1. Why Nigeria’s Solid Minerals industry is underdeveloped, by
Udo
Mr. Mecha Udo is the Managing Director/Chief Executive Officer of Meyong Nigeria Limited. He is a Business
Development and Financial Consultant, and also an operator of a mining, minerals and metals trading
enterprise. In this interview with PAUL OGBUOKIRI and STANLEY IHEDIGBO, he says if the potentials of the
sector are realized, it will be one of the major drivers of the Nigerian economy. Excerpts;
How deep isyour involvement in the mining businessin Nigeria?
We are major players in the mining sector and are major exporters and traders of metals and minerals. Our
mining company Skydive Limited is principally into mineral and metals exportation, and we are also into some
levels of mining. Although the sector is not quite developed yet we are looking at developing the business
further. We are working on a number of areas such as acquisition of leases and investing in them, we are also
looking at exporting to the international market, and sometimes in the future, we shall look at upstream
activities in the metallic industry.
Talking about solid mineralsexport, your company must have been idle, because I am not aware of any
serious commercial activity going on in that sector in Nigeria?
Not very correct, what you can say is that what is going on is not up to the level of what it should be. Very
regular activities are going on in the sector, but they are low, because there are inadequate structures for the
industry to thrive. But some of us who have passion and do really believe in the industry are still hanging in
there to achieve whatever little we can. We shall continue to keep hope alive until such a time, that we will be in
a position to take things to a greater height. Businesses are operating in the sector and there is a registered
Association of Metals Exporters of Nigeria that is very functional and vibrant today.
What kind of mineralsare you exporting?
We export principally Metals such as, Lead Oxide, Lead Sulphide, Zinc, Tantalite, Casseterite (the ore of tin),
Columbite, Wolframite and other metals.
You talked about taking the industry to the next level, do you agree with the assertion that mining of
solid mineral depositsin Nigeria can drive the economy?
It will be wrong for us to also look at it from the perspective of the mining sector driving the economy because
we made this mistake when we allowed the oil industry to be the sole driver of our economy. It is better that the
minerals and metals and mining sector is one of the drivers of the economy in the sense that it has great
potentials to contribute meaningfully. It has the capacity and potentials of contributing much more than we see
today. The sector is not doing anything near its potentials because it is not yet properly developed. It’s under
development is not because of lack of interest but instead because of the absence of a sustainable structure.
There are challenges in the sector today that if they are properly addressed, will give a huge boost to the
economy, I can assure you.
What kindsof structures are you talking about, since there isa legal framework in place?
There is an investor friendly and beautiful legal framework but it doesn’t end there. When you look at Nigeria as
it were, the challenges in the economic environment, the larger economic and environmental challenges which
we can call the macro challenges actually impact mostly more on mining. Because minerals and metals have
to be moved over long distances to places where they are traded and processed, the cost of transportation
becomes an important factor. The bad state of our roads impacts negatively on the overall cost of the product.
Given their nature and bulk, these materials ought to be moved via rail at much lower cost. In a lot of cases, by
the time you deliver your metals at the ports for export, the cost would basically be competing with the real
value of the goods in the international market, so it becomes unattractive and uncompetitive. Take also the
issue of power supply; you cannot effectively mine minerals with generators in the absence of steady power
supply since some of the machines and instruments you are going to use to mine are heavy duty equipment.
Also most of these mines are found in far flung and remote places, so you can imagine what would happen to a
man who is mining somewhere in the North East of Nigeria with the state of security there. So we have a whole
lot of issues that are not just peculiar to mining but are militating against mining itself. Though not peculiar only
to the industry, these challenges directly impact on the industry and the sooner we started addressing them,
the better it will be for us. Yes, there are challenges that are peculiar to the sector but these ones also affect
the mining industry. Yes mining is a risky venture but we can minimize these risks.
What are your expectationsfrom thisgovernment aswe are aware that the Buhari administration is
very much interested in developing the mining industry?
