FG begins process to allow CBN buy all golds from local miners

The Federal Government has begun the process that will make the Central Bank of Nigeria (CBN) buy all the gold from local miners at an international price.

This comes some months after the CBN joined forces with Thor Explorations Limited, a Canadian company that sees Nigeria as a new frontier for a gold rush at a period gold miners face the dearth of new discoveries across the globe.

In a new report, it was disclosed that the Nigerian government was registering artisan miners as the Presidential Artisanal Gold Mining Development Initiative Biometric Exercise commences.

This initiative, which has the backing of the CBN, is expected to integrate artisanal and small-scale gold mining activities in the country and formalize the market.

The initiative was designed to create support for Nigerian gold miners with Kebbi and Osun states serving as pilot states. The registration for the Presidential Artisanal Gold Mining Development started in Yauri Local Government Area of Kebbi State on February 22.

Why is CBN/FG buying these golds? This exercise will enable the CBN to buy gold produced by Nigerian miners at an international price. The purchase of the gold will prevent the local miners from foreign merchants who exploit them during the transaction.

Also, it was disclosed that the acquisition of all the golds would curb smuggling activities which is a threat to the growth of the sector. Mining made up between 4% and 5% of Nigeria’s gross domestic product in the 1960s and 1970s before foreign operators left the country and oil dominated the government’s agenda for obvious reasons.

Now, metal ores account for less than 0.1% while crude exploration makes up 8% to 10% of GDP and brings in 90% of export earnings. FG has promised to increase mining’s contribution to GDP to 3% by 2025. In order to boost its contribution, Nairametrics had reported that experts urged the government to reform its laws to encourage investors to carry out exploration throughout the country as witnessed in the Democratic Republic of Congo and Zambia in the early 2000s.

In October 2019, Nigeria’s mining sector received a boost after Thor Explorations Limited renewed interest in boosting Nigeria’s efforts to persuade investors that it could become a mining destination for metals in West Africa. Also, Africa Finance Corporation, which is backed by the Central Bank of Nigeria and a group of local banks, is investing in the Thor project through a $78 million debt-equity financing package.

This means Nigeria could be on the cusp of getting its first industrial-scale gold mine from Thor that is developing a project capable of producing 80,000 ounces per year in Osun State, Nigeria targeting to start operations early 2021.