Business - Business & Economy - Energy - News - June 20, 2021

Solid minerals: NEITI audit reveals 2019 sector revenues highest in 13 years

Sector’s contribution to Nigeria's economy grew from 0.12% in 2015 to 0.26% in 2019            

MEDIATRACNET

Nigeria realised over N79.96billion from the solid minerals sector in 2019, the Nigeria Extractive Industries Transparency Initiative (NEITI) audit report has revealed.
NEITI said the figure, which represents accruals to the Federation and other subnational entities, was about 15 percent higher than the N69.47billion realised in 2018.
These data were contained in the 2019 NEITI solid minerals sector audit report published on Sunday in Abuja.
The audit was conducted by Haruna Yahaya & Co (Chattered Accountants), an indigenous accounting and auditing firm.
Details of the report showed the 2019 earnings accounted for about 16 percent of the total N496.28billion revenues that accrued to the Federation from the sector between 2007 and 2019 (about 13 years).
The figure represents the highest revenue earning by the Federal Government since 2007 when NEITI commenced reconciliation of payments in the solid minerals sector. 
NEITI said its report of the 2019 revenue receipts showed that taxes paid to the Federal Inland Revenue Service (FIRS) on behalf of the federation accounted for N69.92 billion, or 87.4 percent of the total.
Also, fees and royalties paid to the Mining Cadastre Office (MCO) and Mines Inspectorate Department (MID) accounted for N2.37 billion (3.0 percent) and N2.55billion (3.2 percent) respectively.
In addition, revenue accruals to the  States of the Federation stood at about N5.1billion, representing a 42 percent increase, compared to about N2.1billion realised in 2018.
The outstanding amount of ₦8.887billion, which accrued from the solid minerals sector as at December 31, 2019,  the NEITI report disclosed, was distributed amongst the three tiers of government in May 2020 based on the revenue sharing formula.
The balance as at October 31, 2020 was about N3.948billion.
Further details of the revenue distribution showed the Federal and State governments received N4.073billion, or 45.83 percent, and N2.065billion, or 23.25 percent respectively.
Besides, the local governments got about N1.592billion, or 17.92 percent, while the balance of N1.155billion was distributed to only solid minerals producing states as their shares of the 13 percent derivation.
Out of 702 companies that paid royalties to the federal government in 2019, only  74 met the materiality threshold of ₦3million.
This figure represents a 7.2 percent increase, compared to 69 entities that met materiality threshold in 2018.
“These 74 companies accounted for 87.63 percent of total royalties of N2.50billion paid in 2019, with the top five companies (Dangote Cement PLC, Lafarge PLC, Dangote Industries, Julius Berger and Reynolds Construction) paying more than 50 percent of total royalties collexted for the year,” the report said.
Besides, the report also disclosed that a total of 1,296 mineral permits were issued by the Mining Cadastre Office (MCO) in 2019.
A breakdown of the figures showed that small scale mining leases were the highest, with 602 permits granted during the year.
This was followed by 501 and 169 for Exploration Licenses and Quarry Leases respectively, while the least figure of 24 was recorded for Mining Leases.
The 2019 audit report revealed that the total volume of minerals produced was about 59.82 metric tonnes.
A five-year trend analysis of minerals productions in the country showed about 224,188,056 tonnes produced, out of which 59.82MT was produced in 2019, signifying the highest over the period under review.
The 2019 volumetric figures, NEITI said, represented an increase of 29.41 percent, compared to 46.7MT produced in 2018, closely followed by 43.08MT and 39.27MT produced in 2016 and 2015 respectively. The lowest production figure of 35.32MT was recorded in 2017.
An analysis of revenue flows from the sector also showed that about N79.96 billion recorded in 2019 was the highest in the past five years.
This was followed by N69.47billion and N69.2billion recorded in 2018 and 2015 respectively.
Besides, about N52.76billion was recorded in 2017, with the sector accounting for about N41.98billion in 2016.
On minerals exported, the report showed the solid minerals sector accounted for N124.23 billion of the total government exports of N24.275 trillion for 2019, representing 0.51 percent of total export for the year.
On the contribution of the sector to the economy, NEITI’s report cited data from the National Bureau of Statistics (NBS) which showed that mining and quarrying contributed 0.26 percent to the gross domestic product (GDP), higher than 0.18 percent in 2018.
“Nigeria’s GDP in 2019 was ₦144.210trillion with contributions from the solid minerals sector totaling ₦368.99billion, representing 0.26% of the total amount,” the report said.
The report said the performance showed a steady growth in the sector’s contribution to the country’s economy in the past five years, from about 0.12 percent in 2015 to 0.26 percent in 2019.
A sectorial review of revenue distribution of taxes and royalties by the 74 companies showed that manufacturing and construction companies contributed 68.60 percent and 29.67 percent respectively, while quarry, mining companies and buying centres contributed only 1.73 percent.
On environmental impact and social expenditure, the report revealed ten companies reported environmental expenditures of about N17.13million, on environmental fees, air quality and waste permits, and registration fees for environmental impact assessment (EIA).
Also, the report said Mines Environmental Compliance Department carried out reclamation of seven abandoned mines with about N534.81million.
Besides, the report said a total of 32 mining sites have so far been reclaimed between 2007 and 2019 at about N2.39billion.
On social expenditure, the report said about N2.598 billion was spent on 557 projects by 44 extractive companies operating in the sector.
Apart from the Presidential initiatives on gold, salt and fertilizers, the NEITI report also identified on-going projects in the sector.
They include Gold Mining Development; Mapping of ASM & Buying Centres, and Procurement of Airborne Geophysical Survey; Integrated Automated and Interactive Solid Mineral Portal (IAISMP).
Others include Development of Geoscience Data Bank for Mineral Exploration; Development of Jewelry and Gemstone Industry; Automation of Royalty Payment and Documentation across the country.
Recommendations in the report called for the provision of interventions, strengthening the regulatory framework, enhancing tax payment systems and ensuring synergy, partnerships and collaborations among agencies managing the sector.
To address the issue of non-payments of taxes and multiple tax identification numbers (TIN), the NEITI report recommended that the FIRS should carry out comprehensive tax audits to recover all unpaid taxes by companies and also work in collaboration with the Ministry of Mines and Steel Development (MMSD) to reconcile the multiple tax identification numbers by some companies.
Other recommendations included that the government, through the Ministry of Mines and Steel Development (MMSD) should promote the development and beneficiation of strategic minerals through investments in strategic and metallic minerals to increase revenue to the government.
Furthermore, the ministry should also consider having its representatives at the export terminals and borders to validate export clearance permits by exporters and confirm if the applicable royalties have been paid.
The latest report is the 10th cycle of the independent audit of the solid minerals sector conducted by NEITI in line with its enabling law and Nigeria’s obligation to the global Extractive Industries Transparency Initiative (EITI).

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