PREAMBLE: This opinion piece has been written and essentially put away in the cooler since April, 2013. It predated my article "Re: Africa at the Coalface of development" by almost two years. Based on noises emanating from the upper echelons of government, I had hoped then that my concerns would very shortly be overtaken by impending robust action. How wrong I was.
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The following is quoted from The Punch Editorial of March 26, 2013:
"THE claim last month that Nigeria lost $50 billion to her neighbours through illegal gold mining is a sickening reminder of just how badly we are being governed. . ."
"The government failed since 2006 to follow through on reforms that were poised to attract investors from around the world to exploit the 34 mineral types available in Nigeria, . ."
BIG TOOLS NEEDED FOR BIG PROBLEMS
When Nigerians think or say BIG, they often don't know what they are talking about. It is only here that a president will shamelessly attend the public commissioning ceremony for a 60Mw electric power plant built by a frustrated state government which could no longer afford to wait for the federal government to live up to its responsibilities. Somewhere in the speeches, the plant is referred to as BIG despite the fact that most conservative estimates of the power gap here are in the range of 20,000 to 50,000Mw.
It is so frustrating that our planners consistently fail to correctly determine the true size of each of our various national problems. That failure then makes it impossible to choose or design the appropriately sized tool or system to tackle the problem.
The first time that I drove past the NIPP power plant at Geregu, Kogi State, my initial reaction was to mutter under my breath: "Is this how we are going to bridge the electrical energy gap?"
The plant looked like the auxilliary AC/DC & Compressed Air Power Unit of a typical large nuclear power plant that I was involved in 35years ago. Geregu, for all practical purposes, is nothing more than a captive power plant appropriate for the Dangote Cement factory nearby at Obajana.
STRUCTURE OF THE GLOBAL MINING INDUSTRY
In the summer of 1978, I was in Morenci, Arizona, working at a copper smelter accepting beneficiated ores
sourced from a nearby open pit mine, a rather small one. I took under my wings a nineteen year old whose father was Smelter Superintendent at another facility belonging to our employer Phelps Dodge Inc, in Douglas, Arizona, on the border with Mexico. From that relationship I was to learn that the old man had worked years earlier for Kennecott Inc in Chile at EL TENIENTE, the largest underground mine in the world. This was before then President Salvador Allende nationalised the Chilean copper industry, hence the birth of CODELCO CHILE.
Copper was/is Chile's oil. The difference is that, unlike here in Nigeria, their people are intimately involved, and work hard at it. It was and remains the nation's life blood. Agriculture, including wine making together with Fisheries follow close behind. The manner the Chileans husband scarce water resources, very vital for the sustenance of its major industries, is worthy of emulation.
How time passes. Phelps Dodge had long ago become part of Freeport Mining, which was established about a century ago at Freeport TX. Then they were better known for developing the Frasch Process for mining of elemental Sulphur. Freeport in the late 60s and early 70s developed the rich Copper and Gold deposits in the tropical jungles of Iriyan Jaya, Papua New Guinea. Believe it or not, a Nigerian was on that project.
That was way long before the scandal, in the 1990s, associated with Canadian mining company BRE-X in neighbouring Indonesia. I recall that our very first Minister of Solid Mineral made mention of BRE-X in a speech to impress the audience.
The world has definitely moved on. Mergers and Acquisitions are everyday news. Mozambique came out of its civil war and the war of attrition with apartheid South Africa, and almost overnight became a force to be reckoned with in sub-Saharan Africa in both steam and coking coal production. Meanwhile here in Nigeria, we are still thinking about coal. Granted that every one or two years some elite within and outside of government makes the usual noises about diversifying our fossil fuel energy base and going into serious coal mining. That is just talk.
WHEN DO WE START
In an unpublished writing twenty years ago, I has asserted that here in Nigeria, the moment we propose a good idea, we then immediately embark on an ORGY OF SELF CONGRATULATION, ignoring the two, three or perhaps five million man-hours of brain- wracking and back breaking labour necessary to bring the idea to fruition. Simply put, we hate hard work. The very thought of it freezes us into inactivity.
The resource and infrastructure gap that needs to be bridged here is so huge. The Eta-Zuma Group has recently announced very big plans for coal mining, coal fired electrical power generation, and other mine development for precious and other not-so-noble metals. I suspect that the group may end up spreading itself too thin. Each and every item on its Mission Statement, is enough for anyone's plate. To take on all of them is probably too much. Take rail transport for example.
RAIL TRANSPORT
The Minister of Solid Minerals under Abacha once boasted about his readiness to export 15million tons of coal per annum. With the aid of two handbooks I immediately did my calculations and concluded that we would need very long trains running EVERY TWENTY MINUTES in both directions (ie laden and empty) between the Ayamgba coal fields in Kogi State and the quays at Port Harcourt! On which track I asked? I never bothered to publicise my findings.
