Despite the mining sector’s growing contribution to Nigeria’s economy, stakeholders are calling for greater transparency in the Ministry of Solid Minerals Development’s focus on value addition. They are demanding a policy framework that promotes a comprehensive value chain in the sector, reports Damilola Aina.
The policy direction of the Ministry of Solid Minerals Development to embed value addition in the exploration of critical raw minerals has bolstered the sector’s GDP contribution to N1.56 trillion in one year. However, this figure fell 16% short of the N1.87 trillion contributed in the previous year between Q3 2023 and Q2 2024.
According to the latest GDP report from the National Bureau of Statistics (NBS), the mining sector recorded growth but remained a minor contributor to the 3.19% GDP growth in Q2 2023, which was largely driven by the expansion in the services sector. The report shows the sector, including coal mining, metal ore, quarrying, and other mineral activities, contributed N364.49 billion in Q3 2023, which rose to N878.43 billion in Q4 2023. The sector’s contribution then increased to N71.63 billion in Q1 2024, marking a 136.6% rise from N30.27 billion year-on-year, and reached N249.27 billion in Q2 2024.
The NBS stated, “This sector grew nominally by -0.37% year-on-year in Q2 2024. Metal ores exhibited the highest growth rate among sub-activities at 62.37%, followed by crude petroleum and natural gas at 7.64%, with crude petroleum and natural gas contributing 92.70% to the sector in Q2 2024.”
Despite these gains, the mining and quarrying sector contributed only 5.60% to the overall GDP in Q2 2024, a drop from 6.58% in Q2 2023 and 7.86% in the previous quarter.
To reduce reliance on crude oil, the Ministry of Solid Minerals Development, led by Dr. Dele Alake, introduced a seven-point agenda to increase foreign direct investment and boost the sector’s revenue contribution by 50%. The agenda includes the creation of the Nigerian Solid Minerals Corporation, forming joint ventures with mining multinationals, compiling data on priority minerals, establishing a Mines Surveillance Task Force and Mine Police, reviewing mining licenses, and setting up Mineral Processing Centres focused on value-added products.
Shortly after assuming office, Alake stressed that compliance with value addition would be mandatory for mining investors. He has already revoked 2,557 mining licenses for various infractions, signaling a firm stance on this policy.
The government’s focus on value addition has coincided with a renewed interest from foreign investors and efforts to attract long-term investments into Nigeria’s mining sector. Alake emphasized that minerals like lithium and gold must be processed locally to enhance value and curb losses associated with raw exports.
“We will no longer allow any company to enter the mining sector without a plan for local value addition through processing and refining,” Alake said. “This policy will generate employment and prevent the export of raw minerals, ensuring that more value and benefits remain within local communities.”
Value addition in mining involves enhancing extracted resources through processing, refining, and manufacturing, which is crucial given Nigeria’s diverse mineral wealth, including deposits of coal, limestone, tin, gold, and iron ore. Most of these are currently exported as raw materials by foreign investors.
Experts argue that these deals should ensure that Nigeria receives fair earnings from its resources. For instance, while raw tin ore may sell for N2,500 per kilogram, processed forms like cassiterite can triple in value due to added processing.
Industry stakeholders note that value addition can drive industrialization, job creation, urbanization, and economic development. It also spurs technological advancement, benefiting the broader economy.
At a press briefing, Alake clarified that the value-addition policy does not ban raw exports but aims to enhance their value. “The local value addition doesn’t stop exportation but adds more value to what we export,” he stated.
The NBS data revealed a 102.9% increase in solid mineral exports in the first half of 2024, totaling N121.97 billion, compared to N60.11 billion in 2023. However, the data did not specify whether these exports were raw or value-added, leaving stakeholders calling for clearer guidelines on the implementation of the value-addition policy.
The Nigerian Mining and Geosciences Society (NMGS), Miners Association of Nigeria, Women in Mining Nigeria, and other associations expressed concerns over the lack of precise specifications on the required processing level. They urged the government to accelerate the establishment of mineral processing centers to enhance value addition.
Prof. Akinade Olatunji, President of the NMGS, said, “While we commend the government’s vision for value addition, the absence of clear guidelines is undermining Nigerian mineral production.” He recommended upgrading mineral buying centers to include processing facilities, ensuring that Nigeria’s resources are not only mined but fully exploited for their maximum value.
As Nigeria continues to push for a more value-driven mining sector, the call for transparency and clear policy frameworks remains critical to unlocking the full potential of the country’s mineral wealth.
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