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Mining in Nigeria: seeing is better than hearing

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Rehabilitation of old mining and quarrying sites are not always priority and there are numerous unrehabilitated pits filled with water across Nigeria. Nigeria presents many opportunities in mining, but there are challenges one needs to be aware of when venturing into Nigeria Image credit: Steffen Kalbskopf

Mining in Nigeria: seeing is better than hearing

Mention mining in Nigeria and most investors start gasping for breath. But is Nigeria as challenging on the ground as what we are made to believe? Steffen Kalbskopf, geologist, and owner of Hidden Treasure Consulting has travelled more than 8000km across Nigeria to find out.

Nigerian Mining – challenges and opportunities           

With its enormous mineral potential and new fiscal and legal measures established to promote solid minerals extraction, Nigeria is a prime mineral investment destination, although challenges remain.

By Steffen Kalbskope BSc (Hons), Pr.Sci.Nat, FGSSA, MSEG

During my time in Nigeria, I have worked with several local companies, consultants, academia, and alongside artisanal miners while travelling more than 8000km in 11 states in 2003, and again in 2018-2022. I gained a broad overview of the day-to-day practical realities of doing business in the country while interacting with senior officials, director generals and the Minister of Mines.

Investing in Nigeria’s mining sector    

From a potential investor’s perspective, it is easy to register claims with very helpful staff at the Mining Cadastral Office (MCO) and when fully operational, the MCO’s website will display areas that are pegged, ownership, type of permit and commodities, although currently, persons need to inquire inside the office for the cadastral map and relevant information.

The Nigerian Geological Survey Agency (NGSA) is currently busy compiling historical information into a geodatabase. While a number of national maps and helpful mineral resource documents are normally available online, none were listed mid-March 2022. This is possibly because the system is being revised. Nevertheless, the staff in Abuja are very cooperative.

The rapidly changing pace of small-medium scale mining development over the past 20 years has, unfortunately not been followed up by site visits from the NGSA or academia, leaving significant gaps in mineral deposit knowledge.

Digital, detailed geological maps and bulletins together with the nation-wide airborne geophysical survey data are not free. Nevertheless, there is a considerable depth of geological skills here, in academia and the consulting sector, but relatively little exposure to industry best practice and few local CRIRSCO-compliant “competent persons” necessitating importing QP’s for JORC/NI43-101 reporting.

Local companies are used to paying significantly lower salaries compared to South Africa or outside Africa, which, while lowering the costs of exploration, come as a shock to some players who are reluctant to pay going rates for ex-patriate consultants, and foreign professionals do well to ensure they get remunerated from overseas sources.

The low rates offered to ex-pat consultants is also a by-product of inflation and difficulties that indigenous companies have in exporting foreign exchange which was sharply exacerbated by the Covid-19 pandemic.

These pressures highlight what might be a poverty zeitgeist and associated fears that fuel fraudulent dealings and failures to honour contracts that beset all players in the industry, even though the initiating party may be comparatively wealthy.

Structuring deals and managing expectations  

This issue of mis-managing expectations sometimes comes to the fore where Nigerian companies are not always used to structuring deals in the same manner as internationally linked corporations.

I encountered this when setting up an agreement for a well-established local metal miner to explore a potentially significant molybdenum deposit near Jos, but they were unwilling to pay the local permit holder even a small upfront option fee and the project died!

One cannot over-emphasize the importance of working with a reliable Nigerian partner as their inherent knowledge of culture and bureaucracy are key to successfully negotiating the hurdles en-route to success.

There are six new local drilling contractors which can support Reverse Circulation (RC) and small diamond drilling campaigns, as only a few have embedded JORC-compliant technical staff.

Any company working to JORC/NI 43-10 standards will need to send samples outside Nigeria as although MS Analytical have an IS17025 accredited preparation laboratory in Abuja, the high precision analysis required for this work can only be done in Ghana, South Africa or beyond.

Extracting information from the Ministry of Mines and Solid Minerals Development (MMSD) is normally limited to licensing plus various kinds of permits and while they will gladly and effectively point any investor in the right direction, obtaining information such as up-to-date mineral production is challenging.

Facing the challenges

Obtaining the waivers for getting tax exemptions and import duty is a lengthy, multi-step and painstaking process, which is fraught with bribery when engaging with customs clearance procedures – the abuse of power by “gatekeepers” is an issue that is seldom addressed by top government officials who are divorced from the nitty-gritty realities of doing business.

Another issue is that there is no tax allowance for money spent on community relations and access plus, a premium must be placed on courting the local authorities and supportive community interaction.

While there is effective environmental legislation, it is not consistently implemented and hardly applied at all to small scale or artisanal mining operations unless there are threats that arouse local community antagonism.

Environmental, Social and Governance (ESG) credentials of both local and Chinese-run companies in the Benue Trough range from mediocre to almost non-existent.

This partly explains why the latter have occasionally received opposition from local chiefs or emirs and during the NIMEP enterprise, government teams were denied access to some lead and zinc (Pb-Zn) sites, but no Chinese opposition was experienced by the barite team. The opacity of a few Chinese and other Pb-Zn producers contributes to unaccounted production and, the export of Pb-Zn products without any regard for the silver content thus circumvents revenue collection.

The enterprising and diligent Chinese have a lot to teach local staff who are innovative, eager learners, hardworking. However, the Chinese companies largely exclude Nigerians from upper and middle management, so they don’t benefit from skills upgrading. Sadly, the legacy of most mining operations is just a water-filled hole.

Be aware of security

Savings on labour costs are often swallowed up by security and while I never felt in danger, local intelligence and armed escorts are essential for some regions due to community conflict, such as between the nomadic Fulani and local farmers.

Apart from the Boko Haram insurgency risk (which is mostly outside of active mining areas), banditry is more commonly associated with artisanal gold mining in Zamfara and north-central states.  There is, however, more danger to the average traveller from almost suicidal drivers, overloaded lorries, approaching roadblocks too fast and carelessly negotiating potholed roads than armed threats.

If Nigeria is to cast off the pall of insecurity and notoriety as a high-risk destination, reconciliation is needed to defuse tribalism while stricter and more equitable law enforcement must be top of the agenda for government at all levels.

With the tabling of a new Nigeria Minerals and Mining Act (NMMA) in November 2021, there is significant hope for greater order in a promised devolution of responsibility from federal to state level since they will be incentivised to crack down on the pervasive illegal artisanal mining and associated lawlessness.

However, this will have to be accompanied by upgrading power and transport infrastructure. The other vital input required is extension services coupled with mining machinery loans and hire to buy programmes that empower the artisanal and small-scale mining (ASM) sector to upskill their operations.

Like successful schemes aiding small-scale miners operated by the Zimbabwe Ministry of Mines for decades, there is hope for more a regulated and healthy environment, but it will require a massive increase of skilled and experienced CRIRSCO-compliant engineers, metallurgists, and geologists. Transparency, training, trustworthy tutelage, untainted trading and wise governance can offer a firm way out of the morass to a burgeoning future.


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AgricultureEnvironmental Management & Climate ChangeEnergyESGInfrastructureMiningPolitical EconomyTourism and ConservationWater Management