Mining Rates Review: Stakeholders Decry Inadequate Consultation

Stakeholders in the mining sector have decried the lack of proper consultation before new mining rates were announced by the federal government.

The minister of Solid Minerals Development, Dr Dele Alake, had on July 5  announced an upward review of rates and charges for all activities in the mining sector.

He said that the move was aimed at positioning the sector for economic consolidation, and was due to the introduction of qualitative measures being implemented.

According to him, the move will raise the level of services, improve transaction traffic, and develop infrastructure.

The new rates include increase in mining lease licences and royalty rates of minerals particularly of lithium, kunzite and gold.

In response to the development, the National President of the Miners Association of Nigeria (MAN), Dele Ayanleke, said that stakeholders were dissatisfied with the rates.

Ayanleke expressed concern with the processes leading to the announcement, and the general state of the sector, particularly the multiple taxation of operators by state governments.

“To say the new rates are high is an understatement; it is unrealistic.

“In a situation where state governments keep on issuing unconstitutional regulations with attendant rates and charges with impunity and the federal government, through the Ministry, could not assert its authority on a subject located in the exclusive list.

“Outrageous upward review of rates and charges can only be interpreted as the government wants indigenous operators out of the mining business,” he said.

He urged the federal government to engage with state governments to address the widespread illegality in the regulatory and governance framework of the sector, which was frustrating mining operators in their businesses.

According to him, once the situation is resolved, stakeholders should be engaged in determining the best ways to optimise revenue generation, and harness the wealth creation potential of the sector.

Similarly, the President of the Nigerian Mining and Geosciences Society (NMGS), Prof Akinade Olatunji, said that the review was not the issue, but rather the process of arriving at it.

Olatunji said that the ministry had used the current selling prices of minerals as the basis for determining the fixed rates.

“This was done unilaterally without sufficient consultation with relevant stakeholders.

“There are several factors that govern royalty rates. The operators are currently groaning under huge costs aggravated by the prevailing economic challenges, so this may send many more operators out of business.

“What I think the government should do is to get the Mines Inspectorate Division strengthened with more qualified personnel, provide them mobility and running costs and allow them to do their job effectively.

“That would prevent revenue leakage and of course increase the accrual to the government,” he said.

He said that the new rates for exploration and mining leases indicates that the entire landscape may just be confiscated by those with deep pockets.

Recall  that 268 items were reviewed in the new regime.

Investors applying for a mining lease licence will pay N3 million, while Small Scale Mining Lease (SSML) applicants will pay N300,000 for the first two cadastral units.

The cost to obtain an Exploration Licence (EL) is N600,000 for the first 100 cadastral units, Quarry lease and reconnaissance permit, will attract N300,000.

In the new rates regime, lithium ore lepidolite at the current market value of N600,000 per tonne attracts an N18,000 royalty per tonne.

Kunzite, with a current market value of N3 million per tonne, attracts a N90,000 royalty per tonne, while lithium ore spodumene, with a current market value of N316,667 per tonne, attracts a N9,500 royalty per tonne among others.