I think the government made it clear from its campaigns that they are interested in developing the industry. But
since his appointment, we have not heard any policy statement from the new minister yet, as it were, we don’t
know what direction he intends to take, but we know that when it comes to legal framework, the laws are good
enough already. But what we should be looking at is how do you excite activities in the sector, how do you

2. draw people into the sector, how do you communicate information to get viable businesses into the sector and
how do you encourage players to come in. As exporters we have some challenges that are peculiar, we don’t
have international laboratories for analysis here, and because of the level of development of the country we do
not have local off takers for most of the minerals and metals won, particularly precious and semi- precious
metals, so players are stuck with exporting their goods. We are therefore compelled to trade internationally and
in this trade there are set standards that we have to meet and these standards are international standard. We
don’t have one single internationally recognized assayer in Nigeria and we don’t have anybody doing your
weighing and your sampling for the analysis. You are left with no other option than shipping the goods to your
importer to do the weighing to determine the quantity and quality and advise you. In a whole lot of cases people
lose huge amounts of money because it is not only here that we have dubious business people, it is all over the
world. And for you to play safe you must be able to know what you are doing right here in Nigeria. I think in
that area government can step in, government and develop mineral resources processing zones, may be at the
ports, immediately the minerals arrive at the port, you can access them in terms of quality and quantity and put
a value to them, most minerals are quoted on the metals exchanges, you can therefore easily know what the
goods are worth, once that is done, we are safer. If you know what you are investing in and you are sure of the
results of your operations, then investors will be attracted, but today it is almost like taking a shot in the dark.
So, government has to do something in that area particularly in providing proper and international warehousing
and superintendence activities. Let us have some level of local intermediation in this trade. The refusal of the
Central Bank to allow the exporters utilize their export proceeds in a bid to frustrate the parallel market is
instead discouraging exports. It is not rational to expect operators who have accumulated costs on the basis of
the parallel market rates to now receive income at the official rate where there is a huge gap between the rates.
It has to be acknowledged that the operators took all the risks, most of the time funded their operations, and it
is only fair that they should be allowed to utilize their hard earned foreign exchange. The CBN should revisit
this policy as it is discouraging exportation thereby further shrinking the supply of foreign exchange.
Will it be true to say that some of these challengesyou mentioned have robbed the sector of valuable
investments?
Of course, there are a lot of challenges we have in Nigeria, but people look at finance as if it is the only
challenge we have. The banks are set up to make profit, no bank is going to put its money in any risky area , so
you must minimize the risk as much as you can if you cannot be able to completely eliminate it, you manage it
somehow. The focus of government should be on how to minimize these challenges, how do we make it safer
for an investor in the sector. Yes, we have said that government has no business being in business, but
sometimes for you to activate a particular business, government has to play a role. By law, obtaining data is
part of what the investor is expected to do, you have to do reconnaissance, and you have to do exploration
before you get to the mining site. Government has the right to the mineral assets but is ready to pass on this
right to interested and able investors in a very transparent manner, then you can go ahead and invest. I think in
this vein government has done its bit; they have to do a little more in the area of enlightenment. It is also
important to mention that there are quite a number of incentives in the industry put in place by government
some of them are duty free importation of imported mining equipment, relaxed provisions for expatriates’ quota,
also you have about three years tax holiday, with a possible extension by another two years, there are other
incentives in place also. One will have to agree that government has done a lot, but can still do more.
.You said the sector hasgreat potential, can you estimate in Naira and Kobo, what you think the sector
can contribute to the economy if the potential isrealized?
I cannot put a total value to it just like that; it will be neither here nor there. But I can give you a few possibilities.
It is a known fact that Nigeria has the second largest deposit of bitumen in the world, next to Canada. So, we
have trillions of cubic feet of tar sands from which bitumen and heavy crude can be extracted but nothing is
being done to tap this resource. Look at the state of our infrastructure, particularly our roads; we can actually
produce bitumen to fix these roads. We can produce bitumen to export to the world and we also recover some
heavy crude from this process. The reason, our economy is in the sorry state it is today is because for a very
long time we have depended on a mono-product, if activities had been going on in the other sectors of the
economy, we will not be crying now just because the prize of oil has dropped. We are not the only country that
exports oil but others are not in the kind of situation we are in, because they have alternatives. But in Nigeria
we almost depended wholly on oil as the source of government revenue. We can develop our power sector
using the huge coal deposits in Enugu and Benue axis that are lying idle today. You will remember that coal
drove our rail system in the past; it can generate power for us today. South Africa generates 90% of its power
needs through its ESKOM utilizing coal, we can build some power plant that use coal as feedstock, and we
would have extended huge economic activities to the areas where this activity will take place. What is
happening in cement is driven by mining as limestone is a mineral resource and we can go beyond that. There
must not necessarily be the big cement industries and multibillion dollar investments in cement, but we could
build small to medium sized plants at every place where you have this very commonly occurring limestone.

