Solid minerals sector generated N69.2b in 2015, says NEITI

Nigeria earned N69.2 billion from the solid minerals sector in 2015, an increase of 24% on the N55.8 billion earned from the sector in 2014.

This disclosure is contained in the latest independent audit report of the Nigeria Extractive Industries Transparency Initiative (NEITI) released on Sunday, November 19, 2017 following the approval of the report by the National Stakeholders Working Group, which is the board of NEITI.

The audit report disclosed that the total production of solid minerals in the country stood at 39.27 million tons. This represents a reduction of 17% from the 47.1 million tons produced in 2014. The drop in 2015’s production was attributed to insecurity in parts of the country and more stringent approval process for explosives used in mining.

However, while mineral production reduced, government revenues went up in the same year.  “This increase in revenue was due to the growth in taxes collected from the sector and review of royalty rates paid by companies which came into effect within the year under review,” the report stated. NEITI’s previous solid minerals audit reports had recommended upward review of Nigeria’s royalty rates to align with prevailing industry and present day realities.

The report also disclosed that the value of solid minerals exports in 2015 stood at $9.733 million, which was 1.45% of non-oil exports for the year. Lead and zinc topped the chart with 79% valued at $7.7 million, while 175 ounces of gold valued at only $122,000 were exported during the period.

The report showed that the solid minerals sector contributed 0.12% to Nigeria’s Gross Domestic Product (GDP) in 2015, a marginal increase of 0.01% on the 0.11% contribution of the sector to GDP in 2014.

Waziri Adio, NEITI’s Executive Secretary, said: “This report shows evidence that the contribution of the solid minerals sector to government revenues and macro-economic indicators is beginning to improve, even if marginally. The sector could definitely contribute more to revenues, job and wealth creation, exports, imports substitution, industrial development and overall national growth.

“But there is a sign of progress already. What we need to do is to build on, deepen and sustain this early promise to ensure that the country returns to being a major mining destination and maximises the abundant opportunities offered by the sector.

“Faithful and sustained implementation of the roadmap developed by the Ministry of Mines and Steel Development and of the recommendations in this report will be necessary.”

The report highlighted the specific contributions by companies and states to the sector revenue growth and development. “Cement manufacturing companies were the major revenue contributors to the sector, accounting for over 60%, while construction companies and real mining companies contribute about 31% and 8% respectively. For instance, three states- Ogun, Kogi and Cross River and the FCT accounted for about 70% of the production volumes in 2015. However, Ogun state topped the table with 36%,” the report noted.

According to the report, a total of 4,305 mineral titles were valid in 2015. Of this figure, 204 were mining leases, 657 were for small scale mining, 1,865 were for quarrying licenses while exploration licenses accounted for the remaining 1579.  It noted that 1,220 of the 4,305 mining titles were issued in 2015 alone.

Adio disclosed that the NEITI 2015 Oil and Gas report would be released next month. He also reaffirmed the commitment of the Board to ensuring that its reports are timelier.

Adio said: “Resources and processes permitting, NEITI plans to clear the backlog of reports by the middle of 2018. Our goal is not just to make our reports timelier but also to make them as real-time as possible to enhance their utility and relevance.

“We are finalising the procurement process of the 2016 reports and will soon commence the procurement for the 2017 reports. We are also working hard to automate our data collection and to mainstream the EITI process.

“Once we achieve this, we hope to then concentrate more on adding extra value to the country through cutting-edge analyses, modelling and forecasting, and setting agenda for more prudent and accountable application of natural resources for the benefits of all Nigerians.”

The just released 2015 solid minerals audit report recognised the progress being made by the government towards repositioning the sector to be a major driver of the economic and revenue diversification agenda of the present administration.

To sustain this growth and further enhance the capacity of the sector to contribute to the economy, the report called for “the speedy release of the N30 billion solid minerals development fund recently approved by the Federal Executive Council to the intended beneficiaries in order to support some of the activities already stipulated in the Roadmap for the sector”.

The report also called for the improvement of the economic value of Nigeria’s minerals across the value chain before export in order to maximize their potentials and contributions to the growth of the Nigerian economy, while a ban should be placed on the importation of some minerals like gypsum, barite and kaolin which Nigeria has in good quality and quantity.

As part of measures to curb the activities of illegal miners resulting in loss of revenues to government and ensure the security of field officers, the NEITI report recommended the “re-introduction of mines police to protect the officers, reduce the activities of illegal miners and subsequently increase production and investments in the sector. Government should also build the capacity and equip the states’ mines officers and surveillance teams so they can effectively verify production figures and accurately calculate royalty payments.”

The report underscored the need for synergy between relevant government agencies to ensure that all minerals export including samples have permits duly issued by the Mining Inspectorate Department while urgent measures should be taken by government to curb multiple taxation in the sector in line with its policy on Ease of Doing Business in the country.

NEITI’s first intervention in the solid minerals sector began with the conduct of a scoping study in 2011, followed by an independent audit of the sector in 2012 which covered the years 2007-2010.

The six cycles of audit so far conducted by NEITI in the sector show that Nigeria earned a total of N271.77 billion from 2007 to 2015.

The breakdown is contained in the table below:

The NEITI 2015 solid minerals audit was conducted by Amedu Onekpe & Co., a Nigerian audit firm selected through international competitive procurement process.

The audit covered 481 companies that made royalty payments in that year.  The process specifically reconciled the payments made by 42 companies to government receipts. These 42 companies met the materiality threshold of N3 million royalty payment set by NEITI which accounted for about 87% of the total royalty payments made in the sector.

The report also has comprehensive information on financial flows in the sector, governance and process issues and the implications for revenues tracking, computation and management.