Prioritize International Mining Partnerships to Attract FDI ― KPMG Tells FG
By Patience Chat Moses
With over forty four (44) solid mineral resources, Nigeria’s solid mineral sector has continued to suffer underutilization.
As a result of this disturbing development, a global audit, tax and business advisory firm, KPMG has advised that Nigeria should join global mining bodies to validate its mineral deposits and boost investors’ confidence. KPMG noted that, to fully attract Foreign Direct Investment (FDI) into Nigeria’s over 44 solid minerals spread in over 500 locations nationwide, the country, through its agencies, must sign up for relevant international mining organisations.
As stated in its June report on the country’s solid minerals sector, the advisory firm affirmed that Nigeria should naturally be a preferred mining destination for many multinationals, based on the country’s solid mineral wealth. The firm listed Nigeria’s mineral deposits to include, but not limited to, gold, barite, bentonite, limestone, coal, bitumen, iron ore, tantalite/columbite, lead/zinc, gemstones, granite, marble, gypsum, talc, iron ore, lead, lithium, nickel, and silver.
It stated, however, that a myriad of challenges had plagued the sector, hindering its ability to attract and retain the much-needed foreign participation and investments.
Challenges Facing Nigeria’s Solid Minerals Sector
The report acknowledged that among many challenges the country’s solid minerals sector has encountered over the years, lack of critical infrastructure, particularly adequate electricity supply and access roads to sites of mineral deposits stood out in the list.
In addition, limited geoscience data and information has been another obstacle to the sectors advancement. Lack of adequate, accessible and reliable geological data on available mineral resources and their locations will always affects the sector’s ability to attract investors. KPMG explained that every investor requires access to credible data to facilitate investment decision making and most of the available geological/geoscience data are dated.
This raises questions about the credibility of the resource information and may affect the bankability of mining projects. However, it said the federal government, in May 2024, through the office of the Nigerian Geological Survey Agency (NGSA), introduced the Nigerian Mineral Resources Decision Support System (NMRDSS), a web-based application that provides read-only access to geo-scientific and geo-economic data of Nigeria.
According to KPMG, another issue hobbling the growth of the minerals sector in Nigeria is insecurity. It stressed that although a number of the mineral rich communities in the northern region of Nigeria had now been liberated from the occupation of terrorist groups, communal and religious conflicts occurred intermittently in the Middle Belt region, an area known to be rich in minerals and metals.
It said the recent operations of the Mines Surveillance Task Team to tackle the challenges of illegal mining and the recent inauguration of the Transport and Mining Marshals were a step in the right direction, as it could help to foster a more secure climate for operators.
Illegal mining activities in some of the regions have also posed attendant Health Safety & Environment (HSE) risks and community challenges. However, it is expected that with the strengthening of the nation’s security apparatus, it will help to contain and curtail the nefarious activities of illegal mining.
In the report, KPMG advised that, in addition to its continuing efforts to mitigate the identified domestic challenges and to improve the ease of doing business in Nigeria, the federal government, through the relevant ministries or key mining associations should consider becoming a member of renowned international mining organisations.
Some of these global solid mineral association include; the Committee for Mineral Reserves International Reporting Standards (CRIRSCO), the Intergovernmental Forum on Mining (IFM), Minerals, Metals and Sustainable Development (IGF); and the International Council of Mining and Metals (ICMM), amongst others.
Benefits of Affiliation with Global Mining Organizations
KPMG stated that membership and affiliations with such globally renowned mining organizations would confer several benefits to Nigeria and mining stakeholders, and had the potential to put the country in pole position to attract FDIs.
Validating the veracity and existence of acclaimed mineral deposits, especially of critical metals is another benefit these global organizations provide. Other benefits include earning and maintaining global trust by promoting high standards of reporting of identified mineral estimates and strengthening the social and environmental performance of the mining sector, in view of the increasing ESG-investment considerations.
It identified additional benefits such as building recognition of the mining sector contribution to local communities and society at large and strengthening laws and policies to achieve short and long-term sustainable development goals.
Given what it described as the recent strides and advancements recorded in the Nigerian mining sector, KPMG said the country could maximize its potential by sending positive signals of readiness for business to the global community. It said such signals would be energized by certifications obtained from membership of the appropriate organisations, which could strengthen investor confidence and make the country the preferred investment destination for mining majors.
As of May 2024, KPMG stated that a total of 7,182 companies and individuals were licensed to operate in the upstream subsector, including exploration, mining lease, quarrying lease and small scale mining licence.
