... Sector Earnings Grew To N193.59bn Up From N116.81bn
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The total revenue generated by the solid minerals sector in in 2012 stood N193.59 billion representing an increase of 51.89% from the N116.81 billion generated the previous year 2020, Dr. Orji Ogbonnaya Orji, the Executive Secretary, Nigerian Extractive Industry Transparency Initiative (NEITI) had said.
Ogbonnaya Orji, who gave the figure during the release and Public presentation of the NEITI 2021 solid minerals industry report in Abuja on Monday, said the Report covered factual payments made by 1,214 companies covered by the exercise in the sector and receipts by three key government agencies namely the Federal Inland Revenue Service, The Mining Cadastre Office and the Mining Inspectorate Department of the Ministry of Mines and Steel Development.
According to the NEITI boss, the report
examined and disclosed the quantities of minerals produced during the period under review, identified the actual quantities utilized in the country, those exported from the sector, reconciled the physical/financial transactions and processes followed during this period and how the process conforms with NEITI standards of transparency and accountability.
Dr. Orji further gave a breakdown of the revenues which shows that the Federal Inland Revenue Service -FIRS collected bulk of the revenue of N169.52Billion, the Mining Cadastre Office generated N4.3Billion while the Mining Inspectorate Department generated a total of N3.62 Billion.
The report also observed a consistent year-on-year increase in revenue to the federation account from the solid minerals sector in the past fifteen years (2007-2021). It puts the total revenue that accrued to the government during these years to N818.04bn, which the report pointed out, is significantly low compared to the economic potential of the sector, noting that of the N6.62 Trillion total government revenue in 2021, the solid minerals sector barely contributed 2.6%.
On Production, the solid minerals report disclosed that the total volume of solid minerals used or sold in 2021 was 76.28 million tons with a royalty payment of N3.57billion. The minerals with the largest production volume in the year under review are Granite, Limestone, Laterite, Clay and Sand. Dangote Plc accounted for the highest production in the year under review with a total production of 28.8 million tons. Bua and Lafarge accounted for 8.4 and 4.3 million tons while Zeberced accounted for 3.3 million tons respectively.
The NEITI report also pointed out that Ogun state recorded the highest production in the year under review, with a total of 17.5 million tons followed by Kogi state with 16.3 million tons and Edo with 8 million tons. The least production volume was recorded in Borno State with 25,500 tons.
NEITI also noted that there were increases in the number of licenses issued within the period. A total of 2,045 licenses were issued with exploration licenses accounting for 840 (increase of 62.79%), Small Scale Mining Lease (SSML) 771, Quarry Lease 255, Reconnaissance Permit 139 and Mining leases 40.
On Export, the total minerals exported in 2021 was 142.54 million tons with a Free on Board (FOB) value of $101.29 million, showing an increase of 138.57% from the $42.46 million reported in 2020 report, the report stated.
However, the solid minerals contribution to export value in 2021 was a mere 0.24%. The First Patriot Nigeria Limited based in Ebonyi state accounted for 44.26% of the total export value. China was identified as the principal destination of Nigeria’s mineral exports, accounting for 97% and 88% of the export volume and value. Other destinations for Nigeria’s minerals include Malaysia, Korea, Thailand UAE etc in that order. The report explained that Solid minerals export facilitates international trade and stimulates domestic economic activities by creating employment, enhancing production and increasing revenue generation and so should be encouraged.
On solid minerals contribution to the economy, the NEITI report revealed that the solid minerals sector contributed 0.63% to GDP. While there has been some improvement compared to previous years where it contributed 0.45% in 2020 and 0.26% in 2019, the sector has not yet reached its full potential in making a significant impact on the overall Nigerian economy.
The report identified a total sum of N1.06 Billion as outstanding company liability to government within the period under review. The liability was as a result of the failure of some of the companies to pay their annual service fees for the respective mineral titles. Annual service fee is a statutory payment by mineral title holders for each cadastral unit on mineral titles.
One of the success stories of NEITI in Nigeria’s solid minerals sector is the opening of the Solid Minerals Revenue Account. In June 2021, N7.94 Billion was distributed to the three tiers of government from that account based on the mineral revenue sharing formula, with a balance of N5.67Billion left in the account as at 31st December 2021. The Federal government got N3.64Billion, states N1.85Billion while local government councils got N1.42Billion, while 13% derivation share was N1.03 Billion.
The Report also revealed that “The seven (7) strategic minerals in the sector contributed a total of ₦1.42 billion in royalty payments, with limestone being the dominant contributor at ₦1.03 billion (73.07%). NEITI was optimistic that the commencement of full operations at the Dangote cement plant in Okpella, Edo State, royalty revenue from limestone would definitely increase and therefore called on the government through the MMSD, to urgently review the solid minerals roadmap and align it with current market realities, implement sustainable strategies to boost revenue from other strategic minerals and reduce reliance on single minerals like limestone.
NEITI reported that while there was an increase of 85% in the number of artisanal miners operators, from 1,273 in 2020 to 2,336 in 2021 across the 6 geo-political zones of the country, there are no commensurate data in the areas of production, royalty payments, exports, etc. to support this increase in operators.
Similarly, employment data from the sector showed that the sector’s contribution to employment in 2021 was 25,618, with 596 expatriates while 25,022 were Nigerians. In relation to gender, 92% of jobs were occupied by men, while women occupied 8%. No physically challenged person was recorded as being employed in the sector in 2021.
