States regulating mining sector illegally – Miners association president

President, Miners Association of Nigeria, and a member of the board of Nigerian Extractive Industries Transparency Initiative, Dele Ayanleke, speaks on the artisanal nature of the mining sector and revenue leakage in the industry.in this interview with FELIX OLOYEDE

So, how well do you think the solid mineral sector has been harnessed in Nigeria?

Well, it has not been properly harnessed because of the mode of operating the sector. There is no way I can talk about that without going a bit into history.

In colonial Nigeria, solid minerals were the mainstay of the national economy. And we heard then that even the man who was in charge of solid minerals then, who was the surveyor-general, I mean, the local surveyor. The geological survey department used to be an advisory member of the executive council.

After the discovery of oil, mining was abandoned. And when it was abandoned, mostly had all these foreign expatriates running the industry. When it was abandoned, the government no longer regulated the sector, because we had revenue coming from oil and gas. Everything in the mining sector, including the infrastructure, became obsolete. And then the artisanal miners took over the space. So that is why, up to today, the major operators in the mining sector are artisanal and smoking miners. Most of these operators operate on intuition. There are so many scientific means of extraction. In fact, they use mostly diggers and shovels.

But you have some major operators doing solid mineral mining in the country.

Well, I can’t call it major when you compare it with standard mining. But when you look at it from the Nigerian point of view, you see how some people, some companies, some operators that are a bit higher in terms of operating capacity, that they can acquire some equipment to operate. So presently, the minerals have not been economically exploited in a way that you contribute to the Nigerian economy.

The artisanal nature of the mining industry in Nigeria, what is it costing the country?

It is costing a lot. Not positively. But one thing you want to know is that artisanal mining is a global phenomenon. It Is not limited to Nigeria. Everywhere you have artisanal miners. But what they do is that they formalise them and bring them to cooperatives or something like that, which our government is trying to do over the years. Talking in terms of the cost, economically and environmentally, they are not contributing positively to the economy.

Number one, when you look at the issue of the environment, they devastate the environment without any capacity to reclaim the land. And that is causing a loss of some traditional occupations to the locals. Those who have been farming, those who have been doing hunting, things like that, they can hardly access such land now because of the kind of devastation that has come upon the land.

And when you look at the issue of deforestation too, because whenever these artisanal miners focus on a particular region, they cut down the woods, and do all sorts of things. The place you are looking at as a forest, in a few days, in a few weeks, it just becomes open. So that is environmental degradation.

Then there was the issue of economic losses. The government cannot track the revenue from them. They sell our minerals raw to their sponsors, those who sponsor them at the sites. And they sell to them very cheaply. And there are some of these minerals that you call low volume, high value. You can hold a gram that is worth, maybe, thousands of naira. You can sell just a gram for thousands of naira. If an artisanal miner sells something for one naira, you can be sure that the price is nothing less than double that value.

And you can take this thing out without a declaration so that the government cannot track any revenue from it. So it is an economic loss. So both environmentally and economically, the artisanal miners are not contributing positively to the economy.

So what is being done to formalise those artisanal miners?

The Mineral and Metals Policy of 2005 kicked off the present regulatory regime we have in the sector. So, there was a policy to develop the sector. A part of it is that the ministry was restructured to have some departments. That is when we have the mining cadaster, which is an agency of the ministry, independent again of the ministry, that takes care of mineral and mineralisation. We have the Nigerian Geological Survey Agency that takes care of data exploration, and bankable data exploration, to invite the major investors, because without data, major investors will not come. One of them is the Artisanal and Small-Scale Departments. The major mandate of that department is to formalise these artisanal miners, form them into cooperatives, and provide excellent services for them. So that once their operations become formalised, the government can track development.  They can track revenue from their operations.

Where is the place of your association in all this?

Our role, principally, is to collaborate with the government in terms of policy formulation and policy implementation. So all these issues I’m talking about, like the metals policy, the involvement of the present Nigerian Miners Law of 2007, and some other policy decisions in the sector. We were part of it because we brought our own experiences from the operative angle to whatever policy the government wanted to come up with. We also play the role of sensitising our members to best practices, mining best practices. So we sensitise our members and educate them. And we organise programmes that showcase Nigeria’s mineral wealth.

In 2016, we started an event known as Nigeria Mining Week. The ministry is the host. We are the owners of the event. And we have some partners. PwC is a development partner. And we have an event planner from South Africa.

Are there limits to the licences issued in the mining sector? 

There are so many different titles in the mining cadastre. Right from the reconnaissance permit, exploration license, small-scale mining licence, quarry licence, mining licence, and so many other titles. Each of these categories has limitations on what they can do in terms of working capacity. So if somebody obtains an exploration licence, what that one permits you to do is just make sure that you explore the areas, and know which area you can get as many as 100 mining cadastre units from. So we will now explore and know which of those areas is productive. You then go back to the mining cadastre to obtain either a small-scale mining licence or a mining licence. The essence of that is that when you are doing that, the only equipment you can use is that which assists you in exploration.

But when you now see someone, a holder of an exploration licence bringing in equipment, excavators, bulldozers, and clearing the land, he has gone beyond his boundaries; that is an illegality. So that is why I say it’s not limited to all these astounding miners. In fact, in some cases, in the absence of exploration methodology, they help some of the title holders identify mineralised areas. That is why, in some cases, unless the owner of such a title declares somebody an illegal miner, there is no other person outside who can come and say you are an illegal miner. Some minor title holders can allow their tenant miners to work on their concessions and their coverage. They might help them discover the mineralised areas because these people don’t have beyond shovels and diggers. They cannot dig beyond their knee level. And once they get to the rock, that is where their hands will be. So a minor title holder will take over from there.

