Vision 2020: Can Solid Mineral Get Harnessed?

by L.Chinedu Arizona-Ogwu

Nigeria is potential nation for exporting mineral deposit related products and she is expected to receive a dramatic boost following the offshore oil in mid-2009 as stated by offshore magazine. But will it bring any notable benefits for this nation when there are numerous impediments engulfing the country’s path towards developing solid mineral industry? Nonetheless, solid mineral industry has been identified as a priority sector by the previous and present government. Well, the write-up has ventured to discuss the salient issues of establishing solid mineral industry.

Estimated data are rounded to no more than three significant digits; may not add to totals shown.3/ In addition to the commodities listed, amethyst, aquamarine, bitumen, diamond, emerald, garnet, granite, lead, phosphate rock, ruby, sapphire, soda ash, talc, tourmaline, tungsten, zinc, and zircon are mined, and a variety of crude construction materials (stone, sand and gravel) are produced, but information is inadequate to estimate output. Considerably more barite is produced but is considered to be commercially unusable. Mineral exploration is booming. High prices and the nation’s potential for mineral development are the two main reasons. Our nation also has a strong track record of producing world-class mining deposits .Mining is extremely important to our economy, and last year paid royalties of more than $100 million to the Nigerian government. The mining industry employs more than 3,000, people with at least as many indirect jobs. Mining makes up almost six per cent of the nation’s gross domestic product. Mineral deposits must be developed in the areas they are found. Recent exploration activities have landowners in those areas concerned. Mining is a strong contributor to our economy, using millions of dollars in local goods and services, providing thousands of high-paying jobs to our skilled workforce, and paying hundreds of millions of dollars in royalties and taxes that support our health-care and education systems. Mining continues to be a strong contributor to Nigeria’s economy as we move forward toward self-sufficiency.

Nigeria ranked 11th in the production of crude petroleum and condensate by volume. Nigeria, which was a member of the Organization of the Petroleum Exporting Countries, remained Africa’s largest oil producer in 2001 with about 3% of world production compared with Libya (2%), Algeria (1.8%), and Egypt (0.9%) and was the5th leading source of U.S. crude oil imports following Saudi Arabia, Mexico, Canada, and Venezuela. With more than 126 million people, Nigeria was the most populous African nation. The International Monetary Fund estimated that the nation’s nominal gross domestic product (GDP) was $41.9 billion2. The oil sector, which was the cornerstone of the Nigerian economy, provided most Government revenues and accounted for most of the country’s export earnings. Government Policies and Programs the Department of Petroleum Resources concerns itself with the oil and natural gas segment of the mineral industry. The Ministry of Solid Minerals Development is involved in the promotion, exploration, and development of Nigeria’s nonfuel minerals and coal. The Ministry of Power and Steel administers the iron and steel sector. The Mining and Minerals Decree No. 34, which was enacted in 1999, reaffirms that all mineral rights are held by the Federal Government. Controversy surrounded the requests by individual producing States and local governments that the Federal Government reallocate total control of mineral resources to them. The contention of the coastal States those offshore oil resources (and revenues) should be attributed to them instead of the Federal Government made its way to the Nigerian Supreme Court. The issue remained unresolved at year end. In September, the Government announced that dormant mining licenses would be revoked and that new mining licenses would be restricted to companies and individuals with the” necessary experience and means.” More than 1,000 licenses were considered to be dormant commodity.

Nigeria has in the past largely focused on the development of its oil industry while neglecting the solid mineral sector. However geological reports show that the country has a strong mining potential. In total, Nigeria has some 34 known major mineral deposits distributed in locations across the country and offers considerable attraction for investors. Currently, the solid mineral sector accounts for between 0.05 and one percent of Nigeria’s Gross Domestic Product (GDP) despite the country having significant coal and iron ore reserves as well as several known gold, uranium, tin and tantalum deposits. And the government is determined to turn the corner and look at this solid mineral sector as its economic bedrock. Nigeria, with the help of South Africa has been developing a geochemical database of the country that is intended to facilitate exploration efforts. In addition, the government in partnership with the World Bank pooled US$120 million two years ago to fund the solid minerals sector through the establishment of a project for sustainable management of mineral resources in an attempt to address issues of artisan and small-scale mining as a poverty reduction strategy. The BPE Act empowers BPE to privatize the Nigeria Mining Corporation (NMC) and its subsidiaries as listed hereunder: Nigerian Kaolin Processing co. Ltd, Kuba B/Ladi LG Plateau State ,Nigerian Barytes Mining and Processing Co. Ltd; Azara, Awe LG Nasarawa State, Nigerian Tin and Allied Products Ltd; Gurum, Plateau State, Nimco Gold Mining Company Ltd; Ilesa, Osun State, Nimco Terrazzo Company Ltd; Gurum, Plateau State, Nimco Quarry Products Ltd with sites in six location namely: Kujama, Kaduna, Kuru, Plateau,Gano, Kano, Gubi, Bauchi, Suleja, Niger, Abakaliki, Ebonyi. Nimco Brick and Clay Products Ltd; with sites in seven locations namely: Ikorodu, Ibadan, Jos, Enugu, Kaduna, Kano and Maiduguri including consolidated Tins Mines Ltd; Jos. NMC shares in all its Associated Companies across the country.

