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Published On: Mon, Jan 8th, 2018

Mining for economic growth

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By May Agbamuche-Mbu

The new Sustainable Development Goals (SDGs) came into effect on 1st January 2016 with 17 goals and 169 targets which Nigeria adopted along with several other nations at the 70th United Nations General Assembly (UNGA) in New York in September 2015. This new set of goals target tangible improvements in critical socio-economic areas such as the elimination of hunger, water and sanitation, economic growth, climate change, human settlements, livelihoods and employment, inequalities, energy, infrastructure and industrialisation. All are laudable and achievable goals however Goal 8, ‘promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’ stands out as very important because if we as a nation want to succeed with this particular goal a good percentage of all the other goals will fall into place naturally as a knock on effect. President Buhari has quite rightly highlighted agriculture and mineral resources as two specific sectors that he will be focusing on and one can readily see the great potential effect these sectors could have on the nation’s economic growth, providing massive employment opportunities, investments, industrialisation, social development and hopefully a broadly better standard of living.
The drastic fall in oil prices may someday be looked upon as a blessing in disguise as we as a nation are now forced to look inwards for our sustainability. Take the mining sector for example, nearly every state can account for mineral deposits of some sort. Therefore the government’s plan to diversify its mineral resources and its revenue base is a most welcome, albeit well overdue development. In re-strategising and reforming the mining sector, the government has shown focus by seeking the assistance of the United States to determine the quantity and quality of solid minerals deposits available in the country. Data collection of the solid mineral deposits is key and the right direction to go in as the Solid Mineral Ministry makes headway in its reforms.
The recent statement by the Minister of Solid Minerals Dr. Kayode Fayemi encouraging states to exploit their mineral resources by either setting up their own investment corporations or by going into partnership with the private sector, notwithstanding the federal government’s exclusive right to mine minerals, is a giant stride by this administration in the right direction. He however advised that the states go about such exploitation in a legal manner that will not interfere with allocations already given to other stakeholders.
While this policy statement from the Minister is encouraging and does represent the present administration’s expressed support for the development of the Solid Mineral industry in Nigeria, it also shows intent by the Federal Government to collaborate with the States. However, the practical implications of the Minister’s statement is that the government is challenged by legal hurdles including item 39 of the Exclusive Legislative List of the Constitution which covers mines and minerals…oil mining, geological surveys and natural gas, the Mines and Minerals Act 2007 and the Petroleum Act 1969 which vest the control, regulation and ownership of all mineral resources in the federal government while land ownership is exclusive to the state governments. The combined effect of these laws is that the federal government is the sole approving authority for mining licences and the regulation of the industry. This has far-reaching implications for the purposeful development of a solid mineral policy in the states.
To take an unprecedented step, which will then set the current administration apart from previous expressions of intention about the Mining Industry, the Federal Government should take the bold step of amending item 39 of the Exclusive Legislative List. The Constitutional amendment is simple enough to avoid any major partisan arguments regionally or across party-political lines.
There is no gainsaying that if states were allowed to exploit their mineral deposits there would be less dependence on allocations from the federal government. What is required is a framework whereby the states and the federal government can effectively collaborate in this regard. For example before the oil boom, the Nigerian economy was dependent on agriculture and mining. Coal from Enugu alone was enough to power railways and generate electricity. Currently coal is found in some 13 states of Nigeria but is not being commercially exploited in any of them. Nigeria was also a major producer of tin and columbite mainly found in Jos. Gold found in Oyo, Osun, Kogi, Niger, Kaduna and Sokoto is a huge potential source of internally generated revenue for these states. Appropriate legal frameworks will need to be ironed out to ensure there are fair and reasonable mutual benefits. The sharing formula of taxes accrued must be agreed and tax incentives should be considered, as double taxation is a burden suffered by most legitimate companies. Furthermore joint monitoring of the mines and registration of all levels of mining concerns right from the small scale upwards will be important.
Other countries have introduced models where the state and federal government share ownership of resources. In Australia the relevant state/territory owns almost all the mineral resources in that state/territory and is the authority that grants mining licences. In the United States of America the federal, state and local governments control about 1/3 of all mineral rights but in special circumstances rights are split between ‘surface owner rights’ and ‘mineral estate rights’. Some states with ‘split estate’ systems are Texas, Oklahoma, New Mexico, Pennsylvania, Colorado, Louisiana and New Mexico. Therefore rights to a particular piece of land can be owned by two separate parties; the party who controls the mineral rights can develop and extract any subsurface resources. On the other hand, ‘fractional ownership’ refers to a situation where the surface owner owns about half of the mineral rights beneath their property, probably sharing with other family members, a company, or a government entity. In ‘severed ownership’, the homeowner has no mineral rights because ownership is vested in the federal government.
Another reason why states should be granted more control over their solid minerals is that they would be in a better position to stop artisanal mining also known as illegal mining which has contributed to the loss of earnings from the mining sector. The reformation of this sector will require the protection of the community against environmental degradation caused by indiscriminate mining. For example in Ogun State in Igun-Ijesha over 2,000 pits have been dug by miners in their search for gold. The miners proceed to sell the gold they extract at prices well below global levels and in continued, unchecked violation of s. 94 of the Nigerian Mineral and Mining Act 2007, which states that the purchase of minerals without an officially issued license is prohibited. With joint collaboration the state government can have an effective mineral and environmental monitoring committee which should advise the Ministry of Environment on environmental degradation and the effects on climate change such as loss of land to natural causes through flooding and erosion. With that the ministry stands a better chance of fulfilling its supervisory and monitoring obligation under s. 17 of the Minerals and Mining Act. Similarly, in Ebonyi state illegal mining activities in Afikpo, Ivo, Ohaukwu and Ezza LGAs have resulted in adverse environmental impact for the host communities including health hazards and the destruction of their homes. The issue of reclamation of excavated areas has to be seriously considered to restore such areas to their former use as farmland, a win, win situation.

May Agbamuche-Mbu is a Public Affairs Analyst.

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