* Dutch disease from oil killed Nigeria's mining sector
* Gov't says has reserves iron ore, gold, coal, limestone
By Tim Cocks
BAGEGA, Nigeria, Aug 22 Like almost everything
else in Nigeria's economy, mining of metals and other solid
minerals fell by the wayside when the West African nation
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
"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
percent from its current 1 percent 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
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.
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 ($12.38) or 1 million
naira ($6,200)," 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)
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."
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
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
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 $20 billion.
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.