Elisha Bala-Gbogbo Abuja
NIGERIA was offering mining concessions to companies including Rio Tinto and Ratel Group to explore dormant reserves and boost non-crude revenue, Mines and Steel Development Minister Mohammed Sada said last week.
“We want to see that we have a large body of serious exploration companies” to use available mining data, Sada said in an interview. “Our target by 2015 is to at least make a 3 percent contribution to the gross domestic product [GDP].”
Although commercial quantities of minerals, including gold, coal, tin and bitumen, have been found in Nigeria, their exploitation contributed only 0.36 percent to the country’s GDP in 2011, rising to 0.43 percent in the third quarter of last year, according to the National Bureau of Statistics. Four decades ago mining’s share was 10 percent, the bureau said.
President Goodluck Jonathan would present a mining “road map” tomorrow, that would outline incentives to companies as the government tried to meet the target, Sada said.
Under the plan, investors would get capital allowances for as much as 95 percent of qualifying expenditures as well as waivers of customs and import duties for mining equipment, the minister said.
New investors would get tax holidays of three to five years along with other concessions.
“This is a good initiative and such a road map is probably even overdue,” Samir Gadio, an emerging markets strategist at Standard Bank in London, said yesterday. “That said, this is not the first time that the authorities announce high-level plans to increase the contribution of the mining sector, so the actual implementation of this blueprint and introduction of specific incentives will test the administration’s ability to deliver.”
While Rio Tinto was in talks with the government and had conducted studies, Ratel and Savannah Gold Mines were already operating mining leases in the country, Sada said.
Illtud Harri, a London-based spokesman for Rio Tinto, declined to comment. Ron Clarke, the interim chief executive of Toronto-listed Ratel, did not respond to calls.
Oil has dominated the Nigerian economy since the 1970s, and now makes up 95 percent of foreign-exchange income and 80 percent of government revenue. Mining and agriculture have shrunk by more than 40 percent, making Africa’s biggest oil producer more vulnerable to oil price shocks.
The government is seeking investors for 34 minerals found in commercial deposits at 450 sites across the country, according to the Mines and Steel Development Ministry’s website. These include 2.7 billion tons of iron ore, 3 billion tons of coal and 2.2 trillion tons of barite, a mineral used in drilling hydrocarbons.
Sada said Nigeria had signed a memorandum of understanding with China last week that provided for a Chinese-built minerals laboratory by June and training of Nigerians in mining technology.
The ministry would soon sign a deal with Iron Bull Mining of Australia to take up some iron ore concessions, he said.
The mining revival was expected to benefit from the expansion of the rail network, the minister said. – Bloomberg