frameworks, training administrators and computerising record-keeping.

There two successful projects, which demonstrates that the giant is waking up: a barite processing plant in Cross River State has weaned the country off its complete dependence on imports and an industrial-grade kaolin plant in Katsina is working well.

An updated mineral map, covering 24 states and 44% of the nation’s land mass, was released.

Industrial minerals

There is a shortfall in cement production although one billion tonnes of gypsum is waiting to be extracted from the ground. Big deposits are found in Borno and Adamawa in the east and Sokoto in the north-west. The versatile barite, an important component of thixotropic mud used in the oil drilling process and useful in the glass and paper industries, is present various states. Reserves of 700 million tonnes of bentonite have been identified across the country. Lignite is present in large quantities in Delta State, while there is a good supply of diatomite in Yobe and Borno, the northeastern states bordering Niger. Sokoto State is anxious to attract investors to mine and process phosphate rock, an essential ingredient for fertiliser. There is also an abundance of talc, with a reserve estimated at 100 million tonnes across the south-west and central parts of the country. Only Niger State has talc processing facilities, so there are significant opportunities to exploit this most versatile product for domestic and international markets. 

A total reserve of 1.5 billion tonnes of rock salt has been indicated and several states are investigating building soda ash plants, while marble occurs near the confluence of the Benue and Niger rivers and in the two western states, Oyo and Kwara. The Kwara State Government is looking for private partners to build a marble processing factory.

Mineral fuels

The solution to the long-standing energy crisis could lie in the estimated or inferred coal reserve of 2.7 billion tonnes - enough coal to fuel a large number of power stations. Proven reserves amount to 600 million tonnes. Private participation in coal and bitumen mining and processing should play a large part in helping the country diversify its economy away from overdependence on oil and gas.

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