Nigeria’s ambitious plans to expand its non-fuel minerals sector are becoming more deeply meshed with the country’s strategic industry development agenda, minister of state Abubakar Bawa Bwari has told Mining Journal, as the Muhammadu Buhari government tries to build real longterm prosperity and jobs for the massive youth element of a population that could be the world’s fourth largest by 2050.
Bawa Bwari said in an interview on the sidelines of the recent Africa Downunder conference in Perth, Western Australia, increased recognition of Nigeria’s latent mineral endowment – inside and outside the country – and fresh exploration successes, continued to open up wider industry development possibilities.
The potentially highly significant Titan nickel find by Australia’s Comet Minerals, for example, was “to us … a pleasant surprise”, the minister of state for solid minerals said, that fed hopes for development of local stainless steel production to support wider economic change.
“Nickel was not one of the targeted minerals” in the formative economic blueprint of the government as it set out to diversify Nigeria’s oil dependent economic base, boost government revenues, and “create jobs for our population”. Nigeria’s high youth unemployment and under-employment rates were an issue the government was taking very seriously, Bawa Bwari said.
“A lot of African youth are dying in the desert and the oceans trying to cross to Europe where they believe there are a lot of opportunities. We cannot as a government continue to countenance that and I believe the only way to stop it is to create more opportunities in African countries.
There are certainly opportunities in Nigeria in the mining sector.” After decades of neglect as oil revenues cast mining deeper into the shadows of Nigeria’s economy, ‘solid’ minerals are very much back on the political agenda in the country.
The Buhari government has ambitious short term plans to expand mining output, but even more elaborate goals to build manufacturing and other industrial capacity on the back of mine output to boost jobs and cut imports of steel and other metals.
Bawa Bwari acknowledges critical infrastructure deficiencies – “we are focusing on the need to build roads, rail, power lines” – and also a need to build operating and administrative capacity in the form of properly educated and trained people. Hence Nigeria was keen to work more closely with countries such as Australia and Canada on mining skills and knowledge transfer.
He was also eager to see investors in Nigeria share the training burden. “Before now our friends have shown so much love for our raw materials, but that love has not translated to love for our country and our people,” he said. “We can’t do it without people.
“Our population is getting larger and larger, and there is an increasing need to address the [education and skills of the] population. It can be an asset, at the same time a challenge if it cannot be properly harnessed.”
While licensing, royalties, taxes and other government revenue takes are potentially very significant for Africa’s biggest economy if it can open up more of its promising mineral stocks, the Buhari government seems to have a bolder plan for growth that defers some of the early windfalls it could expect from greater foreign investment in raw materials extraction.
“Any [foreign] investor coming into Nigeria has 3-4 years tax holidays, and can own their business 100%. They can bring in their mining equipment duty free,” Bawa Bwari said.
“The message is that Nigeria is open to business. The aim is to get back to that [former] position of recognition as a mining country, not just as an oil and gas destination. “We want to see Nigeria on the world mining map.”
Published Nigeria Ministry of Mines and Steel Development material has the mining sector’s contribution to national gross domestic product more than doubling from about US$13 billion last year to $27 billion, or 3% of GDP, by 2025.
The ministry concedes it has a task to “recover lost ground from the past three decades [and] … a policy and economic context that was hostile to business”. It is working to “restore stability and market confidence in the Nigerian mining sector [and] re-establish Nigeria as a competitive mining and mineral processing centre”.
Bawa Bwari thinks known base metals and construction mineral deposits and projects can lead short-term expansion of the industry.
“We believe right now [that] tin is doing very well; lead-zinc, gold, limestone … there is a lot of construction going on in our country and the quarrying is important,” he said.
“Nigeria is self-sufficient in cement production now. In fact we are exporting cement now. That’s what limestone has been able to do for Nigeria.”
Reports suggest production from Nigeria’s cement industry will hit 45 million tonnes per annum this year, up about 1,400% from a decade ago. The cement “sub-sector” employs about 30,000 people directly and more than two million people indirectly, and saves Nigeria’s economy $2 billion a year in foreign exchange.
“These are minerals we believe can lead to the increase in GDP,” Bawa Bwari said.
“We also want to substitute some of the things we are importing … critically steel, but also fertiliser for agriculture, lithium and rare earths. Barite is another mineral used in drilling in the oil and gas industry. Before now we used to import a lot of barite into our country and we just discovered we have one of the best barite deposits around.
“We want coal to [help] address the issue of competitive electricity.
“So these are all strategic minerals that we want to use to address some of the things we import, and build capacity.
“Right now [the industry is] operating mainly at artisanal and small-scale level. Even at that level we see significant discoveries such as the gold found in Bauchi (state).
“But we want to bring in the big players.”
Bauchi gold and other near-surface mineral finds such as the stunning Titan colluvium nickel discovery 200km north-east of Abuja provide further evidence of Nigeria’s prospectivity, but have also generally helped sustain illegal mining activity said to cost Nigeria billions in lost revenue.
