Nigeria’s economy continues to suffer from the slump in global oil prices, with matters exacerbated by increased levels of unrest in the oil-producing region of the Niger delta. This year has seen the emergence of militant group, Niger Delta Avengers, some have argued as a result (at least in part) of a sense of alienation from and lack of representation within the centre of power as well as a neglect by the government of regional needs. Their attacks on pipelines at the height of their activity resulted in losses of up to 50% of Nigeria’s oil production and consequently Nigeria falling behind Angola as Africa’s largest oil producer. While there has been some engagement between the militants and the government in recent times, those appear to have yielded limited results and by many accounts, things are going to get worse before they get better. All of this underscores the importance of the Nigerian government continuing to pursue economic diversification.
In previous publications we have explored some of the main obstacles to the Nigerian mining sector achieving its full potential, including with regards to power, infrastructure, testing facilities and terrorism, some of which the federal government acknowledges in its August 2016 publication, “Roadmap for the growth and development of the Nigerian mining industry”. Specifically, it acknowledges a significant reason for the absence of major miners in Nigeria as being the lack of infrastructure (such as reinforced roads, dedicated rail lines and port capacity) in mining districts, citing the inability to complete the rail link through Ajaokuta, Warri and Itakpe as an example. While junior miners would face the same challenges, we have met a number who have indicated that the infrastruture deficit would not necessarily pose the biggest challenge and indeed they would be prepared to make use of existing road networks and explore the prospects of making strategic small scale improvements to them. A bigger concern for such junior miners (and most probably others like them), would appear to be the lack of information on which to base investment decisions – a point highlighted at this year’s Nigeria Mining Week conference in Abuja, which was well attended by various stakeholders including, among others, junior miners, mining consultants and strategists and investment brokers, with limited representation from the government.
At the conference, there was a virtually unanimous view among the participants that more work needed to be carried out in the area of geological surveys. Between 2003 and 2010, Nigeria conducted a high resolution airborne geographical survey involving magnetic, radiometric and limited electromagnetic surveys. While this serves as an improvement on the aeromagentic data available from the 1970s, there remains a prevailing view that its scope and level of detail remains insufficient. Therefore given the significant costs and risks that can be involved in mining exploration, coupled with the limited private sector funding generally available during that phase of the mining cycle, it is no surprise that the lack of adequate data has proved a stumbling block for junior miners. At the conference, a number of proposals were discussed as steps that could potentially help to plug the information gap.
For a start, the skills of higher education students could be better mobilised in order to collate information on the ground. This would allow relevant information to be gathered across a significant geography at a relatively low cost base, though the government would need to work hard on the local community relations front in order to make it safe for the students to visit such communities.
Also, while it is by no means complete, there is a lot of geological data that has been gathered over many years, but which do not exist in a form that is easily accessible to potential investors, particularly foreign ones. Therefore the Nigerian Geological Survey Agency (NGSA) would firstly need to locate such information that is currently scattered across various mining centres in the country and collate it into a central databank. Such information would then need to be converted into digital format and categorised under relevant headings, such as by state, mineral type, etc. It should then made easily available to investors (for example online), at a reasonable cost if necessary.
Thirdly, data on Nigeria’s mining sector would need to receive more prominence through publishing in industry journals and publications and also at relevant trade conferences.
Last but not least, some of the data projects which have already been commissioned but not completed (for example due to failure to pay the contractors) should be finalised.
Everyone knows that there is no silver bullet by which to ignite Nigeria’s mining sector. It will take a long and concerted effort by the various stakeholders (particularly the federal and state governments) and in the short term, there is a need to address certain pressing issues such as the restrictions on access to foreign currency (which is needed to repatriate profits) in order to make Nigeria a more attractive climate for foreign investment. Nevertheless, the view of many key industry stakeholders is that that there are small steps, such as the ones above, that the country can and should start to take, which will inform investors’ decision-making and could be the key to generating their interest and increasing their appetite in the long run. This message is particularly important as it comes amidst the good news that the Minister of Solid Minerals Development, Dr. Kayode Fayemi, has disclosed the negotiation of a $500 million investment fund with the Nigerian Sovereign Investment Authority. He also disclosed that the World Bank has indicated its willingness to provide funding to assist the mining sector’s transactional activities, though such funding would be primarily to support miners who are already in exploration and very close to production – thus reemphasising the need to assist create better conditions for exploration activity