The Nigerian mining sector has largely been seen as a non- performing despite efforts to transform it.
In an attempt to unravel impediments to the development of the sector, a number of issues have revealed what may have been responsible for the lack of investors’ interest in the sector.
Speaking in an exclusive interview with Leadership, a staff of PW Mining International Limited who spoke on grounds of anonymity told Leadership that it wasn’t easy to invest in Nigeria’s mineral and mining sector as investors were forced to run at a loss following multiple taxation in the sector.
“Operating in the Nigeria mining sector is very difficult because of the multiple taxing companies are forced to operate in.
“For instance federal government is charged with giving mining licenses, States own the land and communities claim ownership of the resources, so you find that companies and investors are charged with paying license fees to the federal government, rents to state governments while communities also expect Community Development Agreements (CDAs)in addition to the company’s corporate social responsibility (CSR).
“At this rate companies run at huge losses despite that they may have to invest in infrastructures to run their companies as a result of the poor level of infrastructures available.
“Companies would often have to generate their own data, construct roads, generate alternative power supply and in some cases deal with issues of insecurity among several others,” he explained.
He however was optimistic that there was hope for the Nigerian mining sector because of its vast land resources, viable minerals and huge human capital resources which could be developed for enhanced development.
Also speaking, president, Miners Association of Nigeria (MAN), Alhaji Sani Shehu, expressed that multiple taxation was having negative impact on operators and the mining industry as a whole.
“Multiple taxation aside its effect on operators led to rivalry between different agencies.The National Inland Waterways Authority (NIWA) also charged for royalties which was illegal as the Mineral and Mining Act had authorised that only the ministry of mines and steel development was authorised to charge mining royalties,” he said.
He added that the ministry of environment also came with their own demands, while states and local governments also have their own taxes and in the end, miners find it very difficult to break even .
Alhaji Shehu maintained that multiple taxation also “affects productivity as it distracts the miners and discourages foreign investors.”
He however argued that the Community Development Agreement was not a form of taxation as that only occurs when mining commences and not during exploration while royalty was paid from the commencement of mining.
But in his response, chairman of the Mining Implementation and Strategy Team (MIST), Prof. Olugbenga Okunlola,argued that the PW staff was not speaking from an informed point of view, insisting that the federal government owned mining and minerals resources across the nation, but noted that the community has to be taken along through consent.
He maintained that it was expected globally that companies practice Corporate Social Responsibility (CSR) based on profits accruable which is just about 1-2 per cent.
These he said, “can be established through constructing schools, hospitals as well as granting various social amenities among others.”
Okunlola maintained that because of the peculiarity of Nigeria where many communities were not aware that they do not own the resources there was the need to discuss with them on the basis of coming to their land. He maintained that a company choosing to enter into partnership with host community was a different issue entirely.
He further maintained that except in the Niger Delta where communities make demands from companies, many communities fail to take advantage of the benefits of the companys’ CSRs.