Mining Revenues Have Increased Significantly – Fayemi

The minister of Mines and Steel Development, Dr. Kayode Fayemi has identified inadequate tracking as a key challenge to effective monitoring of revenue leakages in the nation’s mining sector. In this interview with RUTH TENE NATSA, he speaks on the ministry’s achievements, challenges and  the way forward.

One year after, how would you rate the Nigeria’s mineral and mining sector?

It’s been a year of hard work of putting up the sector. The President sent me here in November 2015, basically with the mandate to grow this sector into an alternative revenue generation  and job creation vehicle for the country. And it’s a vehicle within the contest of the diversification vision of Mr President.

On coming here, of course, not being a miner or geologist myself, I spent the early days studying the sector and trying to understand the strength, weaknesses, opportunities there and the players that we have to deal with. Mining is not new in Nigeria, but it has been in comatose for a considerable length of time, particularly solid minerals mining. Oil and gas, hydrocarbons we spent a lot more of time doing that and we made a lot of the resources sustaining this country from that.

However, even the bit that we used to be known for, tin, columbite, coal mining etc, have gone into oblivion for the last 40 years and what we have been saddled with, my colleague, the minister of state  and I require a lot more heavy lifting in order for us to get the kind of results that the President and ourselves would love to see. And that is what we spent the last year, so to speak, to do, to set in place the pathway for regenerating the sector.

 

What been your observations so far?

We identified things like the revenue leakages in the sector. At some point in August this year, I moved all the mines officers in the sector, sending those who had been there for years back to headquarters and put out new people. I do not know if what has happened in the sector is traceable to that or not, but I am sure there is some correlation between that shift and the significant increase that we have witnessed in the revenue. The contribution of mining into the federation account, appears that we have had a meteoric rise almost doubling the revenue on a monthly basis. In terms of royalties and fees, taxes of course go to FIRS, but even the taxes have improved significantly in that regard, that is just on the gaps.

 

What are your efforts to correct these?

The roadmap that was approved in Council on August 31, 2016, pretty much sets out how we see this sector, where we want to play, what we require to play and the results that we expect from appropriate focus in the sector. One is geological data.  And prospectively, what we have in some form of exactitude, where we have them, the quality, the commercial viability, how we explore them(that is technology wise) and how we develop the entire value chain from exploration to actual production? And that is captured in the short term, medium and long term in that roadmap. For us, we feel that whilst we are pursuing the longer term issues, what are the quick wins? As much as mining does not have quick wins in the sense of other sectors, what are the quick wins that we can at least pluck in order to show the clear commitment that Mr President has given to the sector. What we have done to strengthen the opportunity we have noticed is to secure the approval of Mr President and the National Economic Council, comprising the governors, in recruiting revenue consultants, to now work with our mines officers in order to crack exactly what we are supposed to be earning. We suspect a lot of (for want of a better word) inadequate tracking. I don’t want to say fraud, but inadequate tracking of resources that should come to us legitimately that we are not getting, either from quarry operations, mineral resources exploitation, exportation, under invoicing, under reporting or even outright theft of the minerals in this country, because you still get reports that tell us.

For example, the NEITI report, of which I am also privileged to be involved with as chairperson, tells us that, although we have no record of gold exports in Nigeria in our ministry, yet people take gold out of this country and pass it off as gold from Togo, Ghana or when they get to Dusuk in Dubai , Lebanon or any of the other places they take these things to.

So these are things we have been working on and of course, we have just entered into partnership with Southern Graphic Services (SGS) inspection services to run our laboratories in Kaduna, because many of the minerals that exists, when people want to test, they  have to run to Australia, Canada, South Africa or even Ghana, yet we have a laboratory here. We also have lots of bilateral relationships. You can imagine that only today that you are interviewing me, the Ministry of Minerals Resources from South Africa was here because we have been in conversation over the last year to activate the Memorandum of Understanding that was entered into in 2013, but was never really activated since then. We are doing it with the Australians, they were here just a month ago to help train our people in the ministry.  We have capacity building initiatives that we have embarked on with partners, the Australians, the Canadians, the South Africans, because this is a sector that has not really received that kind of attention.

When you go into mines security, we are getting vehicles for our mines officers. This is something that has not happened in a decade. We are giving them more resources, to be able to monitor the activities of mining activities organisations in their domains. In addition, we are strengthening the partnership with states which has been a sore point in mining before now, because states feel very strongly that they ought to be key stakeholders at the table, but that they are not even taken along in what is going on and we found means to support  them in either partnering with technical people from outside Nigeria and applying for their licences through special purpose vehicles or to ensure that the host communities go through their own states in order to legitimise their concerns which is part of the law.

And also we are working with them to generate the data on artisanal miners so that we know who exactly we want to support in the sector. In a nutshell this is a summary of some of the things that we have been doing.

