July 6, 2022/United Capital Research
According to the Q1-2022 Foreign Trade Statistics released by the National Bureau of Statistics (NBS), solid mineral imports increased by 37.8% q/q and 74.4% y/y to N41.1bn from N29.8bn in Q4-2021 and N23.6bn in Q1-2021, respectively. On the other hand, exports grew by 45.2% q/q to N19.7bn from N13.6bn in Q4-2021 and 111.2% y/y from N9.3bn in Q1-2021. Overall, solid mineral trade deficit widened by 31.7% q/q and 50.3% y/y to N21.4bn in Q1-2022 from N16.2bn and N14.2bn in Q4-2021 and Q1-2021, respectively. This was due to demand-led import outweighing the export of solid minerals in the country as unimpressive output in the sector persisted.
To give more context, imports were driven by plastered calcined gypsum or calcium sulphate (otherwise known as Plaster of Paris) from Turkey and China valued at N6.9bn and N1.9bn, respectively. The surge in import of Plastered Calcined Gypsum is a function of strong demand from the real estate sector and other construction players. In addition, salt for human consumption, Gypsum and Other Salt & Coal from Namibia, Spain, Brazil, and Mozambique were other drivers of imports. In recent years, emphasis has been placed on improving output from the mineral resources sector, particularly as the focus on FX diversification intensifies. Interestingly, the NBS stated that solid mineral production climbed by 18.0% y/y to 64.3mmt, while the Coal Mining and Metal Ores sectors GDP grew by 25.6% and 34.2% in 2021. Nevertheless, output from the sector has struggled to keep up with demand due to massive under exploitation, as critical issues such as policy implementation, infrastructure, insecurity, and technical expertise limit potential, thereby deterring investment.
Looking forward, we remain gloomy about future growth in the sector as challenges hampering output still linger. We believe that there is an urgent need to solve the licensing & regulation issues within the sector, eliminate the problem of scarcity of geoscience data & information, inadequate electricity supply, illegal mining, poor access to road facilities to deposit sites. We reaffirm that solving these issues will help eliminate the problem of funding.
