T he federal government, through the Nigeria Extractive Industries Transparency Initiative (NEITI), has disclosed that Dangote Cement Plc and Dangote Industries Limited are the highest contributors to revenue from the country’s solid minerals sector in 2019.
The NEITI’s 2019 audit report signed by its executive secretary, Orji Ogbonaya Orji, released recently, showed that the two companies under the Dangote Group, contributed about N778.28 million representing 31 per cent of the N79.96 billion, which the country earned from the solid minerals sector in 2019.
Specifically, while Dangote Cement Plc revenue contribution to the federal government is N635.52 million, Dangote Industries Limited’s revenue stands at N142.76 million, representing 25.40 per cent and 5.71 per cent of the total revenue respectively, received by the government in the period under review.
The report named the top five companies that contributed significantly to revenue from the solid minerals sector to include; Dangote Cement Plc, Dangote Industries Limited, Lafarge Africa Plc, Julius Berger and Reynolds Construction.
According to the report, out of 702 companies that paid royalties to the government in 2019, only 74 companies met the materiality threshold of N3 million.
“These 74 companies accounted for 87.63 per cent of total royalties of N2.50 billion paid in 2019, with the top five companies (Dangote Cement PLC; Lafarge PLC; Dangote Industries; Julius Berger; and Reynolds Construction) paying more than 50 per cent of total royalties,”
Analysis of revenue flows from the sector also showed that the sum of N79.96 billion recorded in 2019 was the highest in the past five years. This was followed by N69.47bn and N69.2billion recorded in 2018 and 2015 respectively. Besides, N52.76bn was recorded in 2017 while the sector accounted for N41.98bn in 2016.
On the volume of minerals exported, the report showed that the solid minerals sector accounted for N124.23 billion of the total government exports of N24.275 trillion for 2019, representing 0.51 per cent of total export for the year.
On contribution of the sector to the economy, NEITI’s report cited data from the National Bureau of Statistics (NBS), which stated that mining and quarrying contributed 0.26 per cent to GDP, higher than 0.18 per cent contribution recorded in 2018.
“Nigeria’s GDP in 2019 was N144.210trillion with contributions from the solid minerals sector totalling N368.99billion, representing 0.26 per cent of the total amount. This shows a steady growth in the sector’s contribution to the economy in the past five years, from a contribution of 0.12 per cent in 2015 to 0.26 per cent in 2019,” it stated.
A sectorial review of revenue distribution of taxes and royalties by the 74 companies shows that manufacturing and construction companies contributed 68.60 per cent and 29.67 per cent respectively in royalty and taxes while quarry, mining companies and buying centres contributed only 1.73 per cent.
On environmental impact and social expenditure, the report disclosed that ten companies reported environmental expenditures to the tune of N17.13 million. The expenditure covers environmental fees, air quality and waste permits, and registration fees for environmental impact assessment (EIA).
Furthermore, the report disclosed that the mines environmental compliance department carried out reclamation of seven abandoned mines at N534.81 million. It also noted that a total of 32 mining sites have so far been reclaimed from 2007 to 2019 at a cost of N2.39 billion. On social expenditure, the report revealed that the sum of N2.598 billion was spent on 557 projects by 44 extractive companies.
Apart from the presidential initiatives on gold, salt and fertiliser, the NEITI report also identified on-going projects in the sector. They include: Gold mining development; Mapping of ASM & buying centres; and procurement of airborne Geophysical Survey; and Integrated Automated and Interactive Solid Mineral Portal (IAISMP). Others are: Development of geoscience data bank for mineral exploration; development of jewellery and gemstone industry; automation of royalty payment and documentation across the country.
The report made salient recommendations aimed at providing interventions, strengthening the regulatory framework, enhancing tax payment systems and ensuring synergy, partnerships and collaborations among agencies managing the sector.
To address the issue of non-payment of taxes and multiple tax identification numbers (TIN), the NEITI report recommended that the Federal Inland Revenue Service (FIRS) should carry out comprehensive tax audits to recover all unpaid taxes by companies and also work in collaboration with the ministry of mines and steel development (MMSD) to reconcile the multiple tax identification numbers by some companies.
The report also recommended that government through MMSD should promote the development and beneficiation of strategic minerals through investments in strategic and metallic minerals to increase revenue to the government, and that the ministry should also consider having its representatives at the export terminals and borders to validate export clearance permits by exporters and confirm if the applicable royalties have been paid.
Nigeria is immensely endowed with numerous mineral resources. Every state in the country has mineral deposits waiting to be tapped for economic prosperity.
According to the Nigerian Investment Promotion Commission (NIPC), Nigeria has 45 different solid minerals buried in various locations across the country. But these minerals are largely untapped. Both local and foreign investors can leverage on the multi-billion-dollar market.
In its Economic Recovery and Growth Plan 2017 to 2020, the federal government declared that the solid mineral sector is one of the fast-growing sectors of the economy.
The solid minerals deposits in Nigeria are worth several trillion-dollars, yet Nigeria loses billions of dollars every year to the importation of things that can be produced locally using these items.
Also, in comparison with other countries with similar potential, Nigeria’s mining sector is still largely underdeveloped. This situation is despite the sector’s good performance a few decades ago and the huge proven deposits of valuable minerals across the country.
However, the mining sector is currently picking up from its ailing status. Currently, the mining industry is responsible for about 0.33 per cent employment, 0.02 per cent of export and 0.3 per cent of the country’s GDP.