Administrative Law

A Critical Examination Of Artisanal And Small-Scale Mining In Northern Nigeria: The Need For Legal Reform

BACKGROUND

Energy plays an important role in the economy of any nation of the world. It directly and indirectly affects the standard of living of its citizens, the security, transport, growth, and development of its society.

Nigeria’s energy sector is rich in mineral resources from coal, petroleum reserves, natural gas, peat, hydroelectricity, solar and wind. The country remains a top producer of crude oil and natural gas in Africa. Blessed with 44 different types of minerals in commercial quantities in over 500 locations in the 36 states and the Federal Capital Territory; however, it earns less than one percent from solid mineral resources in its total Gross Domestic Product (GDP).[1] This implies that the country is yet to explore and harness value from its natural resources.

The mineral sector in Nigeria is currently dominated by Artisanal and Small-Scale Mining (ASM) operations, mainly informal, working with rudimentary methods and limited technical training, social provision, or environmental consideration.[2] The most beneficial solid minerals are spread across the country but with most of it in the North, an area which is grossly affected by illiteracy, it suggests that the lack of growth in the mineral sector is as a result of archaic and unhealthy economic and legal practices.

This paper sets out to undertake a rigorous examination of the ASM sector in Northern Nigeria, offering an in-depth analysis of the multifaceted challenges it faces and, most importantly, advocating for the imperative of legal reform. By delving into the historical context of ASM, evaluating the existing legal framework, and drawing upon international best practices, this paper aims to make a compelling case for reforming the legal landscape governing ASM in Northern Nigeria. 

THE HISTORY OF ARTISANAL MINING IN NIGERIA

Artisanal mining otherwise called small-scale mining and, in most cases, referred to as Artisanal and Small-Scale Mining (ASM) can be defined as an informal mining activity carried out using low technology or with minimal machinery. It is estimated that more than 100 million people rely on this sector for income, mainly in developing nations, Nigeria inclusive.[3]

Although, some scholars believe that there is a difference between artisanal mining and small-scale mining and define them independently. The 2002 ‘Strategies and Blueprint for Sustainable Development of ASM in Nigeria’ document defined artisanal mining as operations that are usually referred to as ‘illegal’ and ‘informal’ and are characterised by a lack of capital, poor workplace health and safety, community health, environmental management, and mining technical competence. It can also be defined as small-scale mining which is usually undertaken by small legal entrepreneurs or companies that are usually underfunded and therefore do not efficiently exploit the potential of their mineral concessions.[4] In fact, many of such exploration and mining concessions held by small operators remain dormant or are currently illegally and inefficiently exploited by artisanal miners.

However, the Nigerian Minerals and Mining Act 2007 does not separate artisanal mining and small-scale mining as Section 90 and 91 of the Act provides for the Department of Small Scale and Artisanal Mining Department. Also, Section 164- Interpretation Section of the Act defines small-scale mining to mean “Artisanal, Alluvial and other forms of Mining Operations involving the use of low-level technology or application of methods not requiring substantial expenditure for the conduct of Mining Operations within a Small Scale”. This implies that in Nigeria, the term “Artisanal” and “Small Scale Mining” are used simultaneously to mean the same thing.

The exploitation of minerals by artisanal methods has occurred in Nigeria for over 2,400 years, from basic clays to base metals and gold. The first recorded mineral exploitation dates from between 400 BC and 200 AD when the vibrant societies and kingdoms such as the Nok culture in the North-West of Nigeria worked iron and clay deposits and produced the famous terracotta figurines.

From around 999 AD, the Hausa kingdoms with the kingdom of Kano and the famous ‘Golden Lands of Wangara’ were noted for their gold mining. Later in the 11th and 12th centuries, the Ife and its successor, the Oyo kingdoms mined and used a variety of minerals. Subsequently, the Benin Kingdom, which started to rise to prominence around the 15th century, mined various base metals and developed highly skilled metallurgy techniques which produced beautiful art at the Benin Royal Court. More recently, ASM operations have dominated the mining space in Nigeria.

