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How Chinese prospectors exploit local miners to cash in on Nigeria’s gold

How Chinese prospectors exploit local miners to cash in on Nigeria’s gold

Ihuoma Chiedozie

The absence of a ready market for Nigerian artisanal miners to sell their products paved the way for Chinese nationals to take over the illegal mining of gold in the country, investigations  by SUNDAY PUNCH have revealed

The Chinese are largely behind the smuggling of gold out of Nigeria, a lucrative venture which has resulted in the loss of billions of dollars in revenue for the Federal Government.

Our correspondent learnt that Nigerian miners’ lack of capacity  and failure to enforce mining laws by  the government  also contributed to the domination of the Nigerian mining sector by Chinese.

Although not many Nigerians are aware that the country  possesses huge  gold deposits, operators in the mining sector say a market in Dubai, the United Arab Emirates, is exclusively dedicated to the sale of Nigerian gold smuggled out of Zamfara.

About 17 Chinese were recently arrested for engaging in illegal mining of gold in Zamfara and Osun states.

The Minister of Mines and Steel Development, Olamilekan Adegbite, said the Federal Government was being pressurised by influential Nigerians (godfathers) to free the illegal miners, including Senegalese, Burkinabes and Nigerians.

But Adegbite insisted that the FG would go ahead to prosecute the suspects  to “the full extent of the law”, to serve as a deterrent to others engaging in the act.

The FG has also decided to meet the Chinese government over the illegal activities of its nationals in Nigeria’s mining sector.

However,  the  latest developments on the matter  suggest that the FG may not be able to proceed with the planned prosecution as about 15 Chinese arrested in Osun have  yet to be handed over to the police.

According to sources in the Ministry of Mines and Steel Development, the suspects are still in the custody of the state government, and there are fears that they may be set free without being charged.

The FG  for long frowned on the dominant role being played by the Chinese in Nigeria’s mining sector, a development which Adegbite said was not beneficial to the economy.

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The Chinese are seen as largely responsible for the prevailing situation whereby unprocessed solid minerals resources are being exported from the country without any value added to the commodities.

Thirty-five million metric tonnes of unprocessed solid minerals are reportedly exported from Nigeria yearly, and the government believes it is losing revenue from the development, as the commodities would have fetched more if they were processed and converted into products before they are shipped from the country.

Nigeria reportedly lost about N353bn in gold smuggled out of the country and sold in the international market between 2016 and 2018, according to Nigerian Extractive Industries Transparency Initiative audits and reports from international sources.

On the other hand, the entire mining sector generated just N3.7bn as revenue for the government in 2018.

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The N3.7bn realised in 2018 signalled a 68 per cent increase from the N2.2bn that the sector generated in 2014.

Despite abundant mineral deposits in the country, the mining sector contributes less than one per cent to its  GDP.

However, while the government is moving to check the Chinese and other foreigners who engage in smuggling, investigations by our correspondent showed that Nigerian artisanal miners view the activities of the Chinese as a welcome development in the sector.

According to artisanal miners, who spoke to our correspondent,  they don’t have any market for their products and only the Chinese buy from them.

The Secretary, Board of Trustees of the Small-scale and Artisanal Miners Association of Nigeria, Saleh Katsina, said the presence of the Chinese was good for the artisanal miners, whose activities make up about 90 per cent of the operations in the mining sector.

Katsina said, “It is good for us because we don’t have buyers and we don’t have a market to sell our products.

“The Chinese are ready to pay and when they buy (from local artisanal miners), they pay.”

Reacting to observations that the Chinese exploit the local miners by paying them paltry sums while turning around to sell for huge profit in the international market, Katsina said most Nigerian miners were only looking for money to feed their families.

He said, “The artisanal miners operate on the basis of hand to mouth, so when they mine and get products but there is nobody to buy what they produce, they will go hungry.

“So what do we do? If we produce and we don’t have anybody to buy what we produced, do we eat the products?

“There is no arrangement for people looking for products and for those who want to sell to know the right market to go to.”

According to Katsina, the Chinese are not afraid to venture to mining sites in rural areas, despite the current security challenges facing the country.

He said, “The reality today is that nobody can access any of the remote mining destinations – there is insecurity everywhere.

“But the Chinese are willing to go into these places and they are buying from the people, they are not taking these things by force.”

Meanwhile, the FG is planning to address the problems posed by the absence of a market for artisanal gold miners by implementing an arrangement whereby the Central Bank of Nigeria buys off gold from the miners at the official market rates of the product.

It is expected that the move will block direct access to remote mines being exploited by the Chinese.

Katsina, however, blamed the government for failing to stop the smuggling of gold and other minerals out of the country.

He said, “Nothing goes out of this country without passing through the airports and seaports. The smugglers cannot hide these minerals in their luggage and run away.

“The government should make sure that anybody taking minerals out of the country must show evidence of payment of royalties.

“The FG is losing revenue to smugglers as a result of incompetence. In some smaller countries you can’t take any mineral out with the knowledge of the  government.”

Adegbite had claimed most of the Chinese illegal miners were in Nigeria with expired visas.

He said apart from planning to prosecute those arrested the government was planning to expel undocumented foreigners operating in the mining sector.

But the artisanal miners association advised the FG to “thread with caution” in handling the issue of the arrested

Katsina said, “We should not send away the Chinese. We need these people, we need their money. We should not do things in a way that it will come back to haunt us later.

“Maybe they should be asked to pay fines. Sending them to jail will not achieve anything.

“The FG should liaise with the Chinese government to enable their citizens to work within our laws.

“We should not send wrong signals to investors. It is important to bring the Chinese on board.”

But our correspondent also learnt that during  the course of their illegal activities in the mining sector the Chinese subject Nigerian miners to all forms of degrading, abusive treatment.

The President of the Miners Association of Nigeria, Alhaji Kabir Mohammed, told our correspondent that the Chinese treat Nigerian miners as labourers.

He urged the FG to go ahead and punish the Chinese  arrested in Zamfara and Osun.

Mohammed said, “They operate with impunity in the sector. They override us, take over our mining sites and treat us like labourers.

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“We see  Chinese all over the place but we don’t know if they have legal documents or not.

“It is good that this issue is coming up at this time. These Chinese, together with their Nigerian collaborators, should be punished according to the laws.”

He claimed  Chinese who engage in mining activities in the country had no regard for the association.

He said, “Can any Nigerian go to any foreign country and start mining? You must belong to the chamber of mines or the mining association.

“If a Chinese come to Nigeria and wants to engage in mining, he should register with us and tell us what he wants to do.

“But they don’t come to us, they don’t register with us.”

Mohammed blamed the FG for failing to enforce the laws regulating guiding the mining sector, a development which he said had resulted in loss of revenue due to smuggling.

According to the FG’s plans,  the UAE will confiscate gold that did not come with export certificates, keep 30 per cent of the commodity, and return 70 per cent to Nigeria.

“There are markets where they only sell Zamfara gold in Dubai,” Mohammed said.

The recent hike in illegal gold mining has been linked to the coronavirus pandemic which had led to sharp rise in the value of gold as a result of the depreciation in the value of several currencies.

Currently, an ounce of gold sells for $1, 700 and experts expect that it will soon rise to $2, 000.

The Chief Executive Officer of AngloGold, a Johannesburg and New York listed mining company, in a recent interview reportedly noted that “there is every chance that the gold price could exceed $2000 per ounce”.

With the price of crude oil on a free fall, the FG is looking at the possibility of repositioning the solid minerals sector as a major revenue earner for the country.

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