3. With that, you will crash the cost of building construction; create employment and enrich lots of people. In areas
where you have mining activities you find that ancillary industries will be developed. We can quarry stones to fix
our roads and for building houses, God has blessed us with these resources and these are beside the
exportable metals. It is about time we started looking at how we can add value to these minerals, we should not
be a perpetual exporters of ores to the world. In the 1960’s we were exporting casseterite, we built the Makeri
Smelting Company to smelt this metal into ingots, it is no long there today, it has become moribund. We should
not be importing tin plate today but instead should be exporting it. We should begin to explore ways and
means of further advancing activities in this industry by looking at how do we extract pure metals, how do we
add value to our products.
Talking about huge bitumen depositsin Nigeria, the Obasanjo administration at one time in this
country, issued mining licensesto people to explore bitumen yet no mining of bitumen isgoing on
there now. What went wrong?
What I think happened started from the General Abacha’s administration. At the time the bitumen licenses were
awarded to some companies, the people who got them were mostly people who intend to recover crude oil but
when they discovered that the economics seemed more expensive than what was obtainable in the pure oil
fields, they abandoned them. But I am aware that one or two of those who have the exploration licenses are
doing their feasibility studies with a view to carving out mining leases. Mining is not something you can start
today and kick off tomorrow, it needs time to do studies before investments are made. It will take a lot of
investment to put in place a fractional distillation plant that will produce pavement grade bitumen and heavy
crude from these tar sand deposits. This government should re-visit the previous exercise and those who are
not doing anything with their licenses should be made to forfeit them so that those who are serious can take
them up.
What advice do you have for somebody who wantsto come into the sector?
I will say yes, definitely you are welcome, because one thing is obvious; I know and can see this government
as a very serious and committed one and I also believe that the Minister of Solid mineral means well. We have
good rules and regulations and I believe that the government will give the Minister the impetus to operate well
in the sector. It is not only about making finance available but also bringing sanity into the operational
environment, finance becomes available as soon as the sector is properly structured. The potentials in the
sector are enormous. .
But the sector needsforeign investorsto thrive..?
Looking for investors doesn’t mean every Tom, Dick or Harry, should be welcome. Talking about foreign
investors, I believe there should be a level of expectation from them; whoever is coming to invest in this sector
should come with something, and there should be value addition in the offering. It will not be enough for you to
come in and take the ore as is and export to your home smelter. We should expect that after a short period of
time, the foreign investors begin to process the minerals and metals in Nigeria. What we have today is that
some foreigners are going around collecting minerals and we don’t need minerals collectors, Nigerians can do
those themselves. Let us talk about the issue of local content now and not when the cream has been taken as
it happened in the oil sector. Fortunately, the law recognizes the local communities and that is good enough, so
we can take a step further by making sure that those who come to play in the sector, are not just coming to
take the minerals away but adding value here. Some of these minerals and metals when they are processed
will also be used in the local industries, like I said before we export cassiterite and we import tin plate for our
food industries. We can complete the whole chain in Nigeria, we get the ore here, and we get the tin plate here
to supply to the food industries. We can stop the importation of iron and steel products which is a huge drain on
our foreign reserve, if we activate the refining of iron ore at Aladja, Ajaokuta and site a few other mills where
there are deposits. In essence we should look at those investors who are not just coming for the money but
those who are looking at adding value to the system.
But where are our local investorsin thisindustry?
Whatever that is happening today in the sector today is the effort of the local investors, you can hardly point at
any big foreign investors, apart from a couple or a few who are quarrying stones and limestone for marble or
granite and limestone respectively. When you look at the secondary metal sector, you will see a lot of
development as you can hardly find scrap metal in Nigeria now; the Asian smelters have picked them up from
our streets. There is an on- going industrial revolution in Ogijo area of Ikorodu in Lagos where most of these
smelters are situated. This is happening because there is a ban on exportation of scrap metals. So they were
compelled to add value to the metals before exportation. We can also do that with the ores (the primary
metals).I am not one of those that believe that we lack human capacity in every area, we can always acquire
technology were we don’t have it. Mining is not rocket science; we have traditional mining operation which are
still doing well to some extent. If you are bringing people to join hands, fine and good, you can bring them and
we can develop the processes further. It is not the kind of activities that, you must go and bring foreign experts
for. We used to have mining school in Jos; we can reopen that and resume the training of miners who will be

4. useful in the industry. We can retrain our people, now we are looking at the mining direction again due to the
exigencies of our economic situation. We need to develop technically competent persons to service the
industry. Nigerians are engaged in all sorts of hi-tech activities both within and outside our shores, mining
should therefore not be a difficult one. I don’t believe that Nigerians lack the human capacity to excel in this
area after all some of the people we brings in here as expatriates are not even qualified in the field they are
brought in to occupy. I believe we can do it .