Tin also had its popular days, from 1903 until the 1940s when there was an amalgamation of the various mining outfits into commercial larger ventures. However, there was a re-emergence of ASM outfits, especially for metals and gemstones, after independence in the 1970s. This increase in metal and gemstone ASM was due to declining tin prices, the civil war (1967-70), massive Naira devaluation, labour movement and retrenchment, and an increasing craving for foreign exchange. The increased global demand for mineral commodities combined with the collapse of the tin market and the introduction of a Structural Adjustment Programme (SAP) in Nigeria in the 1980s again created a ready market for the export of artisanally mined produce albeit under a different disguise combined with a growing proportion of intermediate traders and mineral smugglers.[5]

Following the discovery of oil of commercial qualities in 1958 and the oil boom of the 1970s, the mining sector experienced a decline as the focus shifted to the oil industry. This caused a downturn in production, particularly in the metallic minerals starting in the late 1970s. Despite several strategic minerals and government reforms, this sector still struggles to reach its full potential. Nigeria’s economy thrives on proceeds from crude oil sales, accounting for the low contribution of mining to the nation’s GDP, which has led to insufficient exploration investment and the inability to harness its wealth creation capacities. This has in turn contributed to the gross underperformance in the sector and, consequently, a loss of economic opportunities, leaving the industry in a struggling state.  To this day, ASM accounts for over 90% of solid mining in the country[6].

THE STATE OF ARTISANAL AND SMALL-SCALE MINERS IN NORTHERN NIGERIA

Studies have also shown that 6 out of 10 artisanal miners operate in Northern Nigeria, thus, making it the mining hub of the country.[7] There are different levels of key players in the North that largely control and impact the industry. On the one hand, there are legitimate license holders who employ workers and pay them on a daily or monthly basis, and on the other, those who do not own licenses and are just itinerants scavenging through marginal deposits.

In the case of license holders, instead of paying the miners to work for them, the license holder allocates mining spaces to others (lessees) who are prepared to work for themselves, or even employ others to work for them. The license holders then charge a commission on every product that leaves each mining pit, depending on the agreement made.

Non-license holders, on the other hand, consist of those who occupy mines illegally and take advantage of the improper closure of abandoned mine sites by legitimate license holders. They are usually on the run from the hot chase of security agencies. In alluvial mining of gold, for example, these miners are commonly referred to as “re-washers” and they scavenge for any leftover gold deposits.

Generally, the sales channel is largely unofficial and embedded with smuggling and distribution cartels leading to loss of revenue from taxes, loss of revenue from royalties, exposure of miners to uncontrolled risks, uncontrolled and non-systematic evacuation, resulting in environmental degradation, erosion, and excessive pollution, amongst other negative effects.

As such, the majority of people engaged in Artisanal and small-scale mining are impoverished and live in communities having limited access to basic amenities such as healthcare, sanitation, or clean water. These problems are likely to be even worse when miners have converged around a freshly discovered deposit or settled in unorganised camps. Such remote and temporary settlements are unlikely to have public health facilities. Experience has shown that these sites often have growing and a high prevalence of diseases (especially water-borne diseases, most commonly found in and around the water-filled stagnant pits left by miners) including malaria, yellow fever, cholera, diarrhea, tuberculosis, bilharzia, and other parasitic and infectious diseases. Miners themselves also present a unique health challenge and the majority of miners work long hours in dangerous conditions.

In 2010, Zamfara, the seventh largest state in Nigeria and a Northern state, experienced a severe lead poisoning outbreak, due to improper mining and control.[8]

Furthermore, inclusive of the many challenges and state of artisanal miners in Nigeria, is the marginalisation of women in the industry. In Benue State where baryte is mined, all 25 mines associated with the Benue State Miners Association belong to male members, with females owning none.[9] This implies that control is largely in the hands of males and no room has been created for proper inclusion.

