What is the Malam Nasir El-Rufai administration doing to diversify its revenue base, by leveraging the huge solid mineral deposits in Kaduna state?
The governor of Kaduna state, Malam Nasir Ahmad El-Rufai, is someone who believes in tomorrow, he believes that the current administration has to plan for the future of the state for sustainable development. That is why he took it upon himself to venture into the solid mineral development which requires time, resources and sustained efforts. To do this, he facilitated the establishment of Kaduna Mining Development Company Limited to serve as a Special Purpose Vehicle for the development of the solid mineral sector of the state. The reason is to free the state from going cap in hand every month to the federation government for Statutory Allocation. Rather, he wants Kaduna state to be able to, within the resources it is endowed with, develop itself, create jobs, create sources of revenue, and expand the frontiers of economic activities in the state.
How endowed is Kaduna state in terms of the solid mineral deposits?
Kaduna state has a very long history of mining activities. Records have shown that since 1910, gold has been exploited in Birnin Gwari and other neigbouring local government areas like Giwa, and Chikun. Beyond gold that we have in a very huge quantity, there are several strategic minerals spread across the state like nickel. Most of us can recall the very important discovery of nickel, the first of its kind the world over, by an Australian company called Comet Nigeria Limited, in a village called Dangoma in Jema’a LGA. What led to that discovery was actually, the existence of tin ore. Tin is a very essential metal that occurs in almost all parts of Kaduna state. The artisanal miners working around in Dangoma, Jema’a and Sanga areas were using their manual methods of exploring tin and throwing away the nickel without knowing what it was. That was how some Europeans that had licenses, eventually discovered that some special kind of nickel was there.
What I am saying in essence is that we have gold, nickel, tin, columbite, some amounts of tantalite, several gemstones like amethyst, aquamarine traumaline—and ours is one of the best in the world. Of course, there are several other precious stones for dimension stone production. People who know will remember Chibi Nigeria Limited, owned by a citizen of Kaduna state that has been operating for over 30 years. Chibi Nigeria Limited controls about 50% of the dimension stone market in Nigeria; in Birnin Gwari and Zaria, Kagarko,Chikun, Kagoro, Sanga, which is used for decoration of our houses, offices and all sorts of decoration.
These solid mineral deposits you mentioned, does the state have them in commercial quantities?
Of course, when you talk about gold as I said, over 100 years, people have been exploiting it. You know up to 90% of the mining activities in Nigeria has been done by artisanal miners who don’t have equipment and technology. So, they have been merely scratching the surface and they have been on that for a very long time. If you go to some places that I mentioned, you will find huge deposits of tin ore being mined by these artisanal miners and they are selling it. In fact, tin mining is a bit simpler because it occurs on a level we called alluvia, a loosed sand that does not require energy to mine. You see even women and children working day and night trying to bring it out. Majority of the Tin Shed that buy these materials in Jos actually get their supplies from Kaduna state mainly, and parts of Kano, Nasarawa and Bauchi states.
Last week, you disclosed that Kaduna state will soon start exporting tin in September. Are solid minerals not within the Exclusive Legislative List, how can a sub-national undertake such exports?
For some states the exclusivity of natural resources, including solid minerals and petroleum resources, presents a challenge. But in Kaduna, we face any developmental challenge by finding solutions because of the doggedness and foresight of our governor. It is true that the 1999 Constitution of the Federal Republic of Nigeria, entrusted all these resources in federal government and that is why it was placed under Exclusive List in terms of control. And that is why Kaduna state decided, in its wisdom, to create a private company, a Public Liability Company, to be an operator in this case. This is what made the state government to establish the Kaduna Mining Development Company as a Special Purpose Vehicle, to be able to harness the resources and to generate the benefits endowed in these resources maximally. That is what we did and we are indeed very grateful that the coming of Kaduna Mining Development Company Limited has boosted greatly, the mining activities in the state.
What we did in the first instance was to identify the very key strategic minerals around the state. Having established that, we then carried out due diligence to ensure the potentialities of these areas that we have obtained. We applied for licenses just like any other private company or person can do, from the Nigeria Mining Cadastral Office, following all due processes. We then advertised for potential investors who know the industry; those who have the experience and the technical know-how. So far, we were able to establish several agreements and Joint Venture Companies (JVCs) with five international companies that are working with us.
One of these companies called New Frontier Kaduna (NFK) Nigeria Limited, will start exporting the processed tin from Kaduna state by September 2021. We have a tin processing centre at a place called Banki in Kubau local government area. That was done with the intervention of the federal government. We have already signed exports contracts with some of our off-takers while still in discussions with many others. This will be continuous as we will be expanding. It is through this Special Purpose Vehicle (SPV) that we seek for private investors and we are now able to get export contracts. This will open a new frontier of activities in the processes of mining in this state.
So far, how many mining licenses have you acquired from the Nigerian Mining Cadastral Office?