The first step would be to examine what other solid mineral -exporting nations are doing right now. What Nigeria can learn from them and what to do to catch up with them? A strong regional co-operation will indeed help Nigeria to obtain technical know-how and expertise from interested countries. Moreover, Porter’s diamond model shows that four conditions are important for competitive superiority: firm strategy, structure, and rivalry, demand conditions, factor conditions, related and supporting industries. All four conditions need to be favourable for an industry within a country to attain global supremacy. For instance, firm strategy, structure, and rivalry will intensify competition among local companies to obtain market share. Fair competition from local market will help software firms to gather experience and knowledge to enter international market. Besides, SWOT analysis of solid mineral industry will speak out its strengths, weaknesses, opportunities and threats within a twinkle of an eye. Nigeria’s solid mineral industry should aim to exploit its opportunities and strengths while neutralize its threats and avoid its weaknesses to build up industry’s global competitiveness. Benchmarking is the most cost-effective way of introducing best practices to a country and it will help a nation to stay competitive in global software market. Hence, it would be prudent to outline wise policies and beef up a real strength in this sector. Therein lies the importance of collective and cohesive efforts. Moreover, human capital is another important issue that must be taken into account.

Dates for reopening the 193,000-metric-ton-per-year (t/yr)-capacity smelter of Aluminum Smelter Co. of Nigeria Ltd. (ALSCON) at Ikot Abasi were frequently announced during 2001; the facility, which had suspended operations in 1999, remained closed at yearend. Negotiations for a new natural gas fuel contract for the smelter, which had been underway since 2000, were completed in July 2001 when the Nigerian Gas Co. agreed to supply 2.9 million cubic meters per day of natural gas for 3 years at about $0.018 per cubic meter of gas ($0.50 per thousand standard cubic feet). At the beginning of 2001, Ferrostaal AG of Germany, which held 30%equity interest in ALSCON compared with the Government’s 70%, was slated to manage the smelter when operations restarted. At midyear, however, the Government began a search for a new technical partner to operate the ALSCON plant and reportedly was considering the construction of a second aluminum smelter .Steel.—Most of the production facilities of the primarily Government-owned steel sector were idle in 2001. The Government awarded Vsesojuznoje Importno-Exportnoje Objedieneije Tyazhpromexport of Russia a $500 million contract to complete the Ajaokuta Steel Co. Ltd. plant by 2003.The Government proposed to add a new $100 million 100,000-metric-ton-per-year (t/yr)-capacity steel rail facility at the Ajaokuta complex .The restoration of mill facilities of the Delta Steel Co.Ltd. Plant at Aladja was under contract to Voest-Alpine Industrien lagenbau GmbH & Co. Renovation of Delta’s meltshop was scheduled to be completed in 2002 Of the three state-owned steel rolling mills, Katsina Steel Rolling Co. Ltd. restarted operations in April; and Oshogbo Steel Co. Ltd. resumed production in June. In the Calabar Free Trade Zone, Bao-Yao Iron & Steel Ltd. of China reportedly was building an 180,000- to 200,000-t/yr steel plant. In joint venture with Futurex Nigeria Ltd., Bao-Yao also had a 22,000-t/yr-capacity concrete reinforcing bar plant under construction near Abuja (Metal Bulletin, 2001f; Essien, 2002;This Day, 2000§).Industrial MineralsA number of industrial mineral projects were proposed or under construction in 2001. Cross Rivers State Business Council proposed the establishment of a barite processing plant. Gemstone-cutting plants were proposed for Adamawa and Nasarawa States. The Ondo State Government rehabilitated the Oluwa Glass Factory. The Edo State Government proposed the development of a granite quarry and a marble polishing factory. The Federal Government’s Raw Materials Research and Development Council (RMRDC) proposed the establishment of a kaolin processing plant at Gwarzo in joint1References that include a section twist (§) are found in the Internet References Cited section.2Where necessary, values for 2001 have been converted from Nigerian naira(NN) to U.S. dollars (US$) at the average rate of NN117=US$1.00.

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