On Community Development Agreement (CDA) and Environmental Expenditure, the Report disclosed that out of the 121 companies covered, only 67 executed CDAs with their host communities. Please note that the Community Development Agreement is a prerequisite for exploitation of minerals in Nigeria as contained in Section 116(1) of the NMMA 2007. The NEITI report revealed that the signed CDAs in the custody of the MMSD(MECD) were not also publicly accessible, contrary to Nigeria’s commitment to the Open Government Partnership and the EITI’s requirement on Open Data. The report recommends that the MMSD should host all CDAs on its website to make them easily accessible to the public. This would allow citizens to monitor the social benefits mining companies provide to the host communities, while reinforcing trust between the government and the communities. Strong sanctions should also be meted on erring companies.
On social payments, NEITI observed that only 39 out of the 121 companies that met the materiality threshold made the mandatory social payments as contained in the CDAs signed with their host communities. 10 companies made only non -mandatory social payments/expenditures. This reveals poor compliance to the social benefit to host communities’ requirements of the NMMA 2007 and Nigerian Minerals and Mining Regulations (NMMR) 2011. NEITI however recommend that the MMSD and MCO should collaborate to monitor compliance to the terms of NMMA 2007 and MMR 2011 and impose appropriate penalties on defaulters.
The report also revealed that only 50 out of the 121 companies (41.32%) fully complied with environmental standards, indicating low overall compliance with environmental laws and regulations by most companies. NEITI recommends that the relevant agency of government (i.e., NESREA) should take strict actions by imposing sanctions on all non-compliant companies. Additionally, it should provide a list of all non-compliant companies to the MMSD for further disciplinary measures, such as license suspension or revocation, fines, and possible imprisonment as per the Harmful Waste Act, 2004.
NEITI reminded its stakeholders at the release of the report that it neither generates data nor manufactures information, adding that the reports being released was based on information and data mandatorily but voluntarily provided to the agency by relevant government agencies and companies covered by the NEITI process who also signed – off the final report as required by the NEITI process.
On Emerging Issues, the report recommended that the federal government should collaborate with relevant stakeholders to ensure that the Energy Transition Plan (ETP) is consciously implemented with the Energy Transition Minerals such as Cobalt, Lithium, Nickel, Copper, Graphite and Titanium beneficiated to increase revenue to government coffers and create employment opportunities for the teeming youths.
The NEITI report also underscored the need to shift attention from oil to the development of the solid minerals sector in the face of dwindling oil revenue. It noted that there have been significant reforms and development in the sector especially the deployment of technology and innovation- the Mining Cadastre Office (MCO) Electronic Mining Cadastre System (eMC+), a title Administration and Management System to ease mineral title administration; the Nigerian Geological Survey Agency (NGSA) technology for Geo-referencing and Geo-coding of Topographic Maps of Nigeria for integration into the Mining Cadastre Digital Database and the NGSA Z-300 LIBS Analyzer of mineral samples and exploration activities among other laudable initiatives.
The Executive Secretary Dr. Orji, explained that the EITI Standard which guides implementation in Nigeria requires a Multi Stakeholders Group (MSG) to provide strategic policy direction and leadership. Unfortunately the National Stakeholders Working Group (NSWG) was among the Boards of MDAs dissolved on June 19, 2023.
The NSWG is a mandatory requirement for any country’s membership of the 57-member international organisation. NEITI hereby renews its appeal to the government to put the NSWG in place in other to fix the gap in the its operations due to the peculiar nature of the agency.
On the use of the report, NEITI reaffirmed that when information and data on revenue from extractive sectors are publicly available and accessible, the citizens, civil society groups and media have the responsibility to ask questions about the management of Nigeria’s natural resources to address the country’s socio-economic problems and poverty reduction.
Dr. Orji used the opportunity to appeal to state and non-state actors to take seriously the contents of the NEITI reports and play their expected roles in the EITI/NEITI process. According to him “The civil society and media play very important roles in the EITI process, particularly, in the areas of dissemination, campaigns and advocacy on the implementation of the recommendations contained in the report and support the translation of the contents of the NEITI reports to visible impacts in the lives of all Nigerians.
The Report was by Amedu Onekpe and Co Chartered Accountants, an indigenous firm and is expected to guide policy makers in making quality decisions in the on-going reforms in the sector.
NEITI says it has simplified the report, printed copies and are circulating the report free of charge.
Speaking at the unveiling, the Speaker, House of Representatives , Tajudeen Abass, represented by Awaji-inombek Abiante, Chairman House Committee on Urban Development, described the report as being key to sanitizing the extractive sector in order to boost job creation and revenue generation.
He noted that the extractive sector was plagued by mismanagement of revenue accruing from it, even as he extolled the fifth assembly that helped empower NEITI to help improve the sector
He assured that the report will be distilled and interrogated to the benefit of Nigeria.
In his goodwill message, Osita Ngwu, the Chairman, Senate Committee on solid minerals, hoped that the report will contain recommendations that will help deal with economic saboteurs shortchanging Nigerians.
Also speaking, the Chairman, House Committee on solid minerals, Gaza Jonathan Gbefwi tasked NEITI to urgently launch investigations to determine the actual amount of solid minerals extracted and exported in the country as against the amount merely reported.