We now have the new and ever evolving mining behemoths, the Anglo Americans, the BHP-Billitons, Rio Tintos, Vale SA of Brazil (reputedly the world's second-biggest miner), Anglo-Gold Ashantis of this world, with huge operations spanning all five continents, in diamonds, columbium/tantalum, tin, bauxite, coal, iron ore, lead & zinc, potash, uranium, etc. The Chinese both in China and overseas are very substantial players in their state planned national interest. While African government are very slowly getting their act together, the wily Chinese are behind almost every single artisanal mining operation across Africa. This aspect has been subject of several studies.
NEW DEVELOPMENTS
Freeport Inc is struggling to overcome opposition, by Native Americans and environmental activists, to its plan to develop the proposed Santa Rosa copper and gold open pit mine in Arizona.
In the Gobi desert of Mongolia, Rio Tinto is taking in its stride the cost overruns in the (now $5.1b) expansion as it further develops its Oyu Tolgoi copper and gold mining operations in that country. Elsewhere in Mongolia Rio Tinto runs one of the largest coal mining operations with the entire output heading to the energy hungry industry across the Chinese border. Note that nobody mentions Global Warming here! The same Rio Tinto in collaboration with Anglo-Gold and, Mittal is moving ahead with a new Iron Ore mining operation in north east Brazil, the Minas Rio project.
In Chile, CODELCO has embarked on a $3.5b development of a new level at El Teniente to boost production and take the company (and Chile) to the next half century.
Here in Africa, we are fully aware of the century-old developments of the mining industry in the Republic of South Africa. Almost every major player is there and also in neighbouring Bothswana and Namibia where they even trawl for diamonds offshore.
Nearer home, regional disputes and local conflicts have not stopped mining investment and operations for uranium in Niger, or iron ore in Guinea and Mauritania, phosphates in Morroco/Saharawi regions.
In a recent (2013) report published in Nigeria's BusinessDay newspaper, Angola released plans to further develop its iron ore, manganese investments in order to cut its reliance on oil and diamonds.
Angola wants to diversify its earnings away from the crude oil and diamonds that make up almost all its exports, more than 40 percent of economic output and over 70 percent of government revenue.
Angola, the world’s fifth-largest diamond producer, has cut mine taxes and plans to spend billions of dollars to attract investment into mineral deposits according to Geology and Mines Minister, Francisco Queiroz.
According to Bloomberg reports the projects include the $900 million Cassinga iron-ore mine, a planned fertiliser output of 400,000 metric tons a year and a $400 million manganese development. A mining law enacted in November that cut tax to 25 percent from 35 percent, was followed by investment from companies including diamond producer De Beers and Sumitomo Corp, which is developing an ammonia and urea plant.
OUR SHACKES ARE SELF IMPOSED
Many elite, with the greatest potential to help nudge Nigerian industry on the right growth trajectory, still prefer to play safe and endeavour to corner every (apparently) easy deal in town. We are all painfully aware of the scandals associated with the award of oil blocks and the granting of import duty waivers. Let me elaborate on another example associated with mining.
Immediately the Nigerian military government of Gen Abacha mooted the idea of creating the Ministry of Solid Minerals, the late Godwin Daboh and two dozen other individuals, (one each from the then existing states), stepped out to claim centrestage. Despite not owning any mining companies, they boldly announced the formation of the so-called " Association of Solid Mineral Producers of Nigeria." According to the published terms of reference, anyone or organisation desiring a mining lease must pass through that cartel. Unfortunately the Corporate Affairs Commission published the usual invitation for comments and objections. I am proud to announce that I was able, almost single-handedly, to shoot down that contraption. The landscape would have been a lot more different and restrictive if I did not.
WHAT IS IN IT FOR US?
The quantum of investments here and elsewhere can only be described as enormous. To date, Nigeria has been incapable of attracting any of this investment flow. The problem of insecurity apart, the approach has been consistently faulty. I had told the same minister in a letter that it was wrong, if not naïve, to think that the development of the Nigerian mining sector would depend on bilateral relationships. Instead of cultivating Rio Tinto, BHP Billiton etc, the Nigerian government routinely wastes its time talking to the Australian government and others. Mining is dirty duty business with very little to do with the usual cocktail circuit. It is on record that the presentation by Nigeria's team at Mining INDABA-2013 was received with derision and scorn. I was ashamed when I read about it.
Since we are lead by people who do not know how the real world works, we shall continue to flounder in the current morass of low level development. I am very reluctant to repeat what I told General Abacha's Minister of Power and Steel in a letter about the wrong premise on which our then nascent aluminium industry was based. I predicted the imminent closure of the plant shortly after commissioning. Sadly it came to pass exactly as I said. We are all witnesses.
How many deskbound decision makers in the Ministry of Steel and Solid Minerals can visualise the logistics of moving 1billion cubic metres of earth (ie 1 cubic kilometre) over a period of perhaps 10 to 40years in a effort to extract the 3-5% value in it? That is what a typical mining operation entails. We are so used to the opportunistic exploitation of visible outcrops of granite for aggregate used by the construction industry and seams of columbite/tantalite routinely exposed during road building. We think that that is mining!
However it is my fervent hope that Nigeria breaks out of this mould soon so as to make real progress.
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