By Ekemini Simon
In part 3 of this report, TheMail investigates a deal that has cost the people of Mfamosing millions of dollars and retrogression. It involves both the State, Federal Government and Lafarge Africa, a subsidiary of Holcim Limited, a major multinational limestone company.
Insight into Mfamosing’s Limestone Extraction by Lafarge
Of all the 41 solid minerals extracted in Nigeria, limestone tops the chart in both the quantity extracted and its revenue. Lafarge Africa, a subsidiary of a large global player in the cement business, Holcim Limited, Switzerland, is among the top players in the industry in Nigeria. The company ranks second to Dangote Cement in limestone mining.
In three years alone (2017 through 2019), Nigeria Extractive Industries Transparency Initiative (NEITI)- Solid Minerals report shows that Lafarge Africa PLC extracted 19.31 million tonnes of limestone in Nigeria. Lafarge has plants in Ewekoro in Ogun, Ashaka in Gombe and Mfamosing in Cross River State. On its official website, the company notes that the Mfamosing plant has the highest production capacity in the country.
Interestingly, the Mineral Production Statistics Report (2019 -2020) published by the National Bureau of Statistics in December 2021 offers a clearer insight into the tonnes of limestone that is extracted in Mfamosing.
In Cross River State, Limestone is extracted mainly in Mfamosing. According to the report, 1.78 million tonnes of limestone was extracted in 2019, while 6.01 million tonnes was extracted in 2020. These extractions come with financial gains to the government.
Lafarge’s Payments to Government from Mfamosing Mining Asset
TheMail Newspaper in a freedom of information (FOI) request to Lafarge Africa, had asked for information on the company’s payments to the government from extractions in Mfamosing. Although the company acknowledged this request, it was not acceded to throughout this investigation.
However, further findings into the parent company, Holcim Report on payments to government (mandatory disclosure report), revealed that Lafarge’s extractions of limestone in Mfamosing had generated millions of naira to the coffers of the government. This is basically in the form of royalties and taxes. Royalties are paid to the federal Ministry of Mines, while taxes are paid to the Federal Inland Revenue service.
The report shows that between 2015 through 2020, Lafarge Africa made payment of royalties to the government amounting to N676.60 million from Mfamosing Mining Asset. On taxes, Lafarge’s payments are not disaggregated.
The breakdown shows that in 2020, royalty payment for Mfamosing was $558,000 (N212.04 million) exchanged at N380/$ Central Bank of Nigeria (CBN) official rate. Also, $406,000 ( N154.3 million) was paid as taxes for Lafarge’s three mining assets in the country.
In 2019, royalty payment was $483,000 (N173.91 million) exchanged at N360/$ CBN official rate. This year, the NEITI report notes that Lafarge Africa paid a total of N320.1m to the federal government as royalties for its operations in the country. The N173.91 million paid for Mfamosing is 54.3 per cent of the total royalty payment of Lafarge for the year.
Furthermore, the NEITI report adds that Lafarge paid $1.25 million (N450 Million) taxes for all its mining assets in Nigeria.
In 2018, $268,000 (N82.03 million) was paid when exchanged at N306/$ CBN official rate. This year N140.7 million was the amount Lafarge paid for her entire limestone mining in the country. The payment on Mfamosing alone is 58.3 per cent of the company’s total royalty payment. In addition, Holcim Mandatory Disclosure Report shows that this year, the company paid as taxes to the Federal Inland Revenue service for both Ewekoro and Mfamosing $384,000 (N117.5 million).
The highlighted instances of the high percentage of Lafarge payment on royalty for Mfamosing Asset compared to the company’s total assets in Nigeria points to the significance of Mfamosing to the mining operations of Lafarge in Nigeria.
Interestingly, when the company was operating through United Cement Company (UNICEM) PLC as her subsidiary, UNICEM report shows that N69.40 million was paid as royalty in 2017, N71.64 million was remitted to the government as royalty in 2016, while N67.58 million was paid in 2015. UNICEM had its operation only in Mfamosing. During these three years, UNICEM stood third on the top ladder of the solid mineral extractive sector.
When TheMail cross-checked the payment claims by Lafarge on Resource projects, an open portal for oil, gas, and mining payments across the globe, there was no significant difference in the payment claims.
Royalties Shared to Cross River State from Mining
Section 162 (2) of the constitution provides for the distribution of not less than 13 per cent of revenue accruing to the federation account directly from any natural resources on the principle of derivation to the region where the minerals are mined.
According to the NEITI report of 2016, the Revenue Mobilisation and Fiscal Commission (RMAFC) distributed N9.92 billion solid mineral revenue generated from 2007 to 2014 in July 2016. Although the report notes that Cross River State received N135.46 million of 13 per cent derivation from Solid Minerals, checks into data obtained from the Federation Account Allocation Committee (FAAC) report, published by the National Bureau of Statistics, shows that the actual payment to Cross River State was N196.63 million. Benue State received the N135.46 million erroneously recorded by NEITI.
