Adeyemo Titilope, the Managing Director of GeoCardinal Limited, in this interview with KINGSLEY JEREMIAH, delves into strategies for fostering the growth of Nigeria’s mining sector amid mounting pressure on oil revenue.
There is advocacy for a national mining company as a way of getting more from the mining sector. What’s your opinion on this?
The National Assembly is currently considering a bill to establish a special-purpose vehicle at the national level, limiting the influence of certain entities. This move aims to create a more open environment for private companies, encouraging widespread participation and investment.
The goal is to involve everyone in the mining sector, reminiscent of the past Nigerian Mining Corporation, which, despite inefficiency, laid the groundwork for such initiatives.
Capacity building is identified as a critical need, as many individuals lack clarity on their objectives within the sector. Notably, successful mining companies often involve foreign investors, who bring capital, technology, and expertise. Indigenous efforts have struggled due to limited access to capital and expertise.
Government policies, such as requiring the processing of resources like lithium before export, aimed to stimulate the development of a value chain within the country. This approach witnessed in the last administration’s policies, aimed to create jobs and positively impact the entire value chain. But right now, a lot of people are still exporting the raw materials even through the ports.
Nigeria’s mining laws are lauded as among the best globally, partly due to the influence of Obiageli Ezekwesili, who drew inspiration from Canadian laws. This reflected a commitment to establishing a robust legal framework that aligns with international standards and facilitates sustainable and inclusive growth within the mining sector.
The government needs to address the inherent risks in the mining sector, like the de-risking undertaken in the oil industry. Unlike oil exploration, where government and individual partnerships are crucial to mitigate the financial impact of unsuccessful wells, the mining sector lacks de-risking mechanisms.
Exploration in mining is a 50/50 proposition, with potential business collapse if desired outcomes aren’t achieved. Government intervention is essential to de-risk the sector, encouraging exploration by generating accurate data through well-supervised initiatives. Supporting institutions like the Nigerian Meteorological Centre financially can ensure the robust generation and supervision of relevant data.
With de-risking measures in place and reliable data available, entrepreneurs can then access funds from institutions like the Bank of Industry. However, a notable absence is the lack of mining desks in commercial banks, hindering direct engagement with the banking sector due to perceived risks associated with mining ventures. To truly foster growth, there’s a need for comprehensive de-risking strategies, government support, and collaborative efforts involving financial institutions in the mining sector.
Oil and gas are waning, and attention is coming to solid minerals, especially those for clean energy. Where do you see Nigeria in this?
We are incredibly fortunate to be in Nigeria, a land we believe is blessed by God and governed as a Republic under divine influence. One notable advantage we possess is the widespread availability of resources. With clean energy elements such as lithium, graphite, and copper are found in various states, except for the Niger Delta region, which I’m not entirely certain about regarding clean light. In Kwara, Abuja, and Nasarawa, we know these resources exist, but the crucial factor is understanding their quality. For us to engage in international commerce and leverage these resources effectively, it becomes imperative for the government to invest in assessing and documenting the quality of these valuable elements. Lithium and graphite, being principal components of clean energy, hold immense potential for economic growth and global collaboration.
However, without accurate data on their quality, it becomes challenging to negotiate and establish their worth in the international market. Consider the analogy of a well in Nasarawa. Just as oil wells provide quantifiable data on expected yields, the government needs to take a similar approach in assessing the quality and quantity of our solid mineral resources in each state. This will not only enable us to understand the value of the resources but also establish a basis for sustainable development.
Drawing a parallel with the oil industry, where barrels are meticulously tracked, the same level of precision should be applied to our other valuable resources. This entails continuous monitoring, quantifying the extraction, and maintaining a record of the depletion over time. Additionally, the government should take a proactive role in assigning a cost value to these resources, ensuring that the wealth generated directly benefits the specific state.
Government is reportedly struggling to finance basic operations. Don’t you think the private sector should take on this role?
The challenge persists in the mining sector, with nearly two decades of consistent efforts. The government must treat this matter seriously, even if it involves seeking loans for development and establishing a trust fund dedicated to the sector. Initiatives like geographical scan, resembling a peek into the land’s potential, have been introduced, emphasising not just revenue collection but a balanced return in terms of resources.
Like the success achieved in the health sector, where strategic investments eliminated the need for health tourism, focusing on responsible resource utilisation in the mining sector can yield substantial benefits. Just as Abacha foresaw the importance of a well-equipped National Hospital to curb health tourism, the government needs to recognise the parallel need for a robust approach in the mineral sector.
The commitment to generating accurate and comprehensive data is paramount. The analogy to the health sector draws a clear parallel – just as national hospitals need to meet international standards, the mining sector’s success hinges on the government’s dedication to building a solid foundation of reliable data. Reflecting on Abacha’s foresight, it becomes evident that without a serious commitment to gathering data, the full potential of the mineral sector cannot be realised.
Are the skills here to develop the sector, especially now that the world is focusing on solid mineral resources for clean energy?
The lamentable state of skill development, particularly in the solid mineral sector, falls below acceptable standards, with even individuals within the ministry lacking the necessary technical know-how. The private sector, exemplified by companies like Emirate Lithium, recognises the potential and importance of the sector, prompting them to seek investments from international platforms like the New York Stock Exchange. They bring in expertise from America and Germany to develop their sites, acknowledging the magnitude of the task. While the private sector strives to contribute, individual efforts, no matter how substantial, might fall short in unleashing the true potential of the solid mineral sector.
