Introduction: The Need for Diversification
Nigeria’s economy has long been dominated by the energy sector, particularly oil and gas, which account for over 90% of export revenues and a significant share of government income. While the energy sector remains crucial, the over-reliance on it has left the country vulnerable to global oil price volatility and shifting energy dynamics. In contrast, the non-energy mineral sector, with its vast untapped resources, offers a golden opportunity to diversify the economy, generate jobs, and create sustainable growth.
This article delves into why Nigeria’s non-energy mineral sector deserves more attention and how it can play a transformative role in shaping the country’s economic future.
Abundance of Untapped Resources
Nigeria is home to over 44 mineral types, many of which remain underexplored or underutilized:
- Metallic Minerals: Gold, tin, columbite, and iron ore are abundant, with reserves often exceeding billions of metric tons.
- Industrial Minerals: Limestone, gypsum, and kaolin hold significant industrial and export value.
- Gemstones: Tourmaline, sapphire, and topaz are in demand globally, especially in the jewelry and luxury markets.
Current Contribution
Despite this wealth, the sector contributes less than 0.5% to GDP, highlighting its vast untapped potential.
Energy Sector Over-Dominance
Economic Dependence
- Oil and gas contribute 7–10% to GDP, but this figure hides the sector’s disproportionate importance in government revenues and foreign exchange earnings.
- Price volatility in global energy markets has exposed Nigeria to repeated economic crises, underscoring the need for diversification.
Limited Job Creation
- The energy sector, being highly capital-intensive, creates fewer jobs compared to mining and other resource-driven industries.
Opportunities in the Non-Energy Mineral Sector
Revenue Generation
With proper investment, the non-energy sector could:
- Contribute 3–5% of GDP by 2030.
- Generate significant export earnings, particularly through gold and lithium, which are in high demand globally.
Job Creation
The mining industry employs millions of artisanal miners. With better formalization and investment, it could create even more jobs, reducing unemployment and poverty.
Global Demand for Strategic Minerals
- Rising demand for lithium, cobalt, and other minerals driven by the global energy transition positions Nigeria as a potential supplier in the clean energy value chain.
Challenges Holding Back the Sector
Despite the immense potential of Nigeria’s non-energy mineral sector, several challenges continue to stifle its growth. These hurdles are not only limiting the sector’s contribution to the economy but also discouraging investments and formalization.
Regulatory and Infrastructure Issues
- Complex and Overlapping Regulations:
- Licensing processes are cumbersome, requiring approval from multiple agencies, including the Ministry of Mines and Steel Development (MMSD) and the Nigerian Mining Cadastre Office (NMCO).
- This bureaucratic inefficiency delays projects, increases costs, and deters both local and foreign investors.
- Inadequate Infrastructure:
- Poor road networks in mining-rich regions make it difficult to transport minerals from mines to processing facilities or export points.
- Limited rail connectivity adds to logistical costs, affecting the competitiveness of Nigerian minerals on the global market.
- Ports lack the capacity and technology required for the efficient export of bulk minerals.
Illegal Mining
- Unregulated Activities:
- Artisanal and small-scale mining (ASM) dominates the sector, particularly in gold and gemstone mining. These activities often operate outside the regulatory framework.
- Revenue Leakages:
- The Nigerian government loses billions annually due to illegal mining, with minerals like gold and columbite smuggled out of the country without proper documentation or taxation.
- Environmental Degradation:
- Illegal mining practices lead to deforestation, water pollution, and soil degradation, affecting communities and ecosystems.
Lack of Investment
- Minimal Financial Backing:
- The mining sector receives less than 10% of the investment directed toward the energy sector, despite its potential.
- Investors are wary of risks, including security concerns, regulatory uncertainty, and limited infrastructure.
- Solid Minerals Development Fund (SMDF):
- While the SMDF was created to finance mining projects, it remains underfunded and underutilized.
Security Concerns
- Insurgency in Mining Regions:
- Northern Nigeria, rich in minerals like gold and tin, faces persistent threats from insurgents and bandits, disrupting mining operations.