It has been reported and on record that women are constantly abused, misused, overlaboured, underpaid, shortchanged, and even raped by the male labourers and staff of mining companies.[10] In Galadima K’ogo, Niger State, women do not dig mining tunnels essentially due to strength and cultural limitations. Even though the women are acclaimed to have a knack for mineral (gold) prospecting as they identify most of the gold veins in the mining areas, the men would send the women away from the site once they find the gold and proceed with the actual mining leaving the women with the only option of scavenging the earth-discards from the mining pits for any remains of gold particles they may find.[11]

Most of the mining associations’ operations and procedures are at variance with gender inclusiveness. This hostility and non-conducive environment according to the women stakeholders, makes it difficult for women to grow in mining. Women, however, participate in the value chain of the mineral sector through the marketing and distribution of products. They are equally involved in the reclamation of land after mining via planting and revegetation of mined land. Through consultation, it has been noted that women are indirectly affected especially when mining regulations are not adhered to, as it leads to accidents that result in these women being widows and put in a position of vulnerability.

SUBSTANTIVE LAWS THAT REGULATE THE ARTISANAL MINING SECTOR IN NIGERIA

The principal legislation governing artisanal mining in Nigeria is the Minerals and Mining Act of 2007 ably supported by the Minerals and Mining Regulations of 2011. The Ministry of Mines and Steel Development which has the Artisanal and Small-Scale Mining Department (ASSMD) holds the responsibility of assisting and supporting small-scale and artisanal mining operations in the country. It also provides extensive services to small-scale and artisanal mining title holders and assists artisanal and small-scale miners in accessing the Solid Mineral Development Fund established by the Act.

The Minerals and Mining Act of 2007 and The Minerals and Mining Regulations of 2011

Seeking to strengthen practices in the mining sector, Nigeria passed the Minerals and Mining Act of 2007, to be administered by the Ministry of Mines and Steel Development, through its five departments. The Act, which repealed the Minerals and Mining Decree of 1999, vested title in all mineral resources to the Federal Government and prioritized mining over other land uses.

The Act established a Mining Cadastre Office to administer mineral titles and maintain registers of mining leases. It also created an Inspectorate Department and an Environmental Compliance Department, established a mine permitting system, and set forth requirements relating to environmental protection and community benefits.

The Act empowers the Ministry of Mines and Steel Development to issue six types of permits, licenses, and leases, as described below. Permits generally convey non-exclusive use rights, while licenses provide exclusive rights for a limited purpose and leases provide exclusive ownership rights for a broader purpose.

  1. Reconnaissance permits: Right to access land to search for mineral resources on a nonexclusive basis;
  2. Exploration licenses: Right to explore mineral resources on an exclusive basis, including the right to erect machinery and plants, along with the right to conduct bulk sampling and sell samples;
  3. Mining leases: Right to exclusively use, occupy, and carry out mineral exploitation in the area covered by the lease, not to exceed 50 km;
  4. Small-scale mining leases: Right to exploit minerals in an area between 5 acres and 3 square km using low-level technology or application of methods not requiring substantial expenditure;
  5. Water use permits: Right to use water for exploration, mining, or quarrying; and
  6. Quarry leases: Right to remove and dispose of any quarriable minerals, including necessary excavation and construction, in an area not exceeding 5 square km.

Although most of the Act is directed at large-scale, commercial mining activities, it does include a short chapter (Chapter 2) on Small-Scale Mining, following the example of its predecessor, the 1999 Decree. The Act defines artisanal mining as a subset of small-scale mining; as such, artisanal mining is included in the requirements governing small-scale mining. Both artisanal and small-scale miners can apply for a small-scale mining lease (with artisanal miners first required to form a cooperative), but there is no lease available under the Act specifically for artisanal mining activities.

