Mining, still on the agenda

The National Bureau of Statistics (NBS) recently released its States Disaggregated Mining and Quarrying Data series. According to the data, last year Nigeria produced 43 million tons of solid mineral; limestone emerged as the leader and accounted for 65% of minerals mined. The ministry of mines and steel development is currently partnering with state governments to promote mainstream mining and eliminate illegal mining operations across the country.

Granite and laterite which are main ingredients in the building and construction industry accounted for 13.4% and 5% respectively of the total minerals mined in 2016. Aquamarine and beryl ore were the least produced.

Ogun State recorded the highest level of mining activities last year, representing 38% of total tons mined. Limestone is one of the dominant solid minerals in Ogun State.

Borno and Yobe states both produced the least tons of solid minerals – 1,250 and 883 tons respectively. The two states have been severely affected by insecurity issues. Although attacks have softened, economic activity is yet to fully pick up.

In terms of accessing credit, the mining sector is not on most banks’ favoured list. The sector accounts for a low single-digit percentage of their loan books.

To tackle the lack of access to credit, last year the Federal Executive Council (FEC) approved a N30bn mining intervention fund to support local mining operators. We gather that the ministry of mines and steel development has partnered with the Bank of Industry (BoI) to offer loans from this intervention fund.

Loans will be offered to already existing mining operators as it is aimed at scaling up businesses within the industry.

The sector’s potential is significant when considering the impact it could have on broader economic development as well as export earnings. However, technical skills required to tap into the industry are scarce. To address this, the BoI has partnered with the United Nations to deliver training on gemstone production under its commodity-based industrialisation strategy.

Similar to agriculture, Nigeria stands to gain from increased investments into mining as the sector offers an alternative revenue source for the country via export earnings and is a potential job generator.

Last year, the sector accounted for just 0.1% of the non-oil sector GDP. Given the ongoing reforms by the FGN to push economic diversification, over the next 3-5 years, we believe that the sector will be on its way to becoming a key sector within the economy.

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