The report of 2017 was not detailed to include what states received as their share of 13 per cent derivation. In 2018, the NEITI report notes that out of N1.131bn shared on 13 per cent derivation for solid minerals across States; Cross River State received N64.56 million. The report says this was distributed in October 2019.
However, tracing the revenue to what went to Cross River State shows some discrepancies. According to data obtained from the Federation Account Allocation Committee report, published by the National Bureau of Statistics (NBS), Cross River State received N118.2 million Solid Minerals Revenue.
In 2019, according to the NEITI report, a total of N3.2bn inclusive of 13 per cent derivation was distributed among the 36 states of the Federation and the Federal Capital Territory (FCT) in May 2020.
The report says Cross River State received N114.3million. NEITI’s report on what was distributed to Cross River State for 2019 was in sync with the FAAC report.
Millions Generated by Cross River State Government
A visit to the Cross River State Ministry of Solid Minerals suggests that the State benefits in no little measure from the mining operations of Lafarge. Lafarge is the only extractive company captured in the Ministry’s signpost.
TheMail Newspaper sent an FOI request to the Cross River State Internal Revenue Service (CRIRS) on the details and amount of taxes paid by Lafarge Africa to the State government. The request and reminder that followed were not acceded to despite the fact that the service acknowledged receipt of the letters.
However, a Senior Civil Servant from the CRIRS told TheMail in confidence that 80 per cent of the revenue generated by the State Ministry of Environment and 85 per cent generated by the Ministry of solid minerals is from Lafarge Africa. The source also added that about 20 per cent of Pay as you Earn tax (PAYE) in the state also stems from the company.
Checks into the financial statements of the Cross River State Government between 2019 and 2021 reveal that the State Ministry of Solid Minerals generated N1.06 million as fees while the Ministry of Environment generated N14.34 million during the three fiscal years. Further checks give credence to the revelation from our source.
In the 2021 budget implementation report, which was more elaborate on the actual subhead of revenue, N1.65m was generated through “environmental degradation from quarry activities”. This year, the Ministry of Environment generated N1.87 million. 88.2 per cent of the revenue was from degradation at quarry sites. What is more, the NEITI report of 2015 states that UNICEM in 2015 paid N404.36 million directly to the state.
Lost Treasures for Mfamosing
Mfamosing community which bears the brunt of extraction and depleted resources, has not benefited from the multi-million naira either paid to the coffers of the state from 13 per cent derivation of limestone extracted in their backyard or from the funds the state generates from their community through fines and taxes from Lafarge Africa.
They are in a situation development experts like to call the ‘resource curse’. The locality lacks major basic amenities such as electricity, pipe-borne water, and healthcare centres. Homes in Mfamosing are mostly made of mud.
” The last time we had electricity was far back in early 2019. You can only imagine life without electricity. As for healthcare centres, anytime someone gets sick, we go to another village because we don’t have any here,” says Chief Joshua Ntuen, the community head of Abimfam, the epicentre of Lafarge mining operations.
”The last time we had electricity was far back in early 2019. You can only imagine life without electricity. As for healthcare centres, anytime someone gets sick, we go to another village because we don’t have any here,” says Chief Joshua Ntuen, the community head of Abimfam, the epicentre of Lafarge mining operations
The community proffers solution to the contentious utilisation of the 13 per cent derivation revenue in their community. “Just as it is done in some oil-producing states of the Niger Delta, there is an urgent need for the state government to establish Cross River State Solid Minerals Producing Areas Development Commission thus give special attention to our plight and enhance effective utilisation of the 13 per cent derivation revenue”, says, a youth leader, Raphael Effiong.
Yet, even as it is disputable that Cross River State government has allowed the 13 per cent derivation fund paid to the state to trickle down to the community that bears the mining brunt, the Nigerian mining law mandates the extractive company to provide for the social welfare of the community through Community Development Agreement. But, the existence and operation of this very important agreement is in doubt.
Lafarge’s Questionable CDA with Mfamosing
When Lafarge commenced mining operations in Mfamosing, the people of the community had high expectations. They thought they would get the best of life as a reward from the mining company for allowing millions of tonnes of limestones to be extracted from their backyard year in year out.
”We had expected that our children would get scholarships, we would have quality healthcare service among other social amenities, and our children would be trained to work with Lafarge. But that has not been happening”, says Mfam Clement Emayip, Village Head of Mfamosing and Paramount Ruler of Akamkpa.
The wishes of the Traditional Ruler are not utopian. Its provisions are part of the legal demands to mine anywhere in Nigeria. Section 116 of the Mining Act (2007) states:
“Subject to the provisions of this section, the Holder of a Mining Lease, Smail Scale Mining Lease or Quarry Lease shall prior to the commencement of any development activity within the lease area, conclude with the host community where the operations are to be conducted, an agreement referred to as a Community Development Agreement or other such agreement that will; ensure the transfer of social and economic benefits to the community.”