In May 2011, the Ministry of Mines and Steel Development finalised the Minerals and Mining Regulations under the 2007 Act. The regulations include a brief section on ―Artisanal and Small Scale Mining Operations, which allows miners to register as artisanal and small-scale mining cooperatives and obtain extension services from the Ministry, including assistance in securing financial support from the Solid Minerals Development Fund. As noted above, artisanal mining cooperatives are also eligible to apply for mineral titles in the form of a small-scale mining lease.

Small-Scale Mining Leases

Under the 2007 Act, the Mining Cadastre Office grants small-scale mining leases for operations between three acres and five square kilometers. As noted above, small-scale mining lease covers both artisanal and small-scale mining activities.

Each small-scale lease application must be accompanied by a showing of technical competence (at minimum, a certificate in mining or a related field) and financial capability (evidence of sufficient working capital through a bank statement or reference letter). In addition, applicants must provide a land survey and a pre-feasibility study.

A small-scale mining leaseholder cannot engage in extensive and continued use of toxic chemicals, cannot dig more than seven meters, and cannot continually use explosives. In practice, the Mining Cadastre Office encourages small-scale (and artisanal)miners to form cooperatives in order to decrease transaction costs and formalize mining practices. Small-scale mining leases last five years, after which the lease must be renewed. All leaseholders must apply in order to export minerals for commercial purposes.[12]

REFORMS NECESSARY TO FOSTER SUSTAINABILITY IN THE ARTISANAL AND SMALL-SCALE MINING INDUSTRY IN NORTHERN NIGERIA

There are four major reforms necessary to foster sustainability in the ASM industry, and they are as follows:

1. CREDIT REFORM FOR MINING BUSINESS

One of the most fundamental constraints to the ability of small-scale miners to upgrade equipment and engage in safer mining practices is their lack of financial capacity. Currently, small-scale miners rely on what is sometimes referred to as predatory lenders for materials and supplies, which obligates them to sell their mineral finds to the lenders at below-market prices.

This creates a cycle of dependence that is a barrier to the implementation of change in mining practices. Strengthening access to credit facilitates greater profitability because it allows miners to participate in the broader market and provides greater stability because miners can make longer-term investments.

Although the Nigerian Government is keen to harness the support of some of the major Nigerian commercial banks to provide financial assistance to artisanal and small-scale miners, experience has shown that a lack of knowledge and understanding of both artisanal and small-scale miners and the poor has rendered such initiatives unsuccessful. Commercial banks often fail to provide adequate microfinance provisions for the poor because they are very wary of providing short-term funds to finance long-term projects, commercial banks also usually require forms of collateral (e.g. land) that the poor may not have. In general, the criterion for obtaining funds is complex and therefore inaccessible to most miners. The lack of appropriate financing mechanisms has resulted in many miners throughout Africa and in Nigeria, having to resort to seeking credit from the multitude of sponsors involved in the sector and therefore becoming trapped in a situation of debt bondage.

In order to achieve better and implementable credits, the following must be put into consideration:

A. Loan-Based Financing Schemes: These may include loans to purchase mines, loans to develop mines, loans to set up extractive plants, mining industry loan funds, etc. These loans should include achievable and implementable criteria for the miners.

B. Hire/Purchase Schemes:  A hire-purchase scheme would enable artisanal and small-scale miners to acquire metallurgical equipment on the condition that they present a sound mining proposal. The funding body would ensure that reasonable repayment periods and interest rates are set and are not prohibitive towards artisanal and small-scale miners (e.g., there needs to be recognition that the repayment period would have to be a substantial length of time and that if interest rates are set to high, many artisanal and small-scale miners would be able to meet repayment rates). The funding body could overcome this by setting repayment rates according to the value of the equipment (shorter repayment periods for lower-cost items). This may be an appropriate initiative that could be implemented by a microfinance institution (MFIs) from specific artisanal and small-scale miners’ funds provided by the government.

