Nigeria: Govt Okays States' Participation in Mining

13 August 2020

The federal government yesterday gave state governments the nod to participate in mining activities as corporate entities.

Minister of Information, Lai Mohammed disclosed this to State House correspondents after the virtual federal executive council (FEC) meeting chaired by President Muhammadu Buhari at the presidential villa.

He said the approval followed a memo presented by the minister of Mines and Steel Development, Olamilekan Adegbite seeking council's approval to address the major challenges the mining industry was facing. Mohammed, however said, states cannot participate in mining activities as sub-national authorities since mining is still on the exclusive list.

He also noted that the issue of double taxation in the mining industry was addressed at the FEC meeting.

The minister said, "On the issue of double taxation whereby mining companies are taxed by local and state governments, two decisions were taken. One is that the council directed the minister of Finance, Budget, and National Planning to deduct directly from federal accounts' allocations of states which have deprived the federal government of Nigeria of revenue due to it by imposition of illegal taxes and levies on mining companies in their states.

"In other words, if a particular state engages in double taxation, you are imposing illegal taxes on a duly registered mining company. If it is reported to the government, the Ministry of Finance will deduct that money from your allocation.

"The intent is to ensure that we don't scare away investors, be they local or foreign. This will go a long way to reassure the investors that Nigeria is a safe place to invest now.

"It was also directed that the National Economic Council (NEC) should also dialogue with the governors and let them understand that states can participate in mining as corporate bodies. In other words, states can register companies and participate in mining. But they cannot come there as sub-national authorities because the law is very clear.

"The federal government has the exclusive right to mine and manage all mineral resources. Those are the major approvals that the minister of Mines and Steel Development got today on his memo".

Mohammed also said among the challenges the industry was facing is insecurity in certain parts of the country.

Notably, he said in the Northwestern part of the country, mining had been suspended because of the activities of bandits and kidnappers.

He said the industry was also faced with the problem of collision between some stakeholders, especially traditional rulers.

The minister also explained that the issue of double taxation was actually driving a lot of investors out of the country.

He also reported certain decisions of past governments in the area of storage of explosives that are used for mining. He continued: "Before now, the position is that any miner that wants to use explosives for mining must store them in either the military barracks or police facilities. So, he asked for special dispensation to build special facilities at least one in each of the geo-political zones of the country. He also complained about extortion, the position of community development agreement, and the issue of many illegal miners.

"But the council directed that the National Security Adviser (NSA) should set up a special unit domiciled in the Federal Capital Territory (FCT), and coordinated by the Office of National Security Adviser (ONSA) to carry out targeted operations at identified and confirmed illegal mining sites nationwide.

"The council also directed the Office of National Security Adviser to facilitate the erection of central magazines (special storage facilities) across the geo-political zones of the country for mining purposes as storage of explosives in military barracks in some parts of the country is grossly unsafe and the establishment of Control and Command Centre for remote monitoring of such explosives.

"The council also directed the minister of Interior and the Nigerian Content Development and Management Board (NCDMB) to work closely with the minister of Mines and Steel Development".

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