- Protection Costs:
- Mining companies must allocate significant resources to security, increasing operational expenses and reducing profitability.
Global Competition
- Nigeria competes with established mining economies like South Africa, Australia, and China, which offer more stable environments, better infrastructure, and streamlined regulations.
Success Stories and Potential
Lafarge Africa and Dangote Cement
These companies leverage Nigeria’s rich limestone reserves to dominate the construction materials market.
Thor Explorations
The Segilola Gold Project in Osun State is Nigeria’s first large-scale gold mine, demonstrating the viability of investing in non-energy minerals.
Emerging Lithium Potential
Exploration projects in Plateau and Nasarawa states could position Nigeria as a key player in the global battery market.
Policy Recommendations
To unlock the potential of the non-energy mineral sector, Nigeria needs a comprehensive strategy that addresses regulatory, infrastructure, and investment challenges while creating an enabling environment for growth. Here are expanded recommendations:
Increase Infrastructure Investment
- Targeted Development for Mining Hubs:
- Build all-weather roads connecting mining sites to processing plants and export terminals.
- Expand rail networks to reduce the cost of transporting bulk minerals like limestone and coal.
- Modernize seaports to handle large mineral exports efficiently, including specialized terminals for bulk materials.
- Power Supply for Mining Operations:
- Provide uninterrupted electricity to mining regions, reducing reliance on expensive diesel generators.
Simplify Regulations
- One-Stop Licensing Framework:
- Establish a centralized platform to handle all licensing and approvals for mining operations, reducing delays and duplication.
- Transparent Processes:
- Implement digital tools for tracking applications and ensuring transparency in granting licenses.
- Policy Consistency:
- Avoid sudden regulatory changes that could disrupt ongoing projects and deter investors.
Encourage Value Addition
- Processing and Refining:
- Set up gold refineries, gemstone cutting and polishing centers, and cement plants to add value to raw minerals.
- Export Incentives:
- Offer tax holidays or reduced export duties for companies that process minerals locally before exporting.
- Industrial Linkages:
- Promote partnerships between mining companies and local industries, such as construction and manufacturing, to boost demand for processed materials.
Formalize Artisanal Mining
- Training and Support:
- Provide technical training and modern equipment to artisanal miners, improving productivity and reducing environmental impact.
- Cooperative Models:
- Encourage artisanal miners to form cooperatives, enabling easier access to finance, equipment, and regulatory compliance.
- Monitoring and Enforcement:
- Strengthen regulatory agencies to monitor and formalize artisanal activities, ensuring proper taxation and environmental management.
Promote Public-Private Partnerships (PPP)
- Shared Infrastructure Projects:
- Collaborate with private investors to build mining-specific infrastructure, such as dedicated rail lines and processing facilities.
- Co-Investment in Exploration:
- Partner with global mining giants to fund large-scale exploration projects, reducing risks for both parties.
Focus on Strategic Minerals
- Global Demand for Lithium and Rare Earths:
- Prioritize the exploration and development of lithium, cobalt, and columbite, which are critical for batteries and green technologies.
- Supply Chain Integration:
- Position Nigeria as a supplier to global industries, especially in Europe and Asia, by securing long-term contracts with manufacturers.
Enhance Security
- Mining-Specific Security Units:
- Deploy specialized security forces to protect mining operations in high-risk areas.
- Community Engagement:
- Work with local communities to address grievances and reduce tensions that may lead to sabotage or illegal mining.
Conclusion: A Balanced Approach for Sustainable Growth
While the energy sector will continue to play a pivotal role in Nigeria’s economy, the non-energy mineral sector offers a pathway to diversification and resilience. By tapping into its vast resource base, addressing systemic challenges, and fostering investments, Nigeria can reduce its over-reliance on oil and gas, creating a more balanced and sustainable economic future.
The non-energy mineral sector isn’t just an alternative—it’s the key to unlocking Nigeria’s untapped potential.
