INTERVIEW: We Are Set To Develop Nigeria’s Bitumen Resources – Ogah
Dr. Uchechukwu S. Ogah, OON, FCA, is the Honourable Minister Of State, Ministry Of Mines And Steel Development. In this interview with THE WHISTLER, the minister reveals efforts being made to tackle illegal mining, increase government revenue through mining activities as well as set the stage for the development of bitumen resources in Ondo and Ogun, Lagos and Edo states, respectively. Excerpt
What is the situation now with the Ajaokuta Steel Project and National Iron Ore Mining Company, Itakpe?
The Federal Government of Nigeria under the visionary leadership of President Muhammadu Buhari has a deliberate plan for the resuscitation, completion and commercial operation of the Ajaokuta Steel Plant. The government has gone ahead to consummate an understanding with the government of Russia for the operation of the Steel Plant. The technical assessment of the entire Plant should have started if not for Covid19 restrictions of movement. This Plant, when completed in the first phase has the capacity to produce 1.3Million Tons Per Annum of liquid steel, generate direct employment of about 10,000 staff, and indirect employment in the range of 500,000 people, covering different fields of learning.
The National Iron Ore Mining Company (NIOMCO) at Itakpe was conceived as a captive mine with iron ore processing plants for the operation of Ajaokuta Steel Plant. When the Ajaokuta Steel Company Limited was under concession to Messrs. GINL, NIOMCO was also concessioned to the same company. These concessions were cancelled in April 2008 by the Federal Government leading to arbitral litigation at the ICC London. In a turnaround event to put an end to the lingering litigation, the parties decided to settle out of Court and a Modified Concession Agreement was signed between the Federal Government of Nigeria and Messrs. GINL. The new Concession Agreement with seven-year tenure in the first instance was granted to Messrs. GINL on the condition that it must meet the requirement of ASCL as a priority customer before supplying to others. The government may still explore other available options of retaining NIOMCO if the parties agree on the financial settlement window.
Nigeria is still earning so little from Mining of solid minerals, far below its potential. What is being done by your ministry to turn the situation around?
Revenue generation of a country from its minerals sector, to a large extent, depends on the volume of investment in the sector and how robust is the mining policy: legal and institutional framework to support the sector’s development on a sustainable basis. Let me also say that the amount of revenue generation from the sector is further contingent on the quantum of mineral production and the type of mineral commodity produced. Therefore, to achieve substantial increase in revenue, there must be first and foremost a consistent increase in mining operations either by expanding existing mining operations or opening new mines.
It is with this understanding the Ministry is committed to deepening the reform programmes in the Nigerian mining sector and since the commencement of the implementation of reform programmes in 2005, the scale of the mining operations has remained very modest with contribution of less than 0.5% to the national GDP. Revenue generation from the sector in the form of mineral royalties and fees on mineral titles/licenses has seen a steady increase in recent past years.
The major challenge facing our revenue generation remains the issue of illegal mineral exploitation and under declaration of the actual quantum of minerals produced by the mines and quarry operators. These challenges being addressed are vigorously through the reform programmes which we are implementing.
The key reform programmes and strategic initiatives include the following:
• Formulation and implementation of the Road map for the growth and development of the Nigeria Mining Industry.
• Enhanced Mines surveillance efforts with the deployment of new field surveillance resources to support the curbing of illegal mining
• Continuous enforcement of provisions of the Nigerian Minerals Mining Act, 2007 to manage the productivity of issued mining titles which translate to increased revenue generation
• Strengthened capacity and digitizing the Mining Cadastre Office to ensure the seamless online process for obtaining mining licences and permits
• Development of Mineral Export Guidelines to facilitate ease of mineral commodities export and ensure that minerals are not smuggled out from Nigeria without paying the right royalties
• Development of the National Gold Purchase Scheme
• Execution of the National Integrated Mineral Exploration Project (NIMEP) to rapidly acquire geological data and attract investment.
• Upgrade of Nigerian Geological Survey Agency Laboratory (NGSA) to international Standard
• Digital Archiving of Geological data for ease of storage, access, and dissemination
• Close supervision and monitoring of mineral production using engineering tools such as explosives powder factor for the assessment of hard rock/mineral production and computation of royalty payments
• Commenced the process of reviewing the Nigerian Minerals Mining Act, 2007, to address current concerns and to introduce new legal initiatives that will further strengthen the legal and regulatory framework that underpins sustainable development of our mineral resources.
These reform initiatives are geared to enable us to achieve the establishment of a vibrant mining industry with the capacity to optimize revenue generation for the common good of all Nigerians.
There is a lot of illegal mining going on and some of the proceeds of the crime have been used by criminals to support banditry and other crimes. What is the government doing to tackle illegal mining?