There may be some control to make sure that whatever comes out of those small operations, he gets his share to service the landscapes.

Stakeholders have identified a lot of revenue leakages in the mining sector, as you have in other sectors. How best do you think governments can block these leakages? Leakages come through many doors.

We have to do one thing. There are some minerals, we call low volume, high value. There are some minerals in Nigeria today that five grams is worth more than the value of another one in the trailer route. But the problem is at the border. How many people will check those and take those things out? Even our gatekeepers don’t have adequate knowledge of these minerals. That is number one. Our gatekeepers must be well-trained to identify solid minerals.

When you say gatekeeper, who are you talking about?

I’m talking about the customs and others who are at our borders. Security personnel. Whether they see the border, the airport, or the road. So that is what I mean. Then, if there are cracks in the wall, you know what will happen. The Nigerian regulatory system is not being implemented, the framework. And it was being managed up until maybe about a year ago. When state governments began to set up structures and their regulatory frameworks.

We have as many minerals, whether solid, liquid, or fluid; they are on the exclusive list. So the state government comes up with a lot of excuses to partake unquestionably and illegally in mining regulations. So when you have this because of revenue leakage, yes.

Multiple levels of control bring multiple privatisations. And there are some slips of income, and revenue being generated from sectors that federal agencies that report to federal accounts cannot capture. Any money collected from mining operators by the state governments or local governments cannot be captured. So these are leakages. Those of us in the operations know that what mining is generating is far more than what is being declared. And we are not blaming those agencies that are collecting data. The problem is that some revenue cannot be captured through their radar.

You talked about state governments participating in the mining sector illegally. Is that what you are trying to say?

They are not participating legally. And if you are not participating legally, that means you are participating illegally. What I mean is that the way a state wants to come to regulate the sector is not according to the Constitution. It is not according to the extant laws. Okay, so they are trying to regulate the sector by stating it is illegal. The way they are doing it presently. The law has been reviewed.

If at the end of the day, the law is reviewed to open up regulations by giving them legal power and authority. But presently what we are operating, the Nigerian constitution and the Nigerian Minerals and Mines Act 2007, do not permit state governments to regulate. There are some provisions that actually open doors for them to participate.

Number one is that in the law, there is what we call, there is a committee that is known as MIREMCO, Mineral Resources and Environmental Management Committee. Each state or division must have that committee. It should be an agency of the Federal Government. However, the membership is mainly from the states. The governor of the state will recommend the chairman. All the many operative ministries in the state, Ministry of Natural Resources, Ministry of Forestry, and Ministry of Environment, are members. But most state governments in Nigeria today abandoned this MIREMCO and they are now setting up their task forces.

Some go to the extent of closing mining operations, banning mining activities, and burning down the mining equipment of some operators who are legally licensed, who are properly licensed by the Mining Cadastre Office, and the Federal Government that gave them licence has not declared them as illegal operators. But we see some agencies of state government going there to disrupt their operations.

MIREMCO is supposed to take care of the issue of environmental conflict between the state and the Federal Government. We have the issue of 13 per cent derivation, just like the oil and gas that have been dedicated to mining host communities. We have the issue of a community development agreement that a mining titleholder must have with his immediate community, the landowners of where he is mining.

And of course, we have the issue of the Impact Assessment that every mining operator must carry out and be certified by the ministry and the Federal Ministry of Environment. So all these are avenues, provisions made for the state government to actively participate in mineral and mining operations.

In 2017, the Ministry of Mines and the state government set up a mining council. This council was set up to provide avenues for all types of government to make representation and see areas where there are gaps in the law. So that they can, through policy formulation, through policy initiatives, block these gaps, in the next review of the mining law. But what we see is that state governments don’t send in quality representation.

Lack of capacity is also a problem in the sector. How can we improve capacity in the extractive sector?

We have been clamouring for this. Capacity will come through funding. Unfortunately, the Nigerian banking institutions, because they know the sector, are not ready to fund anybody in it. If you go there now to say you want to obtain a loan, you have to use another means. Not through mining as collateral to get your money, to get funding support. And they will give you this at commercial rates, which cannot help mining because mining has a long gestation period. You can start a mine today, the next five years, you might not get to the level where you can get anything. And your loan will be running at a cost. But there is one agency, which I forgot to mention at that time, in the sector, which they call the Solid Mineral Development Fund. We have been clamouring for this fund. This agency will be funded to take care of and improve the capacity, and working capacity of mining operators, especially the small-scale leaseholders. So we have been clamouring for this but have not seen much. Even in 2016, during the regime of President Muhammadu Buhari, he released some money, N2.5bn. And the Bank of Industry promised to provide counterpart funding of the same amount, to make it N5bn. I have not heard of any miner accessing that money. That money has been there.

As a member of the board of NEITI, what are you bringing to the table, sir?

 I am bringing my knowledge of the industry to the table to help NIT make sure that the work demanded is effectively delivered. I have been in the sector for about 25 years now. I have been in this position since I became the national secretary of the mining association in 2014, before I became president last year, in August. Apart from my practical experience in the field, I have participated in a lot of policy decisions.

So, I can use this knowledge to make sure that NEITI delivers on its mandate. Meanwhile, I’m also representing the whole of the extractive industry, the mining industry. So I can leverage even the experience of some of my seniors because I can get ideas from them to make sure that we help NEITI deliver on its mandate.

The government is planning to use gold to boost the country’s external reserves. How far do you think we can go with this?

 Everything depends on the way we manage the situation. If it is working in other jurisdictions, why not Nigeria? It can work. But what we have currently is that in some of these policies, stakeholders in the sector are not being carried along. And it is very unfortunate.