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The federal government earned N193.59 billion from activities in the solid minerals sector in the whole of 2021. This was contained in the 2021 industry report of the solid minerals industry released by the Nigeria Extractive Industries Transparency Initiative (NEITI), in Abuja, yesterday.
The report said the amount was 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 per cent.
In a broader analysis, the sector contributed N818.04 billion in 15 years (2007-2021), with 2021 earnings as the highest. From the 2021 earnings of the extractive industry, N7.94 billion was distributed to the federating units from the solid minerals revenue account.
From the report, the outstanding liabilities of various companies operating in the sector stood at N1.06 billion.
The total volume of solid minerals used or sold in 2021 was 76.28 million tons with a royalty payment of N3.57 billion. 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.
Speaking at the unveiling of the report in Abuja, the executive secretary of NEITI, Dr Orji Ogbonnaya Orji, stated that the 2021 figure shows an increase of N60.32 billion or 51.89 per cent growth, when compared to the 2020 revenue flows of N116.82 billion. He noted that the positive trend reflects a continuation of the upward positive trajectory observed in the sector over the past five years; even as applauded the deployment of technology and innovation to drive reforms in the sector
The NEITI CEO added that the 2021 figures, though a significant increase over past years, was still abysmal considering the potential of the sector to the Nigerian economy. Orji explained that the report reviewed, ascertained, reconciled and reported all revenues and investment flows to and from the government in the solid minerals sector.
According to Dr. Orji, “The report which is NEITI’s 12th, covered actual payments by 1,214 companies operating in the sector and receipts by three government agencies, the quantities of minerals that they produced, utilised and exported from the sector, reconciled the physical/financial transactions and undertook special verification on some processes”.
The NEITI report also covered balances payable/receivable from financial inflows, tracked the funds and utilisation meant for the development of solid minerals in Nigeria. The funds covered in the report include Natural Resources Development Fund, Solid Minerals Development Fund (SMDF), Ministry of Mines and Steel Development’s (MMSD) MinDiver Programme and Solid Minerals Development Funds under the Small and Medium Industries Equity Investment Scheme (SMIEIS) operated through the Bank of Industry- BOI, the emerging issues of beneficial ownership and contract transparency and finally made observations and copious recommendations that would inform policy decisions and implementation.
Orji further gave a breakdown of the revenues which shows that the Federal Inland Revenue Service -FIRS collected bulk of the revenue of N169.52 billion, the Mining Cadastre Office generated N4.3 billion while the Mining Inspectorate Department generated a total of N3.62 billion.
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 eight 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 licences issued within the period. A total of 2,045 licences were issued with exploration licences accounting for 840 (increase of 62.79 per cent), Small Scale Mining Lease (SSML) 771, Quarry Lease 255, Reconnaissance Permit 139 and Mining leases 40.
On exports, 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 per cent from the $42.46 million reported in the 2020 report, the report stated.
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However, the solid minerals contribution to export value in 2021 was a mere 0.24 per cent. The First Patriot Nigeria Limited based in Ebonyi state accounted for 44.26 per cent of the total export value. China was identified as the principal destination of Nigeria’s mineral exports, accounting for 97 per cent and 88 per cent 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.
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 sanitising 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, chairman, Senate Committee on solid minerals, Osita Ngwu, 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.
On solid minerals contribution to the economy, the NEITI report revealed that the solid minerals sector contributed 0.63 per cent to GDP. While there has been some improvement compared to previous years where it contributed 0.45 per cent in 2020 and 0.26 per cent in 2019, the sector has not yet reached its full potential in making a significant impact on the overall Nigerian economy.
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 N5.67 billion left in the account as at 31st December 2021. The federal government got N3.64 billion, states N1.85 billion while local government councils got N1.42 billion, while 13 per cent derivation share was N1.03 billion.
The report also revealed that “The seven strategic minerals in the sector contributed a total of N1.42 billion in royalty payments, with limestone being the dominant contributor at N1.03 billion (73.07 per cent). 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 per cent of jobs were occupied by men, while women occupied eight per cent. No physically challenged person was recorded as being employed in the sector in 2021.
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 recommends 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 per cent) 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 add beneficiary to increase revenue to government coffers and create employment opportunities for the teeming youths.
(leadership.ng)
