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By Omodele Adigun
IS the Federal Government looking for magic wand to turn the economy around? If yes, it needs look no further, for the solution is here in its mineral resources.
According to Mr. Seun Olatunji, the Managing Director of S.B. Olatunji Global Nigeria Ltd, a metal exploration and exporting firm, who is also the President of Association of Metal Exporters of Nigeria (AMEN), “the price of one tonne of zinc ore, for instance, is $400. And a container load is 25 tonnes. So, 25 tonnes multiplied by $400, that is $10,000. If one million youths have one container each of these minerals existing in good deposit in Nigeria, one million youths times $10,000. That is one billion dollars per transaction.”
In this interface, Olatunji explained that that is the kind of revenue that would accrue from the trade if government empowers one million people. “Imagine taking one million people from the job market and the revenue government can earn from these one million people that have been empowered. That is a food for thought,” he added.
Excerpts:
Minerals, minerals everywhere
The most exported solid minerals out of the country are metallic minerals. And when we are talking about metallic minerals, we are talking of lead, zinc, manganese, copper, tantalite, to mention just few. That is what forms what becomes the revenue. That is why government should consider it worth their investment and time. This association wants to see the industry where everybody along the value chain has something worthwhile doing. And everybody makes profit, including the government.
How can this be achieved if we don’t have an industry that is well regulated by government; an industry where everybody along the value chain plays according to certain rules? Currently in the industry, a lot of things are done haphazardly. That is one of the reasons we want the government to look into certain issues that bedevil the traders and exporters of solid minerals. One has to do with quality. So far, most of our minerals are being carted away without proper value addition. And what that translates to is a loss of revenue, even to the government.
The government is not going to generate good revenue if these minerals are not processed, at least minimally by pulverisation. We are coming together as an association to let government know that for the industry to grow, the exporters are the key. Without the exporters, the miners, who are actually the producers of these minerals, cannot have a market. So the exporters are the bridge between the miners, who are the producers, and the foreign off-takers because the foreign off-takers first of all interface with export companies most times. So it is important for the exporting companies to let the government see a holistic picture of what happens along the trade chain. From the banks – which is finance – to the quality control standardisation; to the regulation of activities on the mining fields. Today, the Nigerian mining field is such that all manners of people go in and do whatever they like. And that affects the government, in terms of loss of revenue; it affects the indigenous companies’ ability to grow sustainably. And at the end, it leads to unemployment in Nigeria today.
So we are talking about an industry where stakeholders, both in government and private sector, should have a synergy. From CBN, regulation of financial policies, to Customs, to the individual companies, there must be a minimum level of synergy. The association has been able to engage with the Standards Organisation of Nigeria (SON) in an attempt to engender a proper regulation in the industry. But it was unfortunate that up till now, we have not seen any positive steps taken in that direction. The exporters regulate their exports. That shouldn’t be so. It means that whatever we do is always contested in the foreign territories. Asia is the biggest buyer of these products. These Asian countries have their governments regulating the imports as importers of these solid minerals. Their governments have systems in place that regulate these products coming in. And that is the standard they use to pay us regardless of what we do in Nigeria. So what is our government doing about this? That is where the revenue gap exists. Our vision is to have a market that is well regulated where all the players along the value chain are well compensated for their efforts.
Two, to harness and synergise with government agencies and have a vibrant export of solid minerals that would translate to billions in revenue for the Federal Government. There are payment of royalties to government, payment of possible value addition levies on the individual companies. There are so many channels where the government can tap revenue from the industry. Imagine in a country where we say there is no job and we have natural resources that can be exported at good value. Imagine that the government throws up a programme targeted at one million unemployed youths, empower them to be exporters. Now, what that means conservatively is that if those one million youths do one container of a particular metal or mineral, for instance, what that translates to is that a container average sealed price for the basic base metals go for between $10,000 to $15,000 hypothetically. So multiply the minimum figure of $10,000 by one million youths. That is the kind of revenue that would be generated from that trade by empowering one million people. Imagine taking one million people from the job market, and government earning revenue from the one million people that have been empowered. That is a food for thought. Extrapolate what that means to the growth of the economy.