C. Micro Equity (Small Grants Programmes): Artisanal and small-scale miners can be provided with the capital needed to start their own entrepreneurial ventures through small grants. In return, the grant-making body requires social equity i.e. human development returns. The grants often respond to a number of needs e.g. health and basic skills training. These grants may extend beyond the provision of funds and target many of the fundamental barriers to improvements in the artisanal and small-scale miners sector.

2. REVIEW OF THE MINERALS AND MINING ACT

If the sector is to contribute to poverty alleviation, the focus cannot remain with the management level/leaseholders alone. Under the Minerals and Mining Act and Regulations, artisanal miners are strongly encouraged, and in some cases required, to form a cooperative in order to proceed with their activities. Miners must be part of a registered cooperative in order to receive extension services from the Ministry, and while both individuals and cooperatives are allowed to apply for a small-scale mining lease, the Ministry holds the view that the only way for artisanal miners to obtain such a lease is through a registered cooperative. The requirements for forming a cooperative are specific to each state but commonly include the preparation of bylaws and payment of a registration fee, among other things. Once miners have legally formed a cooperative, they must also register it with the Ministry of Mines and Steel Development Central Office, which is located in the country’s federal capital, and imposes additional steps and fees. These dual registration requirements impose financial and time-consuming burdens that are difficult for many miners to meet.

The legal requirement that artisanal miners form cooperatives in order to obtain a mining license and/or extension assistance should be reconsidered. The government should consider alternative approaches that would build on the organisational systems already in existence at mining processing sites (such as by letting existing groups of miners apply for a license without having to formally register as a cooperative beforehand). At the same time, or alternatively, the government may use incentives (such as enhanced access to credit and other benefits) to encourage miners to form cooperatives, without requiring them to do so as a precondition to obtain technical assistance and mining licenses.

Furthermore, many miners do not hold title (in the form of a small-scale mining lease) to the lands where they are working to extract gold-containing ore. This may be because they do not know how to obtain a mining lease, they lack the resources to obtain a lease, or because the title to the land in question is held by somebody else. This lack of formal title can discourage artisanal miners from making longer-term investments to improve their mining activities, without the assurance that they can recover their investment. It also means that miners cannot use the land on which they are working to secure credit for obtaining new tools and developing improved technologies. Nor do they have the security of knowing they can continue to mine in a given location for a specific length of time.

In resolving this issue, the government may develop a mechanism by which titleholders can grant permanent, temporary, or conditional access to marginal deposits by artisanal miners, and prepare a template or model agreement to help facilitate this process. The government may also develop a regulation requiring regular inspections of mining sites at designated intervals in order to enforce the ―use it or lose it principle expressed in Sections 70(1) (a) and 151(g) of the Minerals and Mining Act. Formulation of a genuinely pro-poor policy that can be implemented and that is sympathetic to the realities and social constraints of the Nigerian ASM sector is very important.[13]

3. IMPLEMENTATION OF THE MINERALS AND MINING ACT

Weak enforcement especially in mining-related issues has created a wide gap that policy advisers are struggling to combat. The problems of ASM seem to be making little progress despite the enactments of legislation in the country. The legislation does exist, but enforcement is too weak. However, small-scale miners are largely illiterate who are only aware of the regulations and process of being registered and payment of royalties.

The first and major approach to this issue is to allow legal instruments that are designed to facilitate the physical regulation of the sector in a manner that ensures transparency, open competition, and continuity of service to do so, whilst respecting the actual capacity of the Ministry of Mines and Steel Development Staff to manage and police the sector.

Furthermore, consideration should be given to the varying levels of education of those within the artisanal and small-scale mining sector. Because effective vulgarisation will be key, all supporting regulations and documents should be written in a more user-friendly format. Consideration should be given to the translation of key documents into local languages. Communities and operators should be made aware of the new Mineral Act still in the pipeline and how, if possible, it can be used to benefit them and raise their awareness about rights and entitlements.

