Why Nigerian indigenous miners are not succeeding – Operator

Titilope Adeyemo, Managing Consultant, Geocardinal Engineering Services Limited

As Nigerians await President Muhammadu Buhari’s new cabinet, Titilope Adeyemo, Managing Consultant, Geocardinal Engineering Services Limited, in this interview, says Nigerian operators in the solid minerals sector lack the requisite capacity to succeed. He spoke with Bassey Udo, Business Editor in Abuja. Excerpts:

PT: The end of the oil era in the Nigerian economy is fast approaching. The present administration began with a promise to diversify the Nigerian economy. Four years have gone and into the second term, how do you assess its effort?

ADEYEMO: The diversification effort of the government is only felt in the agricultural sector. Farming is what Nigerians are familiar with. They are not familiar with mining or solid minerals development. These are areas requiring the involvement of professionals with the right competence and capacity if one is to diversify into them.

But, the solid minerals sector is facing the challenge of the dearth of capacity. The government must enhance the capacity of those operating in the sector if we really want to have any dividend from its investment.

PT: When you talk about the dearth of capacity in the sector, what do you really mean?

ADEYEMO: What I mean is the lack of involvement of professionals with the right competence and expertise in driving the sector.

In Australia, Canada and South Africa, professionals are the ones running the industry. Not in Nigeria. Most of the people working in the solid minerals sector do not have the technical know-how to mine the resources. Most of their activities only create the environmental problems the industry is facing today. If the government does not take steps to enhance the capacity of the professionals operating in the sector, by establishing centres to offer training on how to engage in small-scale and artisanal mining, its diversification effort will not go far.

PT: Is the government not going to put the cart before the horse if it goes ahead to train the operators before bringing the investors that would actually bring their money to invest in the development of the sector?

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ADEYEMO: I don’t think so. The issue is this: even where the investor has the money and does not have the capacity and expertise on how to use the money effectively to develop the sector, the result will still be the same.

Government has voted a lot of money for the sector over the years, what has been the result? What should be taken care of first is how to use the funds available.

The capacities of the artisanal miners, professional miners that do mining in a large scale, and the government agencies and the ministry monitoring the operators in the sector, need to be developed. They have to go to South Africa, Australia and Canada, where they know the industry is operating according to international and globally accepted standards, to learn.

PT: If the capacities of these people are strengthened, how would that impact the sector?

ADEYEMO: If their capacities are developed, they will be able to work around the challenges they face in the sector, particularly the effective allocation of available resources in their operations and the deployment of the experience to mine in an environmentally-friendly way.

That is why some foreign companies doing mining in Nigeria are succeeding and their Nigerian counterparts are not. In summary, the government needs to build the capacity of the indigenous operators.

PT: You keep referring to Australia, Canada and South Africa. What do they do differently, that our indigenous operators do not?

ADEYEMO: For instance, in Canada, the regulatory framework is strengthened. There is no interference from anywhere in their operations. Mining law should be included in the exclusive list in the Constitution. But, there has continued to be a conflict between the federal and state governments in the laws applicable to the mining industry.

When prospective miners are coming into the country, they first look at the operational environment. Most of the operators who came to the country could not stay, because of the existence of a weak regulatory environment.

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A study I did on the investment climate in the country revealed that the greatest challenge the sector is facing is the lack of proper regulatory enforcement.

Some of the operators already in the country left because of the conflict between the state and federal laws. The state governments are busy creating their own laws against what the federal government has already created.

To complicate the problem, this situation creates double taxation problems for the operators. They will be paying a royalty to the federal government and the Federal Inland Revenue Service and other agencies of the state government will bring other things. How would an operator thrive in this kind of atmosphere?

That is why the various regulatory institutions need to be harmonised and strengthened to do their work effectively. With that, there will be manpower efficiency and the technical know-how on how they can manage the industry properly.

Apart from the regulatory environment, do we have the competent people that can write bankable proposals and reports that financiers will be ready to bring their monies to invest in?

There are lots of challenges. There is also a lack of infrastructure. Mining cannot be developed without infrastructure. Without the road infrastructure, how would the miners move to site? Those that work on industrial minerals, how would they get to where the minerals are produced to where they could be sold?

What about electricity? If the operators are running on diesel 24 hours, how would they make it with the huge additional cost? The necessary infrastructure for all these have to be developed.

PT: Is it possible to develop power specifically for mining? Or are you suggesting the government should wait until the power infrastructure is fixed before mining development?

ADEYEMO: No, far from it. The two can go together. In those days, we used to have the Ministry of Mines and Power together. There are a lot of mining products exploited that are used for power generation.

For instance, coal. If these things are properly harnessed, there could be a lot of power plants that could operate on coal. That calls for a lot of cooperation and collaboration between the Ministries of Power, and Mines and Steel Development.

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PT: Soon, a new Minister of Mines will be appointed. From what you are saying, which areas should the new minister focus on?

ADEYEMO: First, the minister should work on the regulatory framework. It is not as if there are no regulations. But, the existing regulations are not being enforced effectively.

Although the exploitation of natural resources laws is in the exclusive list, some state governments still use their state apparatus to frustrate their enforcement and those who want to do mining.

A lot of foreign companies have left the country because they could not cope with the laws by some state governments, against those by the federal government. The sad thing is that those states are not even ready to exploit the resources they are endowed with. They do not have control over the resources, because illegal miners have taken over.

What they should do is to create the enabling environment to attract prospective investors, and then market what they have in their domains. The state governments are supposed to register their own mining companies and use them to acquire mineral titles all over the country. But, they are not doing that.

If the regulatory framework is strengthened, prospective investors should be given the operating guidelines to do so after receiving their mining plan. The guidelines should emphasise obedience to environmental and reclamation laws. This is how it is done in Canada and Australia.

PT: How would the conflict between the states and the federal government be resolved?

ADEYEMO: Ordinarily, there should be no conflict if the law is properly adhered to. Agreed, every land belongs to the state governments, which should collect the surface rent. But, every such land that has mineral resources belong to the federal government, which has the right to collect a royalty.

However, the law allows the state government to collect surface rent should not be a reason for them to hold those who are ready to work to ransom through excessive taxation.

The government is seriously working on the issue. I am aware the former minister sent a memo to the Executive Council of the Federation on that for consideration. If that is not resolved, the federal government will be joking with its diversification agenda. There is no mineral in Abuja that the federal government can say it can exploit to realise its agenda. The only way out is for the federal government to ensure the law on mining is obeyed totally.

PT: Are you saying the incoming Minister of Mines & Steel Development should focus on strengthening the regulatory framework and reconciling the states and federal government?

ADEYEMO: Absolutely! I said the previous minister did some things in that direction. Any incoming minister should continue with that agenda and the road map for growth and development of the mining industry. If this is effectively followed, the industry will move forward.

PT: Thank you for talking to us.

ADEYEMO: Thank you!

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