Nigeria Shifting Dependence on Oil Revenue, Plans 50 Mines Before 2023

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Nigeria, Africa’s largest oil producer, has said that it is banking on revenue from the mining sector in a new diversification plan which will see the country move away from dependence on oil revenue.

The woes of falling crude prices – which earlier this year hit two-decade lows – has left the country finance in bad shape, resulting to external borrowings to sustain government projects and governance, observers say.

The Minister of Mines, Olamilekan Adegbite, told Reuters yesterday that as part of the diversification plan, Nigeria aims to establish no fewer than 50 mines before 2023, and make up for time and revenue lost to the impact of COVID-19 on development of the nascent sector.

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“The pandemic has slowed things down, but we can still catch up,” Adegbite said, adding that mining will grow in Nigeria tenfold in five years to account for 3% of the economy.

He said the country can process as well as mine, which generates increased profits compared with shipping raw minerals.

Adegbite said the idea is to process barite, used in drilling for oil and gas, and sell it to countries such as and South Africa, which need the mineral to exploit new oil discoveries.

The minister further hinted as it common with other African countries, Nigeria is also seeking to formalise artisanal mining, which could generate tax and royalties from gold.

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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 in August hit record highs.

The Reuters report said however that the problem is that the country’s gold lies mostly in the northwest, where, humanitarian organisations hardly due to restiveness and terrorism marshaled by Boko Haram and their Fulani herdsmen.

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 said.

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The minister expressed hope that more commercial gold miners would be attracted once Thor Explorations’ gold mine in the southwest of Nigeria starts producing. “Its first gold is expected in the second quarter of 2021,” the minister forecasted.

Malte Liewerscheidt, vice president of London-based risk consultancy Teneo Intelligence, said the plans were likely to be undermined by “structural challenges pertaining to and infrastructure deficiencies.”

The minister also informed that there is a plan by Nigeria to focus on processing barite, which will then be sold to oil and gas drilling projects in and South Africa.

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In addition, the country seeks to formalize artisanal mining, which could boost tax and royalties from gold. Accordingly, “small-scale miners would be encouraged to form cooperatives and sell at government-buying centres. Nigeria aims to attract more commercial gold miners into the country,” Adegbite said.

By Chibisi Ohakah, Abuja

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