By Bulus Katako
Nigeria is at a critical juncture in its journey towards economic transformation, with the solid minerals sector positioned as a key component of the country’s diversification strategy. With over 44 identified solid minerals across the nation, the mining industry represents a significant opportunity to reduce reliance on oil. However, unlocking this potential requires substantial capital investment—a hurdle many local investors find challenging due to the high cost and the relative infancy of the mining sector in Nigeria. As a result, foreign direct investment (FDI) has become essential for the sector’s growth.
Despite a global decline in FDIs to Africa, which fell by 3% to $53 billion last year, the mining sector in Nigeria has attracted notable international interest. A leading example is Segilola Resources Operating Limited (SROL), which operates Nigeria’s first commercial gold mine—the Segilola Gold Mine in Osun State. SROL’s success demonstrates that Nigeria can be a viable destination for international mining projects and serves as an encouragement for further investment in our mineral resources.
Recently however, the Osun State government made serious allegations against SROL, accusing the company of tax evasion and environmental degradation. According to a press release from the state government, SROL allegedly owes ₦3,250,598,513 in unpaid taxes. As an observer, my initial reaction was that this figure seemed disproportionate and warranted further scrutiny.
Information from SROL indicates that the company formally objected to the tax findings presented by the consultant engaged by the Osun State Internal Revenue Service, and it provided explanations and records to substantiate its Withholding Tax (WHT) and PAYE remittances for the period 2019-2023. According to the company, a meeting was held on July 25, with representatives from the state government and the tax authority to discuss the liability, and a final reconciliation meeting was scheduled for September 2, but was later cancelled by the state. SROL later received a letter from the Osun State Internal Revenue Service dated September 23, revising its tax liability to ₦98,347,105.18, with a 30-day payment window.
It is concerning that, just days after issuing this revised tax assessment, the state government made public accusations of tax evasion without giving the company and its tax consultants the opportunity to review the newly claimed outstanding tax remittance, to which they are rightfully entitled. The significant reduction in the claimed liability raises questions about the initial accusations and the overall handling of the matter by the state.
There have also been reports from state officials claiming that Segilola began bankable gold production in 2019. However, it is a matter of public record that SROL poured its first gold in July 2021, not 2019 as some state officials have implied. A mine’s development is a multi-year process, requiring careful planning, construction, and investment before production can begin.
The spread of misinformation by state officials is troubling and could harm investors’ confidence in the sector.
On September 30, the Osun State Government sealed the Segilola Gold Mine under the authority of a magistrate court’s order. However, it is important to note that solid minerals fall under the Federal Government’s Exclusive Legislative List meaning the state government lacks jurisdiction to seal the site or disrupt the mine’s operations. Furthermore, this overreach risks setting a dangerous precedent that could deter future investments in Osun State and across Nigeria’s mining industry.
It should be noted that, in response, the company obtained an interim injunction from the Federal High Court, issued by Justice Emeka Nwite on October 3, restraining the Osun State government from interfering with SROL’s gold mining operations or restricting access to the mining site. This injunction will remain in place until the hearing of a Motion on Notice for an Interlocutory Injunction, scheduled for October 17.
However, the Osun State government subsequently secured a restraining order on October 7, against SROL from the Osun State High Court, granted by Justice A.A. Aderibigbe, prohibiting the company from resuming its mining operations until the alleged tax liability is settled.
From my understanding, in matters where both federal and state courts have concurrent jurisdiction, once a case is brought before the Federal High Court, it is improper for one party to seek a ruling on the same issue from a state high court while the federal case is still pending. Any contestations must be made in the court where the original suit was filed.
Interestingly, SROL has been accused of environmental violations by the Osun State government. However, the primary regulators on environmental matters—the Federal Ministry of Environment and the Ministry of Solid Minerals have not corroborated these claims. In fact, during a visit to the site by the Minister of Solid Minerals Development, Dele Alake in April, no reports or concerns were raised about environmental compliance. Furthermore, an environmental compliance visit was carried out by the Ministry of Environment on September 6 which included representatives of Osun State. Following the site visit, there was no complaint or notification of non-compliance by the company.
What is also noteworthy is that while these accusations against SROL are publicised, little has been done by the state government to address illegal mining activities, which pose significant environmental risks in Osun State. These illegal operations continue unchecked, causing far greater environmental damage than any legitimate, regulated mining project.
Furthermore, it is concerning that neither the governor of Osun State nor any senior government official has made an official visit to the Segilola site since assuming office. Given the level of investment, employment and development SROL has brought to the state, such an oversight raises questions about the basis for these serious accusations. What should concern us all is not just the impact on SROL, but the broader implications for investors’ confidence. If one of Nigeria’s most successful mining companies can be subjected to such treatment, what does that signal to other investors? This blatant overreach risks derailing Nigeria’s economic diversification efforts and undermining the hard-earned progress made in the mining industry.
There is no escaping from the fact that the actions of the Osun State government have far-reaching implications beyond the borders of Osun State. They jeopardise Nigeria’s standing as a destination for foreign investment in the mining sector and threaten to derail the nation’s broader economic diversification efforts. Recently, the Miners’ Association of Nigeria had added its voice to the matter by calling on the federal government, particularly the Minister of Solid Minerals Development, to intervene in this matter.
It also called on the Osun State government to reverse its actions immediately, withdraw its court orders and engage in constructive dialogue based on facts, not baseless accusations. The time for grandstanding is over—what is at stake is the reputation and future of Nigeria’s mining industry. It is important to accede to this voice of reason before it is too late.
•Katako, a public affairs analyst, writes from Jos.
