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Nigeria neglects mining on oil craze

Bagega - Like almost everything else in Nigeria's economy, mining of metals and other solid minerals fell by the wayside when the West African nation discovered oil.

In the two decades to 1954, foreign companies produced around 360 000 ounces of gold in total, according to government statistics - tiny by today's standards, but not insignificant for a country approaching independence with high hopes.

By 1964, post-independence and less than a decade after oil was found in the creeks of the southern Niger Delta, gold production had largely ground to a halt.

Now much of the digging up of Nigeria's minerals is done by artisanal miners in the largely Muslim north, bereft of the high-tech machinery that makes it safe and brings economies of scale.

"The sector was left in the hands ... of untrained and ill-equipped artisans ... making negligible contributions to GDP," was how a government policy brief summed it up last year.

Nigeria's solid minerals remain untapped and largely unmapped, an anomaly in a region that is a growing source of materials such as iron ore, gold, diamonds, uranium and bauxite. The government wants to change that.

Mines Minister Musa Sada aims to revive mining's contribution to the economy to 5% from its current 1% by 2015.

He is wooing investors with a simplified code of rules relating to the mining industry, tax holidays and waivers on duties for imported machinery.

Yet for all that, interest remains confined to small development firms such as Australia's Kogi Iron for iron ore and Australian Mines and Savannah Gold in gold.

That is partly because Nigeria has yet to see the "big find" needed to attract the majors. Even rosy government estimates of reserves are dwarfed by other West African states.

"Until someone finds a big deposit, no one's going to flock into Nigeria," Australian Mines Managing Director Ben Bell told Reuters. "It really just needs that first discovery."

Nigeria's newfound enthusiasm for mines unhappily coincides with a period of shareholder pressure on mining companies to rein in spending, sell marginal assets and tackle debt after years of acquisitions.

"Lucky day"

In Bagega, a village flanked by baobab trees and fields growing millet in Zamfara, one of the country's poorest and most remote states, local miners break up rocks and feed them into small grinding machines. The machines then crush them into gravelly sand, kicking up clouds of lead-contaminated dust.
The miners sift through the powdery rock in metal bowls filled with soap and water. Some will find gold, some won't.

"It depends if it's your lucky day," said Salisu Shamsudeen, 21, after holding up a pea-sized ball of gold ore to the baking sun. To the untrained eye his treasure looks like tinfoil.

"One find could make you 2,000 naira or 1 million naira," he said, shrugging.

For many northerners, the neglect of the mining sector, like that of the region's agriculture and cotton mills, is emblematic of the way oil has shifted economic and political power to the largely Christian south - a source of resentment that has fuelled conflicts such as a four-year-old Islamist insurgency.

"They've totally neglected solid minerals because they only care about oil. The government has neglected a lot of the northern economy," said Mudassir Abdullahi, a geologist with Chinese-Nigerian venture, Zamfara Mining Corporation.

Neglect of remote bits of the north was highlighted when a series of lead poisoning incidents struck Zamfara. It has killed more than 500 children since 2009, when a surge in world bullion prices spurred a gold rush there, Doctors Without Borders (MSF) says.

Prices have fallen dramatically since April, another reason foreign firms are likely to be reluctant to explore.

Gold in rocks usually comes with other metals. In Zamfara, that metal is lead. Thousands of children have dangerously high lead levels in their blood, says MSF, which runs a treatment clinic there. Many are permanently brain damaged.

After agreeing to clean up the lead, authorities took two years to provide the money and a further five months to finish the job, which they finally did last month, MSF country head Michelle Chouinard told Reuters in an interview.

At an MSF clinic near the Bagega mines, 22-year-old housewife Fati Sahiru arrived with her two lead-poisoned young children. One of them, Abdul, was two years old. She gave a straight answer as to why her husband continued to mine gold.

"It makes more money than farming," she said. "Much more."

"Strategic minerals"

Mines ministry data obtained by Reuters identifies seven "strategic" minerals in which it sees greatest economic promise.

Apart from gold, of which the ministry says 300 000 ounces are proven - equivalent to just a tenth of Ghana's output in 2012 - but six times as much estimated, there are also an estimated 3 billion tonnes of iron ore. Guinea's huge Simadou deposit has 2.25 billion tonnes, but that is proven.

Other minerals are: 27 billion barrels of bitumen, 2.23 trillion tonnes of limestone, 14 million tonnes of tonnes of barites and about a million tonnes of zinc-lead.

Proven coal reserves come to 639 million tonnes, and 2.7 billion tonnes estimated, which the government plans to use for domestic power.

At the Zamfara Mining site, a digger piled up crushed rock in front of a concrete building, where workers with shovels moved it into a system of funnels and sifting machines.

It is a frontier operation, but still a leap from the artisanal mine shafts up the road, where miners lower themselves hundreds of feet into the earth to chisel gold ore. In one, four miners took turns to go in, next to a dirt heap they said was a collapsed mine shaft that had buried three people alive.

Mines minister Sada told Reuters mining majors were waiting for "mining laws and regulations that are in line with world best practice" and better infrastructure, adding that "we are working hard to get those kinds of heavy investors".

Bell from Australia Mines said a lack of mining infrastructure meant that "we had to bring everything in from outside".

Another issue is security in north Nigeria. Kidnapping of Westerners by Islamist insurgents Boko Haram or Ansaru make it potentially dangerous for expatriates in the north, and sites would be easy targets for armed robbers.

Firms also face negotiating with corrupt local and state governments, a legacy of Nigeria's tripartite federal system.

Yet even if Nigeria's precious metals don't live up to the hopes, it has more mundane materials that it wouldn't need to export. Cement is a multi-billion-dollar business in a country of 170 million with a housing shortage. It made Nigerian Aliko Dangote Africa's richest man, with a Forbes-estimated net worth of $20bn.

Dangote Cement and France's Lafarge are both making a fortune churning out millions of tonnes of cement. That 2 trillion tonnes of limestone won't go to waste.
 
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