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New gold project set to attract more miners

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By Timothy Akintola

Mining sector has grown to be a strategic priority of the federal government.

Mining has become an important sector, contributing immensely to the growth of Nigeria’s economy. With a range of solid mineral resources now the focus of Nigeria’s mining industry, the government, in its recent National Development Plan which covers 2021-2025, has set a 3% contribution of non-oil mining to the country’s GDP. With a deposit of about 44 mineral resources including coal, bitumen, gold, lead/zinc, limestone and iron ore, Nigeria is constantly working on prioritizing its mining industry to further ensure its contributions to the country’s economic development.

In spite of the numerous untapped metal deposits that Nigeria has, the extractions have been mostly done by artisanal miners who work on a small scale basis. As a result, the government misses out on taxes that should be remitted from these mining operations. These operations have also been reported to be financing criminal groups that perpetrate crimes across the country. In fact, some Chinese nationals have been detained for their illegal activities of trading minerals, with crude sales accounting for about 90 percent of their export earnings.

Formal operations will enhance mining industry and Nigeria’s economy.

Nigeria, the biggest crude oil producer in Africa, has been making significant efforts to pivot away from its dependence on oil and last year, the country’s industrial gold mine output produced about 98,000 ounces of the precious metal. The Minister of Mines, Olamilekan Adegbite, during his tour of Thor Exploration Ltd Segilola Mine in December, noted that further development and formal operations would enhance the mining industry and Nigeria’s economy. This project which was ramped up late in 2021 is now situated at about 155 miles from Lagos’ commercial hub.

Martin Lokanc, a senior mining specialist with World Bank, in an interview, indicated that though mining had been ignored in Nigeria over the years, the sector had now grown to be a strategic priority for the federal government. He further noted that the first industrial scale mine was an important proof of concept, demonstrating the existence of attractive mineral deposits that can be developed to a higher technical standard. However, there is potential for additional gold projects, as mine discovery sometimes take about 10-15 years.

Incoming president of Nigeria urged to modify the mining law.

Last year, Thor reportedly paid $3.3 million in royalties to the government for the gold exported to a Swiss refinery and now, the company is working on plans to transport about 4.2 kilogram bars which is presently worth about $260,000 to the International Airport in Lagos. About $120 million was invested into building the Segilola Mine and processing plant through a debt equity package from Africa Finance Corp. Compared to the Barrick Gold Corps, Kibali and the Loulo-Gounkoto which produced 812,000 and 700,000 ounces of gold last year respectively, the Segilola Mine is actively looking to develop.

The firm’s Chief Executive, Segun Lawson, in an interview, confirmed that the funds from selling the gold which generated about $160 million last year, was being implemented into facilitating the exploration works around the site with the sole aim of expanding the project’s five year mine operations. On the obstacles faced and to be faced, he noted that the incoming presidency would play an impactful role in further modifying the mining law that offers mining firms multi year tax holidays and import waivers. Peter Leon, Africa’s Chair at a London-headquartered law firm noted that with Nigeria being a new mining destination, it would be important for the government to incentivize investors.

Mining industry must not repeat the mistakes of the crude oil sector.

Again, Lokanc insisted that the mining industry must do more to not repeat the oil sector mistakes that turned the country into a resource cursed one. Instead of improving the living standard of Nigerians, especially the residents of Niger Delta, crude oil revenue enhanced corruption and environmental hazards which destroyed the lives of numerous Niger Delta residents. He noted that whilst the country was attracting investors, the environmental and social status quo must be properly managed.

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