NIGERIA – Nigeria’s Minister of Mines, Olamilaken Adegbite has said that the West African nation is aiming to have 50 mines in operation by 2023 despite of delays occasioned by the Covid-19 pandemic.
Africa’s largest oil producer is banking on mining to diversify its income and revive its finances following a collapse in crude prices, which earlier this year hit two-decade lows.
According to Hon. Adegbite, Nigeria hopes mining will grow tenfold in five years to account for 3% of the economy.
He further revealed that the country was looking forward to process the minerals locally as further processing of minerals generates increased profits compared with shipping raw minerals.
In particular, Adegbite said Nigeria aimed to process barite, used in drilling for oil and gas, and sell it to countries such as Ghana and South Africa, which need the mineral to exploit new oil discoveries.
Nigeria is also seeking to formalise artisanal mining, which could generate tax and royalties from gold.
Last year, Nigeria inaugurated the Presidential Artisanal Gold Mining Development Initiative (“PAGMI”) to foster the formalization and integration of artisanal gold mining activities into Nigeria’s legal, economic, and institutional framework.
In July, The first batch of PAGMI gold was unveiled at a presentation ceremony to President Buhari.
The gold had been processed and refined according to the London Bullion Market Association (LBMA) standards required for the use of gold as a reserve instrument by the Central Bank of Nigeria.
Adegbite said Nigeria was encouraging small-scale miners to form cooperatives and sell at government-buying centres, where prices are closer to global values than those illegal buyers offer.
While oil prices have been weak because of the impact of the pandemic on movement and industry, which has curbed fuel demand, gold prices have been tangentially appreciating.
Early last month, Gold surpassed the US$2000/oz mark for the first time in history as investors rushed to acquire more gold as a safe haven for their investments at a time of increased economic volatility.
A problem for Nigeria is that its gold lies mostly in the northwest, where, humanitarian organisations say it has helped to fuel violence attributed to armed groups.
Adegbite said security had improved and buying centres would stop artisanal miners dealing with criminals:
“By weaning them off the illegal people and (making) sure they sell to government-approved centres, you take off that linkage.”
He also expects more commercial gold miners to be attracted once Thor Explorations’s gold mine in Nigeria’s southwest starts producing.
Its first gold is expected in the second quarter of 2021.
Malte Liewerscheidt, vice president of London-based risk consultancy Teneo Intelligence, said the plans were likely to be undermined by “structural challenges pertaining to insecurity and infrastructure deficiencies”.