Before I joined the Kaduna Mining Development Company Limited in 2019, it had existed for about four years–from 2015 to 2019 and I met about 12 licenses; six in gold mining and six as quarry leases. Then when we came on board, we studied the situation and began to acquire licenses based on our investors or partners’ needs. And that is what expanded our title from 12 to 38. However, we reached an understanding regarding one of the quarry leases in Zangon Aya. It used to share border with a quarry owned by Zabercest, one of the biggest quarries in Kaduna and Abuja. We surrendered one of our titles to them because they wanted to expand. They have invested about $20 million in that quarry and there were some encroachments and because we wanted to encourage them, we negotiated and surrendered the title to them. Now, Kaduna Mining Development Company Limited on behalf of the state government, is holding 37 mineral titles across the state. But of course, we have joint venture companies; we use our acquired licenses on most of these JVCs.
The first JVC is Kaduna Amsalco Granites and Marble Nigeria Limited, there are two quarry leases licenses on it. The second one is Kaduna Mining Frontier Nigeria Limited, which deals with gold explorations; there are also two gold mining licenses on this. The third one is Gwari Kaduna Iron Ore Mining Limited; there are three iron ore licenses on that. The fourth one is Jema’a Kubau Mines Limited; there are five exploration licenses on that. Then the NFK Global Resources Limited also has two licenses on it. So, these are the licenses on gold, granite, ore and tin and nickel deposits that are parts of the JVCs agreements we signed with these international corporations.
From your explanation, can we safely say that mining of several solid minerals is going on in different parts of Kaduna state, apart from the activities of artisanal miners?
Yes. We just got the second quarter report of mining explorations going on for this year. These activities are going on and if someone says that Kaduna is Nigeria’s mining destination, he is not actually far from the truth because we have the biggest mining facility and investment in the whole of Nigeria. In fact, the mining company, African Natural Resources and Mines, that we are partnering with, has the biggest private investment in Nigeria and it is located here in Kaduna. This is the biggest Foreign Direct Investment (FDI) outside the petroleum sector. These investments keep on coming because we have developed the most workable framework for anybody to come in and partner with us or invest their resources.
As I am talking to you, we just receive another big foreign company from Canada that will be coming in next month for engagement. They keep coming in because of the policies of His Excellency, the Executive Governor of Kaduna state, Malam Nasir El-Rufai and of course what they have seen happening in the state. Another key factor that keeps attracting these investors into the state is the fact that Kaduna State Government is refusing to take controlling shares. And the reason is, if you want mining to be sustainable, because mining is a big-time international business, then you should allow the private sector to take the lead so that even after this administration, the program will be sustained. Mining investments usually have between 30-100 years mining cycle.
Let me just say this again, African Natural Resources and Mines is an affiliate of private group called African Industries Group, which has interest in many sectors. They came in on their own here but when they saw what we are doing, we told them that beside the iron ore that brought them to Kaduna, we have other important mineral resources here. We were able to convince them in 2019 to go for a join field visit with us. We arranged six site visits but only visited three, which metamorphosed into the two Joint Venture Companies that we established. We had Joint Venture Agreements on eight licenses; three for iron ore in Birnin Gwari, and five for tin, columbite tantalite and nickel in Kubau, Lere, Kauru, Kaura and Jema’a local governments. These five licenses in the local governments listed covered 1,727 cadastral units which translated easily into 342.4 sq km of land area. The reason I am mentioning this is for you to understand the size of the land involved.
What we have with African Natural Resources and Mines in other solid mineral mining triples what they have in Gujeni, in Kagarko LGA where they invested $600 million. By the time they finish their studies, only God knows the amount of dollars that will come in to develop these areas. As we said, this is an international conglomerate and this will give other conglomerates confidence that Kaduna is where to invest and entrust your money and you are sure that your money is secured.
In most of these JVCs, the investors actually bring in the funds and Kaduna State Government gives the title and provides land, does community engagement, provides security and infrastructure in terms of water, power and access roads. All the funding will be by the investors who mostly control between 70-75% shares. They manage their money, we are not involved with their money, all we do is to monitor the amount of money they invested, have a representative on the Board; but they chair the Board and also appoint the Managing Directors of these JVCs. So, the control of the companies is completely in the hands of the investors. This gives them confidence that their money is under their control.
For clarity, is the African Natural Resources and Mines a wholly private Kaduna state-based company or a Public-Private-Partnership?
The nature of the company or the nature of the investment structure is completely owned by private individuals. The relationship we have with them is actually in terms of support and making sure that they have whatever they need. I can remember precisely on the 25th June 2019, their management team met with the Senior Adviser and Counsellor to the Governor, Mr. Jimi Lawal. After the meeting, I was mandated to go and look at the problems they have and see how KDSG can intervene in terms of land matters, security, community engagement and whatever they needed. This is to enable them start their operations without hindrance and that is what we have been doing. This is a company that has advertised for 2,000 staff for a start. The target actually is 3,500 direct staff and 6,500 indirect jobs. It will engage a work force of over 10,000 when it begins operating 100%. No serious government will play with that kind of investment.
