There has been excitement around Nigeria’s solid minerals sector since the coming on board of the Muhammadu Buhari administration, leading to the unveiling of a roadmap detailing what needed to be done to make the sector a revenue and foreign exchange earner.
Minister of Solid Minerals Development Kayode Fayemi had said at a public lecture in May 2016 that Nigeria could earn N5 trillion yearly from solid minerals if it opened up the sector. What was not being emphasised, however, was the need to attract deep pocket investors to open up the sector.
Of course, without geosciences/geological data showing how much minerals the country has in its ground, it is practically impossible to attract investors. Research geared towards getting such data costs huge sums of money. In many climes governments fund such research, but given the precarious state of Nigerian government’s finances, the findings may not be completed by 2020 as the government hopes.
The Federal Government may be waiting for investors to come and try their luck to find out how much minerals are in Nigeria’s grounds, but this too may not happen soon given the global price swings and uncertainties in the solid minerals industry.
A report by SNL Metals and Mining on Corporate Exploration Strategies in 2016 showed that solid minerals was facing four years of steady decline. SNL, part of S&P Global Market Intelligence, found that exploration budgets of 1,580 companies covered by the study totalled $6.9 billion, the lowest in 11 years.. The average exploration budget was $4.4 million, the lowest since 2009, while the median budget was $800,000, which is the least in over 10 years.
Exploration is the first stage in mining. It costs millions to do exploration. Investors that do exploration go to countries where there is data and are well known for mining. Nigeria is known as an oil producer rather than a mining destination..
It is therefore hard to convince investors otherwise, except Nigeria sells the idea of being a new mining destination with incentives and a plan to come up with bankable data and a mining bank. This is also predicated on improved infrastructure and security in the northern part of the country.