Today we shine the spotlight on the mining sector, using the recently published State Disaggregated Mining and Quarrying Data series of the National Bureau of Statistics (NBS). According to the series, last year Nigeria produced 56 million tons of solid minerals; limestone emerged as the mineral with the highest production, accounting for 49% of the total. Increased investment into Nigeria’s mining sector could boost export earnings and support job creation, particularly in some areas where employment is limited.
- Granite and laterite accounted for 17.0% and 9.0% respectively of the total minerals mined in 2018. Both are core components utilised in the building and construction industry. Given the increased activity in road construction last year, we expected a visible trickle-down effect on local mining of these minerals.
- Similar to 2017, Ogun State recorded the highest level of mining activities last year, representing 30% of the total, compared with Kogi (27%) and Cross River (6%).
- There are a few states that have successfully identified their competitive advantage (including solid minerals). If state governments leverage on their comparative advantages, this would boost their internally generated revenue.
- Credit allocation to the mining sector remains relatively low across the banks as the sector is not generally favoured.
- However, we note that the World Bank has approved a US$150m credit facility to enhance the contribution of the mining sector to the economy. The funding is expected to improve data collection and infrastructure, and also strengthen the government agencies focused on the sector.
- Gold, which accounted for less than 1% of total minerals mined last year, is set to receive additional support from the private sector as the construction of the first gold refinery is underway and expected to be completed by H2 2019. This refinery is located in Ogun State and is being built by an indigenous company.
- Over the past eight years, the Nigerian Mining Cadastre Office has issued over 7,000 mining licences. However, this has been reduced to 4,500 as some licences were cancelled or expired. To strengthen monitoring and exploration activities, the FGN has earmarked N14bn for extensive mining data collection. This should also assist with reducing illegal mining activities across the country.
- In Q4 2018 the sector accounted for just 0.2% of non-oil GDP. The solid minerals sector can easily become a large contributor to economic growth, provided that government initiatives geared towards boosting the sector and attracting investment are implemented effectively.