How Nigeria’s mining fee hike may impact local players

The Miners Association of Nigeria has raised concerns about the recent hike in mining rates and royalties for solid minerals by the government, warning that it could force local miners out of business. In a recent interview on CNBC Africa, Nere Emiko, the Vice Chairman of Kian Smith Refinery, shed light on the potential impacts of these fee hikes and discussed strategies to address illegal mining activities in the country. Emiko highlighted the various challenges and opportunities facing the mining sector in Nigeria, emphasizing the need for a balanced approach to drive growth and attract investment. One of the key concerns raised by the Miners Association of Nigeria is the lack of adequate consultation and the timing of the fee hikes. Emiko pointed out that the significant percentage increases, in some cases up to 300%, could deter local investors and favor larger foreign companies. This could potentially hinder the growth of indigenous mining operations and shift the focus towards attracting foreign investment. Emiko stressed the importance of stability and consistency in government policies to build investor confidence and foster long-term growth in the sector. He noted that the government's focus on increasing revenue through higher royalties may overlook the actual costs and challenges faced by miners, such as rising security expenses and operational costs. Emiko called for a more holistic approach that prioritizes investment in the sector and creates a conducive environment for sustainable growth. Regarding the issue of illegal mining, Emiko acknowledged the significant revenue losses estimated at around $9 billion annually. He highlighted the security challenges and porous borders that contribute to the illicit activities and emphasized the need for enhanced monitoring and enforcement measures. Emiko also raised concerns about potential involvement of government officials in facilitating such illegal practices, calling for greater transparency and accountability in the sector. Despite the challenges, Emiko expressed optimism about the prospects for Nigeria's mining industry, particularly in light of the surging gold prices and growing demand for critical minerals like lithium. He underscored the importance of developing value chains and leveraging pricing dynamics to position Nigeria as a key player in the global market. Emiko's outlook resonates with the potential for Africa, and Nigeria in particular, to capitalize on its abundant mineral resources and drive economic growth and development. Overall, navigating the complexities of the mining sector in Nigeria requires a balanced approach that addresses challenges, optimizes opportunities, and fosters a conducive environment for sustainable growth and investment.