 

Would you have an idea of how much the economy has lost as a result of some of the revenue leakages you talked about earlier?

It is quite a lot, it is very difficult to put a finger on it. I will depend on some reports such as the NEITI. There is also some report from the CBN that talks about a significant removal of gold products from Nigeria that is unrecorded. We are right now dealing with a case of people who take out lead zinc out of Zurak mines in Wase local government area of Plateau State.

We have people who engage in illegal exportation of blue sapphire fromNguje, in Sardauna local government area of Taraba State. We haven’t done quite well in tracking what we have in the first instance, let alone know what is being taken out illegally and that is one of the priorities. And that is why we are focusing on automating the activities of the sector, because when you automate, you tend to measure the activities of the sector, a lot more accurately. So it is not guess work, if you automate, you also can see, you have given this license to such a person in this cadastral area, without the risk of giving it to another person, thus causing conflicts that are avoidable. So we are looking at Geographic Information Systems(GIS) to monitor what is happening in the mines and working with the security agencies to determine areas where we require a lot more focus than just a passing security interest, so I do not want to put a figure to it, but I know definitely we are not making as much as we ought to be making in the sector.

 

 I would have loved if you could give us figures, millions, billions…..

I really do think we should be able to undertake this exercise, but what I would advise in that respect is a good critic of the audit that comes out of NEITI, because there are solid minerals audit which tends to estimate whether people are paying adequate royalty, taxes and fees in the sector. I think we need to be much more rigorous in our enforcement of the Nigerian Minerals and Mining Act, because we have people who are just cutting corners and that is why we believe we need to work in partnership with states; the federal government cannot be everywhere. I cannot sit in this office in Abuja and know what is going on in Zamfara, Taraba or even in my own local Ekiti, that is impossible. Yes we have federal mines officers in every state; to cover the length and breadth of Kaduna, Sokoto or Rivers or even Lagos is an enormous task and we cannot do it without the help of the people who have local knowledge of the place.

 

Should we not then worry that 13% Derivative is too low for host states?

Well, that is way beyond my pay grade because that is for the National Assembly to deal with, they handle legislation and constitutional review. But it used to be 50 per cent in the First Republic that is kept when it is generated, then 30 per cent in the redistributable fund and 20 per cent to the federal government, obviously things have changed since then. There is renewed agitation that it should be increased, but I think even the 13%, this is the first time, that it is actually being distributed to states in the solid minerals sector, because we agitated for this, discussed with RMFARC and we got the result that we got in the states now benefiting from the solid minerals derivation, because that principle is about natural resources and not just about oil and we have more natural resources in this sector we could argue than geo-carbons.

 

Prior to your assumption, we learnt there is an existing cabal, how have they influenced your struggle?

Cabal is a pejorative used to describe long term stakeholders or entrenched interests in a sector. And people can become entrenched having been there for a long time and still be professional. And the less professionals who are unable to compete resort to all manners of claims in order to delegitimise or put such persons in bad light. There is also a patron client such as we have in a developing country like ours, who influences peddlers; they are not productive, they are middlemen, commission agents, or ubiquitous, they are all over the place. I would not say they do not exist as they do in other sectors, but our golden principle here is that we would only work in accordance with what our Minerals and Mining Act stipulates.

You could also have officials who are entrenched because this is a very professional ministry  and you have people who have been here because that is all they do, people do not expect you to disappear overnight, you would probably complete your career in the sector and that may put you in difficult situation in the course of your career. But I do think, one thing one can say about coming into this sector was that there wasn’t a lot of motivation in the staff because this was a place that had been traditionally neglected over the years, career development had been slow, it was seen as a dumping ground, punishment ministry in the civil service, if they do not like your face, they send you to Mines and Steel and you rot away there.

But I can tell you that over the last year, this is a much sought after ministry because of the breadth of activities, clarity of the position of Mr President on the importance of this sector and the commitment that has been demonstrated by the players.

There is clearly a lot more known about the sector than it used to be and there is a lot more question being asked by people, neutral observers outside. And I must also give thanks to you, specialists in the sector,the media, for highlighting progress even while objectively criticising some inadequacies. People now know a lot more about the sector than they used to and that has enabled those who used to see this place as a dumping ground to rethink and re-orientate themselves to seeing it as the next frontier in the development of Nigeria.

 

What is the state of the concessioning on Ajaokuta now?

Ajaokuta is still not fully back in our hands. But that is not because we do not have the right to take it over, but simply because there is a process that we are following; it requires due diligence by technical advisers who are meant to review what happened to the Nigerian Iron Ore Mining Cooperation in Itakpe. That process has just been finalised from our side, but there is also the transportation, because there was a railway concessioning too in 2005 when we had the Ajaokuta/Itakpe concession, we are now going to have a meeting that brings together the two sectors, so that we finalise that.

Culled from The Leader Online