Despite having gold and coal in commercial quantities, Zamfara and Enugu States respectively contributed less than one percent royalties to the Federation in 2021, and this has unsettled the Nigeria Extractive Industries Transparency Initiative (NEITI).
Raising the concern in its 2021: “Report on NEITI Solid Minerals Industry Audit – Impact on Blocking Leakages to Grow Revenue,” the watchdog organisation expressed worry that 19 states contributed less than 1% each to the total royalty receipt in the year under review.
It revealed that out that, Enugu produced 108,472 tons of minerals of N3,293,900 royalties representing 0.09% of the States production, while Zamfara produced 152,331 tons of minerals of N10,058,023 royalties representing 0.28% of the total States production.
According to NEITI, “However, it is concerning that 19 states contributed less than 1% each to the royalty receipts.
“Of particular note are Zamfara and Enugu States, which house two strategic minerals (Gold and Coal) in commercial quantities.
“Giving these states’ potential, they should be major contributors to the sector. Yet, they appear to need more attention from the government, raising the need for further consideration and strategic initiatives to unlock their full mining potential.”
The report said on the other hand, Ogun and Kogi States emerged as the leading contributors to royalty, with receipt amounting to N642.07 million (17.98%) and N496.67 million (13.91%), respectively.
NEITI noted that together, these states accounted for a significant share of production at 33.79 million tons (44.30%).
The report said: “The main driver behind their royalty contributions was limestone, primarily mined by Dangote Industries, the largest company in the sector.”
The seven strategic minerals in the sector, according to the audit, contributed a total of N1.42 billion (73.07%).
It noted that the commencement of full operations at the Dangote Cement Plant in Okpella, Edo State, has the potential to further increase the royalty revenue from limestone.
Besides, the watchdog organization, said however, the significant disparity in royalty contributions between limestone and the other minerals highlights the under-performance of the latter.
NEITI sought efforts towards promoting and enhancing the exploration and production of these minerals to maximize their revenue potential and foster balanced growth in the solid minerals sector.
It called on federal government through the Ministry of Mines and Steel Development, to urgently review the solid minerals roadmap to align it with current market realities and implement sustainable strategies for boosting revenue from other strategic minerals like limestone.
According to the report, the major challenge in revenue distribution from the solid minerals sectors lies in the absence of a sector – specific fiscal regime.
NETI notd: “While the majority of revenue (over 85%) is generated by the Federal Inland Revenue (FIRS), it cannot be distributed to states because it is difficult to link these taxes to specific activities within the sector, e.g., taxes paid on quarrying activities of construction companies.
“As a result, only revenue from the Mining Cadastre Office (MCO) and the Mining Inspectorate Department of the Ministry of Mines and Steel Development (MID) are shared among the states. Unfortunately, these revenues have consistently been low.”