Obaseki: Edo Solid Minerals Can Generate More Revenue Than Oil

December 19, 2016

Obaseki: Edo solid minerals can generate more revenue than oil

 

Edo solid minerals sector has greater capacity to generate revenue than oil. Edo has large deposits of untapped solid minerals. But with the declining revenue from oil, the Federal Government and Edo have to opt for diversification of the economy, making solid minerals one of the sectors to focus on. Governor Obaseki should make attempt to diversify the Edo economy and make it less dependent on oil as its major revenue earner. “The reduction in global crude oil prices is not expected to cease at least in the short run, thus the need to diversify the economy. One key sector which offers great potential in achieving this is the solid minerals sector.

 

NIGERIA Is currently not enjoying the best of times. The country is presently suffering the adverse effects of the dwindling revenue from crude oil and gas sector, which today accounts for about 95 percent of its revenue. The fallen price of crude at the world market and pipeline vandalization have orchestrated the devaluation of the Naira and increased inflation. The manufacturing and other productive sectors are worst hit because, as the country is highly import dependent, they find it extremely difficult to bring in raw materials, especially now that the central bank has closed its auction market window. The dollar is expensive to procure at the interbank window and the black market.

THE exploitation of solid minerals is in the exclusive legislative list, which makes it a preserve of the Federal Government. In Edo State, for example, there are about 200 solid mineral deposits, which include; Marble, gold, granite, lime stone, kaolin, gypsum, feldspar dolomite, salena, tantalite, gemstones, quartz, bitumen, bentonite, laterite and sharp sand. They are scattered across several villages and communities in Akoko-Edo, Owan East, Owan West, Ovia South West, Etsako West and Etsako East local government councils of the state. For instance, in Dagbala, Akoko-Edo local government area, companies who get their license from the Federal Government are reportedly mining a deposit of gold.

Edo State has an abundant supply of one of the world’s most beautiful and durable marbles. Although the exact size of Edo’s stone industry is unknown, there are more than 60 known deposits of marble, with 35 different types in different colours. Edo’s chessht and khogiani marbles have been favourably compared to Carrara marble, an Italian marble that is considered to be one of the finest in the world,

Approximately 95 percent of Edo marble is exported as rough hewn blocks and is often re-imported, mostly from UK, as higher value polished marble products for Nigerian reconstruction projects. The Edo marble industry in Akoko-Edo, Etsako West, Etsako East, Owan East and Ovia South West lacks proper equipment, has little technical knowledge, and uses poor extraction methods.”

The Edo State government recently said it had identified about 200 solid minerals in different parts of the state awaiting exploitation. The state government is ready to woo investors to harness the resources in the state. The solid mineral sector falls under the purview of the Federal Government, but the state government would collaborate with the private sector and the central government to exploit the mineral deposits.

Governor Obaseki should  do his best to provide a conducive environment for prospective investors. I want to urge the Federal Government to facilitate the process of harnessing and exploiting the vast mineral deposits in the state. The Governor should focus on solid minerals as an alternative income in the face of the declining revenue from the oil sector. The Governor should find out how many companies that are operating in the solid minerals sector in Edo State and create a data base for the companies. How much revenue is Edo State receiving from Federation Account as derivation? The falling oil price globally calls for the diversification of the economy of the nation. The fall of oil prices means revenue available to the government will be minimal to the extent that the country can no longer meet its obligation to the citizens.

Governor Obaseki should look at solid minerals to cushion the effect of the continued fall in the price of petroleum products. The labour force should be well trained. There is need to improve educational standard so that graduates from higher institutions are well prepared to drive the economy. Above all, we must look at the industries that derive their materials locally. Governor Obaseki should fashion out a roadmap for the exploration of solid minerals in order to cushion the effect of the falling oil prices. Let him initiate the Edo Road Map (ERM).

Today, based on current data, Nigeria’s solid minerals sector only makes up about 0.34 per cent of GDP. While that is significant, it is much smaller than its true potential as the vast majority of our mining assets have yet to be exploited. The Minister of Solid minerals has acknowledged that a lot of revenue coming from the sector is lost due to poor monitoring and ineffective structure, noting that most of the discrepancies within the would be corrected with the proposed audit of the industry to be conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI).

