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Optimizing of the Mining value chain through the establishment of Mineral buying Centers in Nigeria

 

Optimizing of the Mining value chain through the establishment of Mineral buying Centers in Nigeria

http://pwypnigeria.org/optimizing-of-the-mining-value-chain-through...

 

 

The mining sector is one strategic sector in Nigeria for revenue generation, employment creation and diversification of the economy. The establishment of mining buying centers has the potential of not only reviving the solid mineral sector but also establishing Nigeria as an important Mining destination and mining contribution to the overall sustainability of the Nigeria economy. Buying centers will   also ensure minerals are properly priced and sold. It is said that without effective buying   centers, underground sales had robbed both the local miners and the country of expected financial gains through non-payment of taxes, royalties and other beneficiation from the mining sector in the country.

Nigeria is endowed with abundant mineral resources occurring in over 500 locations spread across the 36 states of the federation and the federal capital territory, Abuja. In Nigeria, the high prospective minerals /metals include the following: metallic which include gold, iron ore, cassiterite, columbite, tantalite, lead-zinc and copper ores, Industrial minerals like Limestone, brayte, Kaolin, dolomite, silica and bentonite & other clays, feldspar, Marble; energy minerals like coal, bitumen, exotic gemstones like sapphire, emerald, Tourmaline, Aquamarine, Garnet, Topaz, Zircon, Amethyst Citrine and Smoky quartz and dimension stones. And also the categorization of some minerals with high economic potentials for further development which includes barytes, lead, Zinc and gold.

The government mining buying centre and the private mining buying centres should be strengthened and all the necessary policy and institutional framework towards the operation and maximization of the benefit of this important value addition process encouraged to ensure optimization of benefit of the sector to all the stakeholders.

Nigeria have more than 93 certified Private mineral buying centers and more than 10 prototype Minerals Buying Centers created by the federal government across the country but these has been largely ineffective and underutilized. With these centers the country would be able to achieve the following; the maximization of profit from the artisanal miners and other stakeholders including the government, control of illegal mining dues, improved profit maximization, provision of the necessary infrastructure and regulatory framework across the value chain, enforcing compliance by mining operators on payment of royalties and mineral revenue.

The buying centers are to serve as standardization centers to enable artisanal and small miners’ cooperatives and operators receive fair premiums for their labour as they concentrate on production. The centers will indirectly ensure the enforcing of compliance by mining operators on payment of royalties, taxes and others on minerals.

The absence of solid mineral buying centers and lapidaries has enabled the flourishing of cartels who engage in illegal sale of minerals and illegal mining of the country’s minerals, with resultant loss of mineral revenue from taxes and royalties. One of the biggest problems we have in mineral exploitation in the country is smuggling. Some of these solid mineral resources were exported and sold back to the country at exorbitant rates and without the government and other stakeholders deriving the needed benefits. It is not good for us to take gold out of Nigeria and get it registered as gold from Niger, Togo or Ghana. The establishment of various mineral buying centers and lapidaries across the relevant zones in the country would be a good one as such step will encourage the artisanal miners to sell minerals in-country and production can be monitored for taxes and royalty collection.

Buying centers should be standardized to reflect the kind of KC process. The Kimberley process was set up in 2003 as a certification scheme to clean up the diamond supply chain and make sure that the diamond trade does not finance armed conflict. The ‘KP’, as the process is known, requires member states to set up an import and export control system for rough diamonds. The buying centres should explore the ideas of the Kimberley process.

To achieve the optimization from the buying center the government needs to do the following; Engagement and communication with all the stakeholders on the benefit of utilizing the buying centers, the establishment and deliberate policy of the government to promote the use of buying centers and thirdly the government should establish a viable policy, infrastructure and regulatory framework that will support the buying centres.

A well-managed and regulated buying Centre will help curb the following loopholes in the mining sector of the economy:

  1. Poor access to markets and support services,
  2. Chronic lack of investment capital,
  3. Low level of consideration for health and safety.

Also the significant negative impact on the environment will be easily traced and monitored.

  1. Miners operating without legal mining rights would be easily traced,
  2. Gender issues and child labour prevalence curtailed and
  3. Conflicts in mining and minerals tracked and sorted out.

Buying centers are essential if the stakeholders will be able to realize the potentials of this sector with all the benefit and interest accruing to the sector.

Paul. O. Ogwu

PWYPNigeria

ogwupaulo@yahoo.com

 

 

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Comment by Daniel Stapper on Monday

Thanks for this note, Mr Oqwu. Very relevant and timely discussion. I whole-heartedly agree that formal buying centers can provide a very useful means for assisting the development of the solid minerals sector. In addition to buying minerals, these centers should also act as 'centers of excellent', training, and equipment supply for the ASM communities. I work for Pact Mines to Market, an International NGO operating in Nigeria - and we are very interested in partnering with government and mineral sector stakeholders in Nigeria to bring this vision into reality.  I expect to be in Nigeria again in February and would be happy to meet stakeholders on the subject. Daniel Stapper, Senior Program Officer for Gold, with Pact Mines to Market. 

Comment by Henri-Claude ENOUMBA on December 28, 2018 at 9:56

 Fortunately, there is growing awareness by African states on the need to get an equitable share of their mineral resources. While this is important, governments are also taking into account the interest of private companies. This is why it is key to engage minerals Buying Center as private companies with reforms for a common understanding hoping that this will have a dire effect on resource governance.Congrats !

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