Cautious optimism as FG lifts ban on Zamfara mining

DAMILOLA AINA sheds light on several complex and interrelated issues surrounding the revocation of mining exploration licenses in Zamfara State and the global resurgent demand for gold

The recent announcement by the Federal Government, through the Ministry of Solid Minerals Development of lifting the ban on mining exploration in Zamfara State has triggered reactions akin to the explosive force of a dynamite blast, attracting diverse comments. This decision has been met with both praise and concerns from stakeholders and investors in the mining sector.

Many have commended the move, recognising its potential to stimulate economic growth and investment and also stressed the urgent need for the implementation of robust security measures to ensure the safety of operations and personnel in the region, which security challenges have plagued in recent years.

The Nigerian mining sector, particularly in Zamfara state, has long experienced both opportunities and challenges. With abundant mineral resources, especially gold, the region has the potential to significantly contribute to the nation’s economic development.

However, the surge in illegal mining activities and the associated security and environmental risks have hindered this potential for years. In 2019, the government imposed a ban on mining exploration activities in Zamfara in response to escalating violence, environmental degradation, and criminal activities linked to illegal mining.

The government ending the five-year restriction said the decision was taken after careful observation and significant improvements in the security situation in the gold-rich and terrorist-ravaged state.

Announcing the development at a press briefing, the Minister of Solid Minerals Development, Dr Dele Alake, highlighted the economic potential of Zamfara, known for its abundant reserves of gold, lithium, and copper.

He noted that while the 2019 ban was intended to address security issues, it inadvertently created opportunities for illegal miners to exploit the nation’s resources.

“The existential threats that necessitated the ban have been largely mitigated, thanks to intelligence-driven security operations that have neutralised key bandit commanders,” Alake said.

He added that Zamfara’s mineral wealth has the potential to boost national revenue significantly.

The former Lagos commissioner said that the decision had brought formal activities in the state mining sector to a total halt, leaving the field to illegal operators.

“The concomitant result was the colossal loss of revenue to the affected communities, local government, the state, and the federal government, as legitimate miners were forced to shut down operations,” he reasoned.

Zamfara State is one of the largest gold-producing regions in Nigeria, with vast gold deposits scattered across the state’s landscape, which has attracted both legal and illegal miners to the region over the years.

However, it is the illegal mining activities that have largely dominated, with artisanal miners, often operating without permits, exploiting the state’s gold resources, leading to a range of challenges for the state and the country.

The PUNCH recalls that the state had been overrun by illegal mining operations and banditry, leading to lead poisoning and deaths of over 700 children as reported by ‘Doctors Without Borders.”. Illegal mining has also led to environmental degradation and pollution of several communities’ water sources.

This was compounded by banditry activities that had overwhelmed the security architecture of the state, leading to the displacements of several communities.

Armed groups, sometimes referred to as “bandits,” have exploited the chaotic situation by targeting miners, extorting money from them, and engaging in kidnappings and other criminal activities. These groups have been funded in part by the proceeds of illegal mining operations. As a result, Zamfara became one of the epicentres of Nigeria’s security crisis.

The unregulated extraction of gold has also led to severe environmental degradation, including deforestation, land erosion, and contamination of water sources due to the use of toxic chemicals like mercury. These activities have not only destroyed local ecosystems but have also made the land unsuitable for farming, affecting the livelihoods of local communities who depend on agriculture for sustenance.

But commenting on the restoration of economic activities in the mining pits, the National President, Miners Association of Nigeria, Dele Ayanleke, welcomed the move, highlighting the financial losses incurred during the ban.

He stated that insecurity and banditry, which led to the ban, had also resulted in unnecessary budgetary allocations being wasted to maintain peace in the area.

Ayanleke, in a chat with our correspondent, said, “We are grateful to the Honourable Minister, Dr Oladele Alake, for his efforts to lift the five-year ban on mining activities in Zamfara State.

“The ban has not only deprived the government of accruable revenues; the factors of insecurity and banditry that led to the ban in the first place have also resulted in waste of unnecessary budgetary allocations to maintain peace in the area.

“This is not to talk of unquantifiable losses to the mining leaseholders in Zamfara, who might have lost their titles due to non-remittances of appropriate fees and levies as at when due, inability to service loans and their attendant piling debts, rotten equipment, loss of manpower, and social embarrassments due to inability to service family livelihoods.

