Why Nigeria Needs A Mining Corporation Now

By

Professor Olugbenga Okunlola

The zeal and focus of the current Minister of Solid Minerals as observed from his  utterances, actions and body language give an impression of his determination to make a mark in the industry.

Naturally, the cynical reaction will be “Na Today?”, Using a common Nigerian local refrain. Or, “have we not seen this before?”, especially, also considering the actions and initial zeal  of previous ministers. Something is striking here however, especially for those of us  in the sector for over 40 years , spanning the public service, academia, and industry and seeing through over eleven Ministers with diverse agenda and reform programs. A seeming departure is this audacity and boldness to “strike the iron while it is still red hot”. The speed in rolling out his agenda and the clarity of the path he has chosen for this seems a different approach from his predecessors. He is in a justified hurry. This might well be hopefully, an elixir many of us have been envisaging.

Again the usual refrain may be, let us wait and see. As the saying goes, Morning shows the day.  This particular morning seems to portend an interestingly hopeful day.

One major bold leap in his agenda is the proposal to set up  the Minerals or Mining Corporation. This has generated some hearty debates and discussions amongst professionals and non-professionals. A notable one is the editorial in one of the leading newspapers-The Punch. It was more or less a direct, pungent criticism and condemnation of the proposed Corporation. The comments were more or less premised on Nigeria’s  experience with State Owned Enterprises, which according to the newspaper, has been one of monumental waste, losses, inefficiencies and massive corruption. While the generalization may be true to an extent, the concept of this corporation, though not entirely new, needs to be subjected to objective analysis.  In doing this, It is important to delve a bit into historical perspectives.

Organized mining activities started between 1902 and 1923 with the commissioning of The Mineral Survey of the then southern and northern protectorate.  The earliest mined mineral was tin ore by the Royal Niger Company in 1905. Gold and Coal followed around 1916.  It is significant to note that Coal Mining gave birth to the railway industry with the earliest rail Infrastructure built to mine coal from Enugu to the sea port in Port Harcourt.  Besides the coal Corporation, iron ore discovery through government agencies in partnership with the Russians led to  the formation of the Nigerian Iron Ore Mining Company NIOMCO, at Itakpe, the beginning of the Ajaokuta Steel complex and  steel rolling Mills at Katsina, Aladja, Osogbo and Jos respectively.

 Prior to 1971, British companies dominated the scene with about 120 companies at the peak of production. Thus a combination of  government initiatives , via a combination of  state corporations and private entrepreneurship ensured that between 1955 -1975 about four main minerals explored and mined contributed about 12 % to the the GDP with over two million workers employed legally across the value chain of the sector, from exploration  to production,processing and smelting. The steel rolling mills , world class tin smelters  at Jos, Clay bricks productions across Nigeria were also clear evidences.

It is true that prior to the free fall of fortunes, Jos, Enugu and arguably, Port Harcourt were built practically from mining. From then, to about now, despite series of reforms, laws, policies, road maps, foreign and local promotions, the sector has recorded  abysmal 0.3% contribution to GDP. The Nigerian Extractive Industry Transparency Initiative,NEITI’s recent audit report corroborates this.

It should be emphasized that there was (and still is ) the Nigerian Mining Corporation (NMC) that was “ wound up” by the President Obasanjo administration through the then Minister  of Mines and Steel, Oby Ezekwesili. While many of us applauded the decision then, because of the then obvious issues of managerial lapses, corruption, and a befuddled understanding of the emerging sectorial global trends of the minerals industry ,on hindsight , it was a not too correct applause. Why? The Nigerian Mining Corporation served then as a buffer between the public and the re-emerging private sector that had been severely traumatized by the costly mistake and negative effect of the Indigenisation decree of 1972 on the minerals sector. This decree led to the exit of virtually all the foreign companies including the over 120 British companies. Up till now, despite all the strenuous efforts at promotional trips  and wooing them back , none or only very few has returned and are still testing the ground . The “wooing” has been going on now for close to 40 years or there about. As at now, there are only about  five active mining companies in Nigeria and are mostly small to medium scale companies. This excludes the cement companies that are notably producing limestone for cement in  surface quarries.

The Mining industries is peculiarly a highly sensitive industry that is more or less a “marathon” and once trust is missing, it can be tortuous to gain it back. In fairness, there has been strenuous efforts, but it has only led to minimal gains. Despite a 2016 Road map that has set a target of 5% contributions to the GDP and efforts to implement it, the GDP contribution is still a shameful 0.3%. Confidence has to be brought back. Of course, myriad of issues bedevil the sector now, like security, scavenger/ illegal mining, financing constrains, mining rights governance amongst others, which naturally scares away both local and international mining investment. A confidence building investment contraption now needs to be on ground for stability and to convince the serious investing sector. It must be deliberately  well run , (and this should be emphasized), with a mind set  and  clear  focus for a PPP entrepreneurship model with adequate checks, balance and free from debilitating bureaucracy. This may  need now to be promoted.

Back to the old Mining Corporation of the 70s to the early 2000s, it was  involved in breaking down the exploration barriers, and followed it in some appreciable cases to the end point of the value chain. All the serious potential companies for metallic, and even industrial minerals operating or even about to operate today, for metallic and development minerals were virtually all spear headed and developed to brown field status, ranging from the Segilola, Iperindo to the Okolom , Niger fields up to some projects in the Kebbi- Zamfara  gold fields by  the corporations not to talk of the  many brick factories, carbonate ventures and so on. Since they were privatized and sold, over 80% of these efforts have become moribund and completely run down. A notably sad case is the Coal Corporation  assets. Of course, as mentioned earlier, at some point, the Mining  corporation lost focus at the latter years, but while they lasted, they were a buffer between the exploration data generated by the Nigerian Geological Surveys (NGSA)and translating to detailed exploration and production ventures , with working and successful collaborations. Despite the ineptitude that arose later, still to her credit there was no debilitating over hanging liabilities. In fact, it left many assets, now all appropriated, including a world class commercial analytical laboratory that could have been very useful now for the industry. That buffer contraption to facilitate a trust and hence a waiting success story of the  Nigeria’s Mining sector  may still be needed today.

The compelling issue that we must challenge this administration about, is to see that a honest, diligent well planned structure that can be a show case for successful investment is re-enacted. Experienced, truly trusted, skillful, honest personell must be involved,. “The job for the boys” syndrome must be discarded. The “new “ Corporation can replicate what NNPCl is, to the oil sector, despite and in the presence of oil giants and IOCs.

In setting up this corporation, a lot of hard work needs to be done and with the zeal of the Governance as seen in the last 2 months one does not think that should be a difficult thing to do.

A parting shot. The concept of “ Government has no business in business” in this case may need some modification , especially  at this time, and where we find ourselves  in the  mining industry. No doubt, Private investment should still continue to be vigorously promoted , through provision of conducive atmosphere, good  and implemented mining governance policies and comprehensive regulatory oversight. However, as a strategy to also encourage and convince the “scared” and unsure international and local investors, this contraption, where safe MOUs, partnerships and long term collaborations and JV on clear and straight business terms  are emphasized ,may be needed . This confidence building has been lacking in the last 20 years . Let us give this initiative another chance! Anyway, the last time I checked, the act setting up the NMC was never repealed . Its activities were only “wound down”. This might be a good start.

Prof. Olugbenga Okunlola, Head, Department of Geology, University of Ibadan, Nigeria, and a former President of the Nigerian Mining and Geosciences Society, is currently the President of Geological Society of Africa.