December 13, 2021/CSL Research
Amid the growing interest in the country’s abundant mineral resources for economic diversification, the National Bureau of Statistics (NBS) focused on the country’s mining activities as it published the solid mineral production statistics report for 2019 and 2020. Based on the data, in 2020, the country produced 64.3m tons of mineral resources in aggregate, a 17.95% y/y improvement over 2019. Among the states, Kogi, Ogun and Cross River states had the largest share of production with 12.5m, 12.1m, and 8.9m tons, respectively, in 2020. On the other end, Borno State produced the least with 5,060 tons of minerals in 2020. Sadly, the high level of insurgency in Borno has caused the state so much economic deprivation. Furthermore, across the vast minerals deposited in the country, limestone, sand, and granite were the most mined in 2020.
Despite the endowment of mineral resources in Nigeria, the solid minerals sector has significantly underperformed with a meagre contribution of less than 1% to the GDP over the years (0.6% currently). The figure is, however, solely from formal channels as the artisanal and small-scale mining activities that constitute over 80% of the current mining activities in the country are unaccounted for. Also, illegal mining activities have continued unabated. The government launched the Presidential Artisanal Gold Mining Development Initiative (PAGMI) in 2019 to integrate artisanal and small-scale gold mining activities in the country and boost more accretion to foreign reserves. However, based on current realities, it does not appear that much has been gained.
Without downplaying the country’s perennial concentration on crude oil, several issues affecting the entire value chain have bewildered the sector. These include, but are not limited to, large funding requirements; insecurity in major regions known to have huge mineral resources deposits, decrepit infrastructure, limited technical know-how, and unreliable information on the quantity & quality of mineral deposits in the country due to limited geoscience data and information. These have contributed to the low investments in the sector as many investors remain concerned about its bankability, with many mining operations still in the exploratory phase.
Though it is difficult to ascertain the exact quantity of the combined solid minerals in the country, a rough compilation as of 2012 from proven reserves on the key 7 identified solid minerals given by the Ministry of Mines and Steel Development amounted to c.5.3bn tons. Comparing the production figure of 64.3m tons in 2020 with the estimated figure brings the utilization rate to 1.2%. Thus, the sector portends enormous potential and can serve as a huge source of foreign exchange for the country vis-Ã -vis increased exports in the long term. In addition, accommodative policies to encourage new investors into the sector can boost the government’s revenue through royalties. That said, between 2017 and 2020, solid mineral production has increased by 40.4% from 45.8m tons in 2017 to 64.3m tons in 2020. We also expect the recent local production of made in Nigeria barite to support the increase in the production of mineral resources going forward.
