Nere Teriba, Vice Chairman of Kian Smith Trade & Co, Nigeria’s first gold refinery said the firm is expected to more than triple its capacity within five years after operations begin in June 2019.
Teriba said the refinery would initially be able to produce three tonnes per month of gold and one tonne of silver, but will eventually rise to 10 tonnes a month of gold and three tonnes of silver in five years.
In more than 500 locations spread across the country, there are untapped deposits of 44 minerals, which include gold, iron ore, coal, tin and zinc. However most of the mining is artisanal and the absence of gold refineries means value typically has not been added in the supply chain.
Construction workers broke ground at the refinery site in the southwestern state of Ogun. The Vice Chairman revealed that work was expected to be completed by the end of February 2019 and production would start by the end of June. She said “it is a five-year expansion plan to get to 10 tonnes a month of gold. Silver will probably go up to about three tonnes a month”.
The gold refinery said it would supply the Central Bank of Nigeria as well as the jewellery industry. Teriba said “the gold supply for the refinery will be coming from Nigeria … but also from the rest of Africa”. She noted that Kian Smith had a memorandum of understanding (MoU) with a supplier to bring gold from Ghana, Sierra Leone and Tanzania.
Teriba, who did not provide a name, said that one supplier had committed to providing a total of 100 kg each month from Ghana and Sierra Leone. She said the company had MoUs from about 200 gold suppliers.
Most ore will be sourced locally from various locations including the northwestern states of Zamfara, Kebbi and Kaduna, as well as the central states of Kwara and Niger.
80 percent of mining in Nigeria is carried out on an artisanal basis and gold is routinely smuggled out of the country illegally to neighbouring Cameroon and Niger, as well as Togo before being registered in those countries. Teriba said Kian Smith was in talks with the government after proposing an altered approach to import duties and royalties.
According to Teriba “we are working with the government on a proposal to reduce import duties on gold dore”. She said the company had asked the government to make refined gold bars and coins free of value-added tax.
Miners are currently responsible for paying the royalty on gold, an approach Teriba said caused “leakages” because most miners were artisanal. The refinery will seek to incentivise suppliers by paying royalties on their behalf.
Gold mines produce gold dore bars, a semi-pure version of the substance, which are sent to a refinery for further purification.