Still on the metal exporting for unemployed youths. First of all, to give you a figure on what I said previously is a simple mathematics. I will break it down. These figures are coming from our trade as an individual company. These minerals are sold in tonnes just as oil is sold per barrel. A tonne represents 1,000kg. I am giving you a general price. For instance, the price of one tonne of zinc ore is sold at $400 and a container load is 25 tonnes. So, 25 tonnes multiplied by $400, that is $10,000. Now $10,000 for one container multiplied by one million youths put under empowerment programme by government. It is an example for you to see how unemployment can easily be solved. So if one million youths have one container each of these minerals, which are existing in good deposit in Nigeria, so one million youths times $10,000. That is one billion dollars per transaction.
State minerals
Osun State has not been able to pay workers for many months. The state has one of the best; one of the purest deposits of gold in the world. If the Federal Government has allowed states to exploit minerals in their domains, what we expect the government in states like Osun to do is to look for those who have mining licences and strike a deal with them. That way, they will generate money into their coffers. They would not wait for the allocation from the Federal Government. For instance, in Osun State, apart from gold, there are also gem stones and plenty of mica – used for pigment in paint – available there. With those gem stones available, you can create processing centres called Lapidiaries for gem stones cutting and polishing. So instead of exporting the gem stones raw (because gem stones have more value, you can just put a little in your pocket and travel abroad and sell them for millions of dollars), foreigners can come in and buy. And they would come. That is what we are saying, policies that allow the states do this is a good one. But the states, do they have the knowledge and resourcefulness to exploit these minerals?
The vested authority of all the minerals in Nigeria is the Federal Government. The Minister for Solid Minerals (Kayode Fayemi) made it clear that the state cannot operate in an area where a company that had already been issued licence is operating. It is clear. But that doesn’t stop the states from doing collaboration, joint venture like NNPC-Chevron Joint Venture. NNPC-Mobil Joint Venture. These are joint ventures, which means the two sides have come together and struck a deal. That is what the states should be doing.
They don’t necessarily have to open a fresh field. They look for existing players in their domain and strike deals with these people, using government’s powers. We are talking about generating revenue for your state.
Quality control
Cobalt Inspection – this is an agency that inspects the goods leaving Nigeria on behalf of the Federal Government – was nominated by the Federal Government to be the collector of what is called Nigerian Export Proceeds (NXP) form. The principle of the policy is that every exporter of solid minerals pays 0.5 per cent of the FOB (free on board) value. That is the value or the amount you are selling the goods (cost price plus profit) of that particular shipment. That is the charge that Cobalt takes on every export. It collects that money and does nothing. That is the area we expect the government to be enforcing proper rule of engagement. Cobalt is taking money from exporters on NXP. It is the reverse of Form M, which is for import. For export it is called Form NXP. So what are they taking this money for? They are not inspecting the minerals. They only come to the port and take pictures. Now, we have SGS, it is a global inspection company. SGS is in Nigeria, it is not doing mineral inspection in Nigeria. Why? They would tell you that it is a risk for them to do it because it is not crushed; it is not pulverised. We also have Bureau Veritas in Nigeria, same global brand. They are not inspecting these minerals because they say it is not crushed.
You can reason with them in the direction that this thing is not crushed.
Variation can happen at the destination port, which would result in litigation for those companies. I agree. That is why we Nigerians should look inwards and add value to these products by way of crushing them instead of selling them (in) lump. That is why we are emphasising pulverisation, crushing.
Foreign investors
The principal foreigners that play in this metallic solid minerals industry in Nigeria are the Chinese and the Indians. In as much as we want more foreigners to invest in the industry, that should not be at the expense of Nigerian jobs. When we have an unemployment rate that is very high, alarmingly high, we should be encouraging Nigerians to play in the sector.