But beyond that, we were able to convince them that, beside the original investment in iron ore, they should be interested in other minerals, and they agreed with us. That is why, together with them, we now have two other joint venture companies.
Last year, the Zamfara state government’s reported sale of its gold reserve to the Central Bank of Nigeria (CBN) sparked a lot of controversy. How will Kaduna state navigate this minefield as it plans to exploit its gold deposits and sell to the Apex bank?
Kaduna, as everybody knows, is very different from most states. Whatever we venture into, we look at it critically, study it and look at the legal standing, look at what regulates the sector before we key into it. Malam Nasir El-Rufai is not doing this for himself but for the citizens of Kaduna and for posterity.
The reality is that mining, just like petroleum, is also on the Exclusive List but you find out that a private person can set up a private refinery just as Dangote is doing. People can apply for oil licenses and they will be granted. The proper way to do it is acquiring the license, carry out exploration, then mine and sell to whoever you want to sell to as a private operation. As you can see, we have already instituted that under the Kaduna Mining Development Company Limited. All the areas we are dealing with, are the areas we have our licenses and we carry out explorations. We properly bring out these resources, export them as we want to start doing in September, so that both the community and the state government will benefit and federal government will get its royalties on these resources without bye passing any extant laws.
So, are you already in discussion with the Central Bank of Nigeria as the buyer of the gold when it is finally processed?
There are two approaches to that; first we already have a joint venture company, Kaduna Frontier Mining Company Limited that has already accessed $6.7 million to start exploration since last year (2020) only that the security challenges has delayed them from commencing work. But I am sure in the next two months, they will be there. These are people who have been supported by African Finance Corporation. We had several meetings with even the president of AFC in Kaduna.
Secondly, there is what is called the Presidential Artisanal Gold Mining Initiative (PAGMI). This is a fund under the Federal Ministry of Mining and Steel Development called Solid Minerals Development Fund. We signed an MoU on the 22nd of March 2021 for their interventions. They are going to give us support in the exploration of gold under this PAGMI scheme.
How PAGMI operates is that artisanal miners will be given areas to be explored, quantifying the gold in that area and they will be given facilities and equipment to enhance their production. They will work based on our licenses and the arrangement is that they will mine, Kaduna State Government that has the titles will be given about 30% of what is coming from it, workers will have their share of 40-50% with the federal government, while CBN will now buy the gold and turn it into reserves. So, PAGMI was here in Kaduna and we signed an MoU with them, the CBN has already reached out to His Excellency on this scheme late last year and the discussion is on.
Last week, the Federal Ministry of Mines and Steel Development said that it will conduct geophysical survey in Sanga and Jema’a local governments. What is the significance of this exercise?
Well, it is a very important activity and we believe it will add value to what we have. The airborne survey is not the first one. It has been done in 2003 and 2004, 2009 and 2011. But there is new improved technology now that will bring out more detailed information. What this means is that they will be able to pin-point the exact areas of potentialities of these minerals. What we do even in getting our licenses, is to actually move around, find the locations based on previous studies. When you mention that there is a particular mineral in say, Giwa local government, it does not really mean that you will go and see where it occurs. You have to go and zero on that area. So, this airborne study will be able to pinpoint the precise area of these deposits based on the indicators that will be generated there.
So, it will make it easy for us or any other person that will want to invest, to know that aquamarine is there, amethyst is there, nickel is in this area. So, it is left for the investor to cover it and apply for a title so as to establish the actual quantity and quality of that materials. It is reducing the risk involved, by giving you a more precise information. There are several places where we have carried out due diligence but found out that it is false alarm. But when you have this study, it will help you to reduce some of these moving about aimlessly.
-Gold mining has been going on in Kaduna state since 1910, in Birnin Gwari and other neigbouring local government areas like Giwa, and Chikun area councils;
-Apart from gold, the state has huge deposits of the best nickel at Dangoma in Jema’a local government;
-The state has tin, columbite, some amounts of tantalite, several gemstones like amethyst, aquamarine traumaline;
-So far, Kaduna Mining Development Company has established several agreements and Joint Venture Companies (JVCs) with five international companies;
-One of these companies is the New Frontier Kaduna (NFK) Nigeria Limited, which will start exporting the processed tin from Kaduna state by September 2021;
-Kaduna State Government already has a tin processing centre at Banki in Kubau local government area.
– From 2015 to 2019, Kaduna Mining Development Company Limited had 12 licenses–six in gold mining and six as quarry leases. It now has 37;
– Kaduna Mining Development Company is partnering with African Natural Resources and Mines, the biggest private investment in Nigeria outside the petroleum sector;
-KDSG has so far established Joint Venture Companies (JVCs) with five international companies;
-In most of these JVCs, the investors actually bring in the funds and Kaduna State Government gives the title and provides land, does community engagement, provides security and infrastructure in terms of water, power and access roads.