Today we shine the spotlight on the mining sector using the recently published States Disaggregated Mining and Quarrying Data series by the National Bureau of Statistics (NBS). According to the series, last year Nigeria produced 46 million tons of solid minerals; granite emerged as the mineral with the highest production, accounting for 38% of minerals mined. 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.
- Limestone and laterite which are the main ingredients in the building and construction industry accounted for 30.5% and 8.1% respectively of the total minerals mined in 2017.
- Ogun State recorded the highest level of mining activities last year, representing 51% of the total, compared with Kogi (11%) and Abuja (10%) at the other end of the spectrum.
- We often reiterate the need for states to diversify their revenue base by boosting their agricultural and mining activities, and leverage on their comparative advantages in the process.
- 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 this lack of access to finance, the federal ministry of solid minerals and steel development in collaboration with the Bank of Industry has launched a N5bn fund for small and medium scale miners. Both are expected to provide N2.5bn each towards this intervention fund. Loans will be offered to already existing mining operators in order to scale-up businesses within the industry.
- Other similar intervention funds include the N20bn from the mining sector component of the Natural Resources Development Fund and US$150m from the World Bank to the Mineral Sector Support for Economic Diversification (MinDiver) programme.
- On the regulatory side, the FGN has announced its intent to setup a mining commission. The commission is expected to be the final authority on regulatory matters within the sector and also take charge of mining leases.
- The mining sector has also received support from the private sector. We understand that Chevron has invested US$1.4m to train barite miners as well as secure barite mining equipment.
- In Q2 2018, the sector accounted for just 0.2% of the non-oil sector GDP. Given the ongoing reforms by the FGN to push economic diversification, over the medium term, we believe that the sector will be on its way to becoming a meaningful contributor to the economic growth.