Solid Mineral revenue appreciated by 21% with N52 Billion earned in 2017- NE‎ITI- Business Day

The solid minerals sector contributed N52.75 billion to the federation revenue in 2017, a 21% increase on the N43.22 billion contributed by the sector in 2016.

The information and data followed an independent reconciliation of company payments and government receipts in the sector by the Nigeria Extractive Industries Transparency Initiative (NEITI) in its latest report issued by Ogbonnaya Orji, the director of Communication and Advocacy in the agency.

From the sector’s total revenue contribution of N52.75billion, payments to the Federal Inland Revenue Service (FIRS) accounted for N49.162 billion which is about 93% of the total revenues realised during the period under review.

Payments to the Mines Inspectorate Department (MID) and Mining Cadastre Office (MCO) amounted to N1.59billion and N2.08billion or about 3% and 4%, respectively of the total revenue from the sector, the report said.

NEITI however noted, “Except for revenue from MID, there was significant increase in revenue from all other streams” in 2017.

 “A trend analysis of the revenue flows showed that there has been a very remarkable increase in revenue accruing to the Federation from the solid minerals sector from 2013 to 2017, though 2016 witnessed a decrease of 31.02% compared to 2015,” the report said.

Other revenue flows from solid minerals, according to the NEITI report, include sub-national payments. These are direct payments to states and local governments as a result of national laws, contractual obligations or local regulations which are disclosed as unilateral disclosures by the extractive companies. “

The total payment was ₦2.877 billion representing about 5.45% of total government revenue from the sector”, NEITI stated.

On production, the NEITI Solid Minerals Report disclosed that 35.33 million metric tons of minerals valued at N32.78 billion was produced in Nigeria during the same period. “The production data was based on minerals either used or sold during the year”.

A breakdown of the production showed that Limestone, Granite and Laterite accounted for 85.72% of the total minerals produced with Limestone alone contributing about 55% of the production volumes. However, in value terms, Granite and Limestone contributed 37.28% and 35.57% respectively.

On state-by-state contribution, the report highlighted that Ogun State produced the highest quantity of minerals in terms of both volume and value.  “The state accounted for over one-third of total production quantity and 23% of the total minerals production value. The contributions by Ogun and Kogi states put together accounted for over half of the total production quantity”.

 A further analysis showed that the two states led in Limestone as major minerals produced in the states.

However, in terms of production value, Ogun, FCT and Kogi states accounted for 23%, 20% and 18% respectively.

A review of minerals production by states also shows that with the exception of the Federal Capital Territory, there was a material decline in states production in terms of both quantity and value.

Total production quantity decreased from 41.87million metric tons valued at N34.09billion in 2016 to 35.33 million metric tons valued at N32.78billion in 2017. The figure represented a decline of 15.64% in production volumes and 3.83% in production value in 2017.

The NEITI 2017 Solid Minerals report also revealed that Dangote Cement dominated activities in minerals production in 2017.

The company alone was responsible for about 46% of the total minerals production that year.  Other big players in the sector included Lafarge Cement Plc., CGC Nigeria Limited, and Julius Berger Plc.

 “The four companies produced over 27 million tons of minerals, representing 77.31% of the total minerals production quantity and over 60% of the production value”, the report remarked.

The sector’s contribution to employment in 2017 was about 0.3% of Nigeria’s total employment, same as the figure recorded in 2016. The report also affirmed that artisanal and small-scale miners currently dominate the sector.

On the solid mineral sector’s contribution to exports, the NEITI report stated that about 16.34million metric tons of minerals valued at $29.90million was exported in 2017. According to the report, “Nigeria’s total export was about ₦13.60trillion with solid minerals contributing N77.23billion or 0.57% of total export in 2017”.

The trend analysis shows that in 2015, solid minerals export was N1.94 billion. This witnessed a geometric leap to N11.16 billion in 2016 and an equally impressive figure of N77.23 billion in 2017. This is an indication that the solid minerals sector is steadily contributing to the Federation’s export earnings but requires greater government attention.

The report also disclosed, “The major destination of Nigeria’s export during the year under review is China. The country accounted for 68% of the total export value during the year”. Other destinations are Malaysia, Vietnam and India. The report however observed that export data received from the Nigerian Customs Service (NCS) include minerals that were not captured in the production data provided by the MID as well as inconsistency in FOB value of minerals.

The report also contains comprehensive information and data on how many licenses were issued as well as gross revenues that accrued to the federation account from both oil and non-oil sources for the year 2017.  It asserted that while Nigeria’s gross revenues stood at ₦7.35 trillion, revenues specifically from the solid minerals sector represented only about 0.05%.

The report explained that the absence of an industry-specific fiscal regime made it difficult to tie revenue flows from the solid minerals industry to the federation account. According to the report, the development equally affected efforts at quantifying the contribution of the solid minerals sector to Nigeria’s GDP, which presently stands at current basic price of ₦113.72 trillion. The report however highlighted that the sector’s contribution to GDP was an abysmal 0.11%, which showed a decline of 0.01% and 0.02% from the data of 0.12% in 2015, and 0.13% in 2016.

The report further explained that out of 1,072 entities covered by the exercise, only transactions by 59 companies were reconciled. These 59 companies accounted for over 86% of the total royalty payments made by the sector in 2017. Royalties paid by fifty-nine (59) companies in 2017 was N1.3billion as against the N1.4billion paid by fifty-six (56) companies in 2016 resulting in a decrease of about 7.7% in revenue. This may be an indication of lower investment in mining activities in 2017.

On payouts to the federating units from solid minerals revenue, NEITI stated that the last distribution of solid minerals accumulated royalties occurred in July 2016, when the sum of ₦9.92 billion was distributed by FAAC. “The accumulated balance in the account as at December 31, 2017, was ₦8.54 billion. However, as of April 30, 2019, the accumulated balance in the account increased by 66.4% to ₦14.21 billion,” NEITI explained.


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