August 10, 2022/CSL Research
Amid the growing clamour for economic diversification, the National Bureau of Statistics (NBS) is drawing attention to the country’s mining activities as it published the solid mineral production statistics report for 2021. From the data, in 2021, the country produced 89.48m tons of mineral resources in aggregate, a 39.19% y/y growth compared with 2020. Among the states, Ogun, Kogi, and Cross River states had the largest share of production with 32.04m, 18.40m, and 11.64m tons, respectively. On the other end, Borno State produced the least with 231 tons in 2021 from 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 mineral resources deposited across the country, limestone, granite, and laterite were the most mined minerals in 2021.
Despite the abundance 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 (0.63% in 2021 vs 0.43% in 2020). However, the figure is 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, with huge monies lost. 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 accretion to foreign reserves. However, the current reality seems far from the intended plans.
Several issues affecting the entire value chain have been the bane of the sector. These include, but are not limited to, large funding requirements; insecurity in major regions known to have abundance of mineral resources; 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 factors have led to low investments in the sector as many investors remain concerned about its bankability.
Nigeria has the 12th largest iron ore reserve in the world. Reserves of some minerals, such as lead, baryte, coal and bitumen, are specific to only Nigeria in SSA. These reserves represent an untapped opportunity for the nation to enrich its mining portfolio and effectively diversify its earnings away from crude oil. While Nigeria has more gold reserves than Burkina Faso and the DRC, gold production has been the lowest in Sub-Saharan Africa (SSA), underscoring the dearth of large-scale production facilities in the country.
This is corroborated by the fact that Nigeria’s annual gold production was less than 15% of Mali’s in 2019, despite their similar gold reserves. Nevertheless, the grade quality of gold found in Nigeria is one of the highest in SSA presenting a substantial growth opportunity, as it continues to remain in demand from the jewellery sector and commands the highest price worldwide.