“All these will be unveiled early this year, as leaseholders attempt to resume mining operations.”

Similarly, Patrick Odiegwu, the Secretary of the Association of Miners and Processors of Barite, described the reversal as a step in the right direction and a welcome development.

He stated that continuous suspension of economic activities could lead to more insecurity, as the residents in the affected areas might become idle and resort to unlawful means to sustain themselves.

According to Odiegwu, the government should consolidate on the reversal by leveraging advanced technology to secure mining areas and beyond.

He explained that analogue security measures may not be effective in addressing insecurity compared to a modern monitoring system that incorporates artificial intelligence.

“If we want to apply guns towards securing our environment, we will continue to have insecurity. If we apply technology, huge artificial intelligence, and robotics, you don’t even need to lose one soldier. The government has the capacity to monitor everybody in Nigeria, individually, if such a system is available, “he said.

He emphasised that proactive measures were necessary to keep bandits on the run and maintain the peace that had been established.

Meanwhile, the effectiveness of this unbanning will be premised on whether the insecurity and banditry have been curtailed and whether enough measures have been put in place to sustain the curtailment, which we are quite aware that the Honourable Minister has been assiduously working towards in collaboration with the nation’s security high commands.

Another expert who requested to remain anonymous for fear of potential backlash stated that the underlying issues that initially led to the ban have yet to be addressed or resolved and continue to pose significant concerns moving forward.

He noted, “Now that the ban has been lifted, the question is, the factor that led to the ban in the first instance, has it been well taken care of? Insecurity was the major reason for banning mining activities in that place for a number of years. So, the question now is, has all this issue been well taken care of? If it has not been well taken care of, then it means that even if the government lifts the ban, licensed operators might not still be able to access their mining sites.

“I spoke with a stakeholder in Zamfara, and I think this is their major concern there. Has it been improved? Has the banditry left their site? These are the issues that one needs to get clear.

“Can mining marshals take care of banditry and all this insecurity in the mine site? That’s the reason why the minister, if you observe, before he launched the mining marshal, has been collaborating with all the secretaries from the Ministry of Defence and all those ministers in charge of all these paramilitary forces. So, the job of protecting security personnel in the mining field is beyond mining marshals. That’s the truth.”

With the ban lifted, the government aims to regulate mining activities better, curb illegal operations, and maximise the economic benefits of Zamfara’s mineral deposits.

Furthermore, the resurgence in gold prices, combined with the lifting of the ban, has the potential to bring substantial economic benefits to Nigeria. If the country can successfully harness its gold resources, it could see a significant increase in revenue from mining-related activities, which would benefit the Federation Account.

Projections suggest that Nigeria could increase its gold production substantially, making the country one of the top gold producers in Africa. As more foreign and domestic investors are attracted to Zamfara and other states with gold reserves, Nigeria could see a rise in both foreign direct investment and tax revenue from the mining sector.

On Friday, domestic gold prices reached an all-time high of N80,034 ($927.69) per 10 grammes in India.

The surge was driven by international spot gold prices, which hovered near a record high of $2,790.15, last seen on October 31, 2024.

In top consumer China, dealers offered discounts of $10 and charged a premium of $10 per ounce above international rates, versus premiums of $3-$13 last week. In Hong Kong, gold was sold at par with a $2 premium and a premium of $1 in Japan.

With the surge in global gold prices, Nigeria stands to earn more from gold exports, which could help stabilise the country’s foreign exchange reserves and reduce its dependency on oil revenues.

The growth of the mining sector could also create jobs and stimulate local economies in Zamfara and other gold-rich regions. By formalising the sector and providing training and opportunities for local miners, Nigeria could empower communities, reduce poverty, and promote inclusive development.

The revocation of the mining exploration ban in Zamfara brings a sense of cautious optimism to Nigeria’s mining sector, particularly with the surge in global gold prices.

While challenges remain in terms of security, environmental regulation, and ensuring the benefits of mining reach local communities, the lifting of the ban represents a new opportunity for Nigeria to unlock the full potential of its gold resources. If managed correctly, Zamfara’s gold could be a cornerstone of Nigeria’s economic future.