Do African Nations Know the Worth of their Minerals?

Precious Minerals. Image generated by a.i

The conversation often surfaces on how foreign powers are exploiting Africa's most valuable natural resources at little or next to nothing. The question thus arises as to whether African nations truly understand the worth of their earth resources. There are complex reasons why Africa's minerals are often under-priced. One fundamental reason is the lack of technology. When foreign companies come to Africa with technologies that Africans do not possess, the bargaining power tips in favour of the companies. An African leader desperate for funds to run his country may succumb to unfavourable deals despite knowing they unfairly favour the foreign company. Sometimes, proceeds are shared in a ratio of 6:3 in favour of the foreign company. Take the case of Orano SA, a French company that mines uranium in the Arlit region of northern Niger. Orano holds a 63.4% stake, while Sopamin, the Nigerien state-owned company, holds a mere 36.6% of Somair Mines. What's even more striking is that the lion's share is held by a company owned by a few individuals.

In some cases, a country's colonial history gives undue advantage to certain companies. France is a typical example of a colonial power that maintains a predatory relationship with its former colonies. Currently, Mali, Burkina Faso, and Niger, all former French colonies, are fighting to correct unfair economic alliances with the European nation. The case of Nigeria is a nation blinded by oil revenues. Before the discovery of oil, Nigeria's economy was largely agro-based, relying on cash crops for revenue. The nation also depended on solid minerals for extra income. Following the discovery of oil, the Nigerian authorities failed to recognize that significant revenue can come from a combination of numerous smaller sources rather than a single giant source. The metallic mineral industry highlights the Nigerian government's contempt for non-oil industries. The authorities have failed to demonstrate a sincere willingness to reform the solid minerals industry for maximum benefit. One of the negative outcomes is the invasion of the industry by illegal miners, many of whom are foreigners who make large haulages daily.

The issue is complicated by the Exclusive Legislative List, under which earth resources fall in Nigerian law. This ensures that the prerogative to regulate activities in the industry remains in the hands of the Federal Government in Abuja. However, since the federal authorities are more concerned about oil revenues, the sector suffers. Despite the creation of an agency like NEITI (Nigerian Extractive Industries Transparency Initiative), solid minerals-producing states still suffer from a lack of funds that would be expected given the scale of mining activities in the states.

In December 2022, the Federal Government announced it had given N625 billion as derivation funds to the nine oil-producing states in Nigeria. This amounts to an average of approximately N70 billion per state per year. On the other hand, only Nasarawa State is fortunate enough to receive around N1 billion per month. In September 2024, Governor Caleb Mutfwang of Plateau State complained that the state only receives about N500 million as annual derivation revenue despite the billions generated from mining activities in the state.

Solid minerals-producing states are embittered by the unfair circumstances in which they find themselves. Some have developed mining policies that take advantage of loopholes in the Nigerian Mining Laws. The aim is to ensure they don't lose everything. These policies allow them to charge companies certain fees for registration, inspection, haulages, etc. When setting the charges, however, they are cautious to ensure that local companies are not discouraged. Total charges per annum in most states may not exceed N700,000 per annum, which is the same amount foreign companies pay. Upon hearing this, an alarmed foreign investor exclaimed, "That's just about three hundred pounds! Don't you value your minerals?" Thus, about £300 is what a Chinese company pays to a solid mineral-producing state to operate for one year, while earning hundreds of millions of pounds.