4. IMPROVAL OF THE ARTISANAL AND SMALL-SCALE MINING LICENSING PROCESS

Securing title can go a long way towards helping artisanal miners improve their operations by investing in safer and more effective mining technologies. While Nigeria‘s Mining Act and regulations allows artisanal miners to obtain a small-scale mining lease, the process is difficult and costly. The license fee of Fifty Thousand Naira (approximately Fifty Dollars at current exchange rates), while not prohibitive – particularly for mining cooperatives – is still a substantial sum for poor communities. In addition to the fee, the mineral lease application requires a pre-feasibility study, proof of sufficient working capital and technical competence, and details such as coordinates about the location of the proposed lease.

However, rather than requiring artisanal miners to seek a small-scale mining lease, the Ministry of Mines and Steel Development could simplify the licensing process by creating a new license category for artisanal mining activities. It is important that ASM activities are defined during the creation of a new mining license (e.g. the level of mechanisation permitted) so that the license provision is not abused by applicants with greater resources, but at the same time does not prevent artisanal miners from upgrading their operations. An effective licensing process should be transferable, renewable, and long-lasting, with a reasonable application fee and processing time.

Furthermore, while the new small-scale mining license is being developed, the Ministry of Mines and Steel Development can also take steps to decentralise the license application process and work with miners to help them submit license applications. When properly used, decentralisation can reduce delays in the processing of license applications, enable greater control and management of environmental impacts, and reduce informal activities and security problems in mining camps and surrounding areas.

CONCLUSION

In Nigeria, ASM is not a new phenomenon. The poor performance of the large-scale mining sector in the country, together with high unemployment rates, poverty, farm seasonality, a lack of alternative livelihoods, and little incentive to raise money for alternative livelihoods and little provision of basic life amenities, has encouraged the growth of the ASM sector in Nigeria. In spite of the social and financial concerns associated with ASM, as revealed in this paper on northern Nigeria, the sector has evolved into a viable venture that can potentially support rural developmental objectives such as increased employment, and reduction of poverty and hunger.

However, the rate of achieving these developmental goals may be dependent on the practices themselves. It is acknowledged that the legislative process responsible for the reform of the Mining Act may take a lot of time, but a systematic regulatory approach would do no harm pending the passing into law of a new Mining Act.

BIBLIOGRAPHY

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[3] InforMEA “Artisanal Mining”, Online: informea.org https://www.informea.org/en/terms/artisanal-mining

[4]  Wardell Armstrong “Nationwide Baseline Study on the Development of Artisanal & Small-Scale Mining in Nigeria”, (August, 2008), Online: delvedatabase.org https://delvedatabase.org/resources/nationwide-baseline-study-on-the-development-of-artisanal-small-scale-mining-in-nigeria

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[6] Publish What You Pay Nigeria “Formalizing Artisanal And Small Scale Mining In Nigeria” (August, 2018), Online: pwypnigeria.org https://pwypnigeria.org/2018/08/31/formalizing-artisanal-and-small-scale-mining-in-nigeria/

[7] Delve, “Nationwide Baseline Study on the Development of Artisanal & Small-Scale Mining in Nigeria” (August 2008), Online: delvedatabase.org https://delvedatabase.org/resources/nationwide-baseline-study-on-the-development-of-artisanal-small-scale-mining-in-nigeria

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About EFERAOMON ISEGHOHIME

Eferaomon is a resourceful lawyer with a unique desire for excellence. She has an intricate understanding of corporate and commercial issues which she employs to identify and address risks to clients. She primarily advises on energy, banking, and finance transactions across different sectors, including energy, infrastructure development, transportation, telecommunication, regulatory compliance, and international trade. Beyond her legal capabilities, Eferaomon is an astute conversationalist. She enjoys listening to TED Talks and is an avid Monopoly player.