We are already tackling illegal operations in the sector through the formalization of artisanal, small-scale and informal operators given that we fundamentally understand that it is as a function of poverty and the socio-economic issue/challenges being faced; however, in addition, we are scaling up our mines surveillance activities using the instrumentation of the Presidential Special Mines Surveillance Task force which has been established in all the 36 states and the Federal Capital Territory. The task force teams are working in the states and we are getting good results with the recently reported cases of arrest of illegal miners in Zamfara, Osun, and Ondo states.
We are presently collaborating with the Ministry of justice with the objective of introducing specialized courts in each of the six geopolitical zones of the country that will be dedicated to the trial and prosecution of illegal mining suspects and other mining offenders,and such operators that evade mineral revenue payments.
Is the government planning to revisit the issue of privatized steel rolling mills, which have generally been idle after being sold to investors?
The three (3) Inland Rolling Mills at Oshogbo, Katsina, and Jos were set up to receive billets from the two integrated Steel Plants at Delta and Ajaokuta for the production of reinforcement bars. These rolling mills were privatized by Bureau of Public Enterprises (BPE) through guided liquidation but have not performed as expected. The post-privatization monitoring of the enterprises is domiciled with BPE and the Federal Government is engaging the new private owners to ensure that the mills are put into operation. The business cases of the companies will be evaluated with regard to imported billets and transportation logistics.
Bentonite clay used as drilling mud in the oil and gas industry is available in some parts of the country in large deposits but it is mostly imported. What is the ministry doing to get the oil industry to source this mineral from Nigeria rather than importing it?
Locally available solid mineral products like Bentonite, Barite, pi –coat (from iron ore concentrate and aggregates) which are used as a raw material in the production of drilling mud for oil/gas industry operations have not been properly harnessed. There have been issues around production capacities and quality of the local bentonite and barite products to meet the oil/gas industry requirements. The Ministry is implementing a programme to ensure the sustainable production of quality Bentonite, Barite, etc that are acceptable to the oil/gas industry players. The local content Act and the Presidential Executive Order No.5 of February, 2018 are the legal basis for the enforcement of patronage from the oil/gas industry provided that we meet the quality standards.
Are there collaborative efforts between the solid minerals mining sub-sector and the oil mining sub-sector?
There is a collaborative inter-ministerial relationship between the solid minerals and oil/gas sectors with regards to improving local consumption of mine produce. However, the Ministry of Mines and Steel Development is making an effort to ensure that basic standards are not lowered in our efforts to encourage local patronage.
Nigeria has large bitumen deposits in Ogun and Ondo States respectively, is there any plan to develop these deposits?
The country is endowed with bitumen resources covering Ondo, Ogun, Edo, and parts of Lagos State. This resource has been partitioned into blocks and efforts are being made to successfully concession the blocks to investors with the requisite competency and the capacity to develop and exploit the resources. You may wish to note that bitumen is one of the priority minerals in the Ministry of Mines and Steel Development and very soon our plans with respect to the development of bitumen resources will be made public.
What are the key challenges facing the Mines and Steel Industries?
There are many challenges facing the industries, but I will dwell on some key issues like:
BANKABLE GEOSCIENCE DATA
Investments in the mining sector are information-based and the generations of bankable geoscience data are the risky part of the industry. The industry has been finding it difficult to attract serious investors mainly due to inadequate geoscience data and government alone cannot be responsible for the exploration. The FGN has graciously provided some funding and the Ministry have commissioned the National Integrated Mineral Exploration Project (NIMEP) for the generation of some bankable geosciences data.
DORMANT PRIVATISED ASSETS
The assets of the Nigerian Mining Corporation (NMC) and Nigerian Coal Corporation (NCC) were handed over to Bureau of Public Enterprises for privatization. Most of these assets already privatized were not functioning and many are yet to be privatized. The government is currently fashioning out strategies to revive these non-operational assets and optimize them in partnership with the private sector.
STATE GOVERNMENT INTERFERENCES
The constitution of the Federal Republic of Nigeria placed solid mineral exploitation as an exclusive preserve of the Federal Government while the States are in charge of land where minerals are deposited. The Ministry has always been inundated with petitions from investors on multiple charges in the name of environmental levies, road usage fees, etc. which are so uncoordinated that you would not know what to expect each day. We have been engaging the other tiers of government to sensitize them on the exclusive list of the constitution and the need for seamless mining operations in their area.
What is the government’s vision for both sectors?
Our Vision as a Ministry is “to facilitate the transformation of the Nigerian Mineral and Metals Sector for Sustainable Industrial Growth and Economic Surplus,” which in a nutshell, means we are geared towards using the sector to drive economic diversification, employment and wealth creation, industrialization, the export of value-added minerals and poverty reduction.