In his Africa Downunder presentation Bawa Bwari was at pains to outline a legislative programme aimed at finally making headway on effective regulation of artisanal mining. He said the government wanted to eliminate negative public health and environmental fallout from unregulated mining activity (which has also come historically from bigger mines), and was also determined to ensure larger-scale operators had community agreements in place before mining licences were granted.
Symbol of progress
Australia’s Symbol Mining, which has started mining and producing concentrate at the small, high-grade Macy zinc-lead-silver operation in Nigeria’s Benue Trough, is emblematic of Nigeria’s new mining push albeit it is currently facing dangerous commodity price headwinds.
Symbol gained a 25-year mining lease in good time and got its mine going seven months after an initial public offering. The company wants to use cash flow from the new, small-scale mine to fund a bigger exploration effort in what CEO Tim Wither said at Africa Downunder was an underexplored base metals province that might be analogous with Coeur D’Alene in the US, and Touissit-Bou Beker in Morroco.
For a small enterprise, Symbol already has in place an impressive community investment program and claims to enjoy a good connection with local people.
“Approval of the mining lease at Macy shows the ongoing support from the Nigerian Mining Cadastral Office in advancing the first industrial-scale mining operation in Nigeria for several years,” Wither said.
“We want to build Symbol into a mid-tier Nigerian mining house.”
Others are keen to marry foreign capital with the dual-track government agenda of new mining development, and industry building.
Chief Comet Minerals backer and executive Hugh Morgan, a former CEO of leading Australian mining house WMC, and Ian Burston, another senior Australian mining industry figure, are at the head of the queue of foreign companies looking to figure prominently on Nigeria’s new mining “roadmap”.
Burston’s Kogi Iron (ASX: KFE) has a mining licence and community agreement in place to underpin an ambitious plan to tap vast low-grade channel iron deposit (CID) resources on the Agbaja Plateau in Kogi State to feed a cast steel plant that can replace some of Nigeria’s US$15 billion a year of steel imports.
After meeting with Bawa Bwari in Perth, Burston said recent testwork by consulting engineer Tenova confirmed Agbaja ore was amenable to production of a beneficiated iron ore concentrate suitable for the production of pig iron, as well as a refined metal suitable for the production of billet. The company is working on a definitive feasibility study and obviously has iron ore price and massive project funding hurdles (for a circa US$500 million project) to overcome.
But Kogi’s CEO Martin Wood said: “This [metallurgy] is the key proof of the whole project. It indicates that the iron ore that we own can be economically turned into a cast steel product that can be sold for more than it costs to make. Our internal numbers show this is a very valuable project.
“We think the definitive feasibility will show we can produce steel for around US$300 per tonne.
“The entire [Nigeria] market for scrap is around 2.5 million tonnes, and we have hundreds of years’ worth of ore.”
Banker Wood said Kogi, which had been working in Nigeria for more than a decade, would ultimately turn to UK equity and debt markets for project finance.
Morgan’s Comet Minerals will follow a similar path, he revealed at Africa Downunder.
“[Titan] we think has all the marks of being a very significant discovery that will attract international attention and that will bring name enterprises into the exploration and development opportunities within Nigeria,” Morgan said.
Fellow former WMC executive and Comet investor Dr Stephen Davis said the company had been working away in Nigeria for five years and “some of this has taken much longer than we expected earlier”.
“But everything we seem to be dealing with at this project is new,” he said.
The experienced mining team at Comet took a long time to be convinced the “92-94% pure nickel balls” lying near-surface in colluvium soil, over vast tracts of land, were not man-made or the property salted. Now the job was to convince other investors the “naturally occurring nickel that is richer than what comes out of a concentrator” can support a multi-billion-dollar revenue – and government royalty – stream, and possibly add significant value to local steel-making.
Comet hasn’t drilled the bedrock below the colluvium cover – “why should we?” Davis asks, saying indications from trenching were that the nickel balls were contained in the underlying rock – but estimates the top 5m of the deposit, over a 20sq.km area, could contain $57 billion worth of nickel.
A simple plant – “something like an alluvial gold plant” – might be all that is needed to produce “pure nickel off the site”.
“There is no need for a concentrator or a refinery, so our transport costs would be particularly low,” Davis said.
Comet’s environmental protection program has been approved and it is said to be close to finalising its community agreement. Davis said “we hope to see a mining lease very soon”.
“As Hugh said this is a very significant project for Nigeria,” he said.
“It has the potential to bring to Nigeria modern mining processes and a large-scale world class mine.
“A new modern mine like this brings not only a lot of jobs, but also new benefits to Nigeria. The royalties alone on stage 1 [could be] $246 million; on the wider [20sq.km] tenement, mining just the first 5m, they would be $1.64 billion.
“That’s without starting on the hard rock.”