The limestone deposit we have in Edo State can still sustain not less than 10 cement companies. I say this without exaggeration. In Etsako East alone, there is a belt of continuous occurrence of limestone. There is an area in Okpella where they just finished exploration of 1km by 1km. We have proven not less than 12 million tonnes of limestone. It is like that in all of the sedimentary basins.

Despite the fact that gold, marbles and other solid minerals are being mined in Akoko Edo, Edo State there is no record to show that these minerals are among the mined or exported minerals in Edo State. My further finding shows that solid minerals are mined in Etsako West, Etsako East, Owan East, Owan West, Akoko Edo and Ovia South West Local Governments, they are also purchased by multinational oil companies as drill fluids, despite high activities of miners there are no records of royalty payments and derivations paid to Edo State. Governor Obaseki needs to find out the powerful individuals that now control solid mineral deposits in Edo. The truth today is that potential investors cannot get deposits to mine even after obtaining mining license from Federal Ministry of Solid Minerals in Abuja.

The challenge before Governor Obaseki in the Edo Solid Minerals is to ascertain how many companies that illegally bought the solid mineral deposits in Edo State. How comes that investors with licenses have no deposits to mine in Edo? How many companies that are operating in the Edo solid minerals? How many companies that are paying taxes and royalties to the federation account? How much revenue is Edo State receiving from federation account as derivation from solid minerals? In term of corporate  social responsibility, what are the companies doing in their various host communities? Why is it that there is no laboratory to test Edo solid minerals? As at today Edo people do not know the solid minerals that companies are taking away from Edo State.

No evidence of royalties payment from the available records of the Ministry of Mines and Steel Development, there were no evidence of royalty payment on these exported minerals which derivations will be paid to Edo State.. The Nigeria Minerals and Mining Act 2007 require that any exporter of solid minerals must request for permit to export minerals. But in defiance to the act, there was no available evidence of request for permit or approval to export minerals by the companies operating in Edo State. The informal players are mostly artisan miners, medium scale operators and illegal miners who hardly keep any record. Some of the minerals mined in Nigeria and Edo State are exported out of the country by formal and informal players.

There are no official records from Ministry of Mines and Steel Development on the actual volume of minerals exported out of Nigeria and Edo State within the period under review from 2011 to 2015. However, the few records available relates to transactions that were done by the formal players as they passed through the Central Bank of Nigeria, Nigeria Customs Service and Nigeria Export Promotion Council.

Federal, states and local governments are losing huge amount of money annually from untapped and tapped resources that abound in the nation’s soil. Nigeria is estimated to be losing about N8 trillion annually from untapped gold. The estimates are monies that should have accrued to the federation account from royalties, taxes, charges and other fees from companies and individuals operating in the solid mineral sector if the Federal Government had paid enough attention to the development of solid minerals in the country.

However, the Mining and Mineral Act of 2007 which puts the exploration and exploitation of mineral resources in the exclusive list has hindered state like Edo from developing mineral deposit in their jurisdiction. Nigerians put the blame at the feet of federal politicians that have paid lip service to fiscal federalism

At different fora the Minister of Solid Minerals Resources, Dr. Kayode Fayemi, continued to harp on the money-spinning potential of the sector as well as its capacity to significantly impact employment generation in the country. Speaking at the third edition of the Chief John Agboola Odeyemi Annual Lecture at the Obafemi Awolowo University (OAU) Ile-Ife, Fayemi noted that the country’s mining sector had the potential to contribute N5 trillion (about $25.3 billion) annually and significantly impact the prospects of creating thousands of job opportunities. The sector’s under-performance becomes more glaring when its contribution to the country’s GDP was put at 0.55 per cent, compared with that of other African countries with less quantity and numbers of products as Nigeria. Records show that the sector contributes 40 per cent of Botswana’s GDP, in South Africa it is 18 per cent while it is 25 per cent in Democratic Republic of Congo (DRC).

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