Nigeria’s mining sector in crisis, $9bn lost to illegal miners yearly

• Foreigners‭, ‬especially Chinese‭, ‬big culprits
• Some private jets airlift minerals out of country
• Politicians collaborate with illegal miners

Nigeria’s diverse and vast possession of relevant natural resources, notably in the abundance of mineral resources, is a fact economists, geologists, historians and researchers have  proven to be true over time.

A report by the Nigerian Geological Survey Agency (NGSA), confirmed that the country is endowed with over 34 different solid minerals and precious metals  available in commercial quantities in more than 500 locations across the various regions of the country with a commercial value estimated to be worth trillions of dollars.

The country’s capacity to lure investors and business investments in the mining industry has, however, remained largely untapped, and subjected to structural and policy impediments, fuelled by unlawful mining activities which have to a large extent, made the mining sector a menace rather than a key component of the country’s economic diversification goal, analysts aver.

Also, data gleaned from the National Bureau of Statistics (NBS), showed that the solid minerals sector’s contribution to Nigeria’s gross domestic product (GDP) stood at 0.6 percent  in Q1 2021, an indication that the sector is in dire need of structural advancements to attain the five percent GDP target by 2025 set by the Ministry of Mines and Steel Development (MMSD).

According to a research conducted by the Nigeria Extractive Industry Transparent Initiatives (NEITI),  Nigeria lost an estimated $9 billion  to illegal mining and exportation of gold and other mineral resources between 2014 and 2015. It was also disclosed that the country  lost nearly $54 billion to illegal gold mining and smuggling between 2012 and 2018.

Further analysis showed that while the definition of illegal mining has been restricted to miners without license, many licensed miners have reportedly operated  illegally without compliance to mining regulations, making the fight against illegal mining more complicated, capped by the government’s inability to properly monitor and regulate mining activities.

One of the instances of illegal mining, which was reported by Business A.M., occured in Dagbala, Akoko-Edo local government area, a community noted for its abundant gold deposit, among other solid minerals.

Investors and registered miners of solid minerals in the community expressed their displeasure over the emergence and continual disruptive activities of illegal miners, adding that  some of them have been forced to abandon their sites and livelihood due to the operations and attacks by the unlawful miners.

Fatai Jimoh, operating officer of Macana Company Limited, one of the registered mining companies in the state, noted that the illegal miners who often present deceitful license to delude security operatives whenever they are confronted had taken over mining operations in the community, preventing authorised miners from working and also, robbing the government of essential revenue.

Jimoh called on the mining cadastral office to take more stringent measures against illegal mining and also, enlighten security operatives on better ways to identify fake mining licences and understand the longitudes and latitudes of mining operations to enhance mining control.

A study conducted by Maurice Ogbonnaya, senior research consultant, Institute of Security Studies (ISS), found that an estimated 80 percent  of mining in the North West region is carried out illegally and on an artisanal basis by local populations.

According to the report, the mining of large untapped mineral deposits in the area, especially gold, which has strategic importance and economic value, is dominated by illegal miners, who control mining operations in the region. It also disclosed that some of the illegal mining activities were  promoted by collaborations between politically connected Nigerians and some foreign corporations, notably from China.

“Illegal miners often front for politically connected individuals who collaborate with foreign nationals and corporations to sell gold. The mineral is routinely smuggled to Dubai through neighbouring Niger and Togo,”  it stated.

Commenting on Section 1(1) of the Nigerian Minerals and Mining Act, 2007, which gives the federal government ownership and absolute control over all mineral resources in the country, Ogbonnaya argued that the act has failed to address  the deep-rooted structural problem facing Nigeria’s fiscal federal system which favours the central government. He pointed out that state governments in many cases, refused to police and regulate mineral resources because they considered them federal property.

To address the challenge, Ogbonnaya suggested that the Mining Act should be amended to place ownership and control of mineral resources on state governments rather than the federal government.

“Nigeria also needs to deal, through diplomatic channels, with the involvement of foreign nationals and corporations in organised crime and illegal mining in the country,” he added.

In his assessment of the country’s mining sector, Babatunde Alatise, a mining expert and chairman of solid minerals and mining group of  Lagos Chambers of Commerce and Industry (LCCI), said the failure of Nigerian governments to establish a reliable database, provide adequate financial interventions and put in place a structure that will make the benefits of the exploitation of solid minerals available to all Nigerians, is partly responsible for  the spate of illegal mining seen in the country.

On the way forward, Alatise enjoined  the federal government to prioritise technology to enable surveillance officers monitor mining activities efficiently, and also enable licensed miners and investors exploit available data to make significant investments in the sector.

On December 9, 2020, Orji Uzor Kalu, senator representing Abia North constituency, moved a motion to investigate the alleged $9 billion annual loss from illegal mining activities, noting that the offenders  had cost the country over $500 million annually in forfeited royalties and taxes to the government.

The erstwhile Abia State governor enjoined the government to develop sustainable programmes that will catalyse increased investment in the extraction and refining of gold and other minerals sourced from mines in Nigeria. He added that proactive measures should also be implemented towards tracking and curbing illegal mining activities.

Kalu also argued that if the country conserves its mineral reserves, and ensures effective exploitation, the accruing revenue would surpass that of oil and gas.

Nine months after Kalu’s motion, an investigative hearing was eventually organised by the senate committee on solid minerals, mines, steel development, and metallurgy.

Speaking at the hearing, Uche Ogah, minister of state for mines and steel development, noted that illegal mining in Nigeria started as far back as the early 1980s as a result of the indigenisation policy of the military regime implemented in the late 1970s.

The minister also disclosed that unlawful mining thrived due to some factors such as: private jet owners aiding and abetting miners in the exportation of smuggled gold,  connivance of security agencies with the unlawful miners, collaboration by host communities who are bribed by offenders, lack of manpower to monitor and curtail illegal mining activities, and low level of application of technology in carrying out surveillance and other inspections.

He called for stringent scrutiny of private jet ownership and operations in the country to prevent smuggling of mineral resources to other countries by air. He added that the menace could be tackled proactively through the establishment of mines police, special court/tribunals to try and punish offenders, and  sufficient funding for the ministry to execute development projects to restructure the sector.

The minister also accused the Central Bank of Nigeria (CBN) of failing to support the development of the mines and solid minerals sector through financial interventions.

“It is unfortunate that the Central Bank of Nigeria (CBN) did not believe in us. If they believe in us, if they support us the way they are supporting agriculture, we will do wonders for this country,” the minister said.

He further enjoined the Ministry of Finance to speed up the export policy on solid minerals, noting that it is the only way investors can be brought into the sector.

Ogah also urged the general public to get involved in checking the activities of unlawful miners in their communities.

On his part, Tanko Al Makura, chairman of the committee, said all concerned agencies in the mining sector, including heads of relevant government agencies, would be summoned to enable an in-depth investigation of the issue and ensure the implementation of sustainable and effective measures towards addressing the menace.