To address this, the government must take a proactive role in development. Allocating funds to specific zones, such as the southwest, with a substantial budget ranging from N20 billion to N50 billion, can be a step in the right direction. This strategic approach allows for focused development, ensuring that allocated funds are substantial enough to make a meaningful impact. The government must move beyond sporadic disbursements, like the N40 million to Nasarawa, and implement comprehensive plans that address the root issues.
Mere token amounts risk being insufficient, ending up merely sustaining immediate needs without fostering the long-term growth and development the sector requires. In essence, for the solid mineral sector to thrive, the government needs to shift its approach, focusing on sustained and substantial investments, strategic development plans, and fostering partnerships to bring in the required expertise. This will not only elevate the sector but also position Nigeria as a formidable player in the global solid mineral market.
There has always been an issue between the state and the federal governments on the management of solid minerals. How does this issue affect the development of the sector?
The concept of federalism, akin to the American model, holds promise for the solid mineral sector in Nigeria. The 2007 law designates mineral ownership to the federal government, granting states the authority to establish sub-national companies as special-purpose vehicles. This empowers states to apply for licenses within their regions, fostering localised control over mining activities.
However, some states have not fully embraced this opportunity, perhaps opting for shortcuts. The law provides a clear framework for states to establish companies, like Osun’s Segilola Company or Kaduna’s mining development company, as special-purpose vehicles. These entities can then apply for licenses within their state, enabling them to manage and even sublet mining operations responsibly.
Under this framework, Nasarawa state government, for instance, has the legal authority to acquire mines in Zamfara, as permitted by law when operating through their own company.
Similar to the petroleum industry, where restrictions are not confined to specific states, the solid mineral sector allows states like Rivers to establish their companies and apply for resources in other regions, such as gold in Osun state. The challenge arises from a perceived reluctance or greed on the part of some states to fully leverage this framework. In contrast, the experience in Osun highlights the success of embracing this model, allowing the state to control resources in various regions, from Zamfara to Kaduna, Ebonyi, and Kogi. Ultimately, adhering to the established legal pathways can mitigate conflicts and noise, fostering a more harmonious and efficient development of Nigeria’s solid mineral resources.
Do you think federal allocation is impacting how states improve their revenue from the sector?
Unfortunately, the reliance on federal funds often influences the development trajectory of states, and leadership choices play a crucial role. Opting for a younger leader with innovative ideas can potentially diversify economic activities, such as cultivating crops like cocoa or rubber in agriculture.
However, positive strides are being made, as seen in Nasarawa’s proactive approach. By fostering partnerships with foreign governments and establishing new lithium processing companies through signed agreements, Nasarawa is paving the way for significant improvements in the next few years. This initiative promises enhanced liquidity for the state and sets a promising example for others to follow.
States like Oyo, Adamawa, and Niger are also actively engaged in various initiatives, with Niger making notable progress in the lithium sector, given its significant occurrences. While copper occurrences are limited in Nigeria, discoveries in Plateau and other areas indicate potential areas for development.
Encouragingly, if more states emulate the proactive strategies employed by Nasarawa and others, there’s a collective opportunity for widespread economic growth and development across the nation. The key lies in fostering effective partnerships, diversifying economic activities, and tapping into the full potential of the resources each state possesses.
Some mining companies have cited the issue of multiple taxations as a critical challenge. What is your take?
The absence of a clear structure contributes to challenges such as overlapping duties and confusion within the boardroom. A defined structure is crucial to delineate responsibilities; for instance, if one is focused on current affairs and another on energy, there should be no overlap. The issue of multiple taxations is caused by the absence of a nationally recognised structure.
This makes it unclear what taxes apply to the mining industry. Establishing a clear and nationally recognised structure would alleviate these issues. It should involve identifying the specific nature of taxes applicable to the mining sector and streamlining the process. The Federal Inland Revenue, as a national entity, could then uniformly expect and enforce the necessary taxes. A structured approach would bring clarity, reduce confusion, and foster a more efficient and effective environment for the mining industry.
Do you think we are dealing with community and environmental crises from mining activities?
The current administration in Nigeria is addressing issues in the mining sector, particularly focusing on community development engagement. Recognising the importance of fostering peace within communities, the administration has reviewed and emphasised the need for proper engagement. However, challenges arise in areas with intense poverty, where funds intended for local communities end up being redirected to urban areas, leading to potential unrest.
Similar challenges persist in environmental issues, especially in the mining sector. Some companies neglect proper reclamation procedures, violating laws that mandate the restoration of mined areas to their original state. The law is clear about the obligation to set aside funds for reclamation during the mining process, yet there is a lack of oversight and enforcement.
Establishing a special bank to monitor and secure these funds could ensure compliance. The law requires mining companies to present plans for decommissioning and to allocate funds for reclamation throughout the mining operation. Unfortunately, some areas, like Jos and Abuja, bear witness to unaddressed environmental consequences, with large holes and pits left untreated.
The challenge lies in enforcing existing laws and ensuring that mining companies adhere to regulations, not only for community development but also for environmental preservation. A collective effort involving government oversight, adherence to laws, and public awareness is essential to prevent further environmental degradation and community discontent in the mining sector.