According to NMMA 2007, every mineral titleholder is required to negotiate a contract in the form of a Community Development Agreement (CDA) that ensures the flow of economic and social benefits to the local community.
A Community Development Agreement (CDA) contains undertakings with respect to the social and economic contributions that the project would make to the sustainability of such community; it as well addresses some of the issues relevant to the development of the host community which includes educational scholarship, apprenticeship, technical training and employment opportunities, health or other community services, roads, water and power among others.
The CDA is between the titleholder and the host community, with the Ministry having a copy for reference and monitoring purposes.
Regarding the CDA, TheMail Newspaper sent an FOI request to the Plant Manager of Lafarge in Mfamosing, Idara Uyok, and the Chief Executive Officer of Lafarge in Nigeria Khaled El-Dokani, in December 2021 and January 2022, to seek information and obtain a copy of the CDA. The same request was made to the Federal Ministry of Mines and Steel Development and Cross River State Ministry of Solid Minerals. This was followed by a reminder. Although they all acknowledged receipt of the request, they did not respond, thus raising suspicion on the availability of the document.
When members of the Abimfam community council were contacted, they said Community Development Agreement does not exist between the community and the company.
Community members revealed that the only document that exists between them and Lafarge Africa is an imposed document tagged Deed of Lease and entered in 2003, four year before the NMMA, 2007 came into operation.
TheMail Newspaper which assessed the Deed of Lease, noticed that it is dated September 18, 2003. Signatories to the deed from the community are the Village Head of Abiati, Ntufam Pius Ekpe Itita, Village Head of Mfamosing, Ntufam Clement Emayip, and Ntufam Augustine Ekpe and Hon. Augustine Etim. The Chief Accountant of UNICEM, A.B. Umo and Confidential Secretary Bernedette Onikoyi were signatories for the company.
Interestingly, Our newspaper also obtained the Certificate of Consent signed by the Cross River State Commissioner for Lands and Housing, Arc. Bassey Ndem on June 30, 2004.
Analysis of the document turned out a few agreements. The company said it would give preference to suitably qualified members of the community in its employ, train them, ensure contracts and subcontracts are awarded to qualified members of the community, pay compensation commensurate with the crops destroyed, renew the lease after five years and pay to the community as lease rent N2 million per annum.
Although members of the community claim the community members were not involved when the agreement was drafted and that their leaders were deceived into signing the agreement, they noted that the company has over the years failed to keep to the provisions of the agreement.
The community members narrate that after 12 years of not having social or economic gains from Lafarge, they decided on September 28, 2015, to write to Lafarge notifying them of their withdrawal from the “flawed” agreement.” Even after our letter, Lafarge has neither responded or made amends to keep to even the minutest part of the flawed agreement they imposed on us”, says the secretary of Abiati community, Ewa Asuquo.
Section 116 (5) of the Mining Act stipulates that a CDA is subject to renewal every five years. Although Lafarge’s agreement is tagged “Deed of Lease” and does not contain all the provisions designed for in a Community Development Agreement as provided for in the Nigerian Mineral Mining Act 2007, findings reveal that the company has not renewed the Deed of Lease since it was entered into 18 years ago.
Be that as it may, NEITI reports note Lafarge claims on social expenditures across its host communities in Nigeria. These spendings are usually made based on Community Development Agreement or Corporate Social Responsibilities. In what the report tags as ” Unilateral Disclosure” by solid minerals company, in 2015, through Lafarge’s subsidiary, United Cement Company, that operated only in Mfamosing, the company reports that it spent N134 million on social expenditure. In 2016, it was N162.55 million, and N327.56 million in 2017. In 2018, according to NEITI’s report, Lafarge was not among the 21 solid mineral mining companies who reported to have spent a total of N538.8million on social expenditures. Yet, in its financial report, Lafarge noted that it spent N868.9 million, thus generating controversies about whether the company carried out a community development project in the said year. About the same inconsistencies were observed in 2019.
Although the NEITI report notes that Lafarge reported to NEITI that it carried out 72 projects across its host communities in Nigeria at the cost of N613.6 million, Lafarge, in their 2019 financial statement, claimed it spent N992.7 million.
In 2020, Lafarge’s financial statement, reports that the company spent N1.26 billion on diverse social and investment programmes in her communities in Nigeria. N500 million was spent on community development projects across Nigeria (Covid-19 donation), N430 million on Inclusive projects (roads), N329.9 million on corporate social responsibility intervention, while N1.1 million was spent on donations and sponsorship. In 2021, the company claimed to have spent N2.39 billion on its social investment programmes.N1.79 billion was reported to be spent on Inclusive projects (roads), N595.9 million on corporate social responsibility intervention, while N8.19bn was said to be spent on donations and sponsorship. Nothing was spent on community development projects.
Freedom of information request by TheMail Newspaper to Lafarge’s Plant Manager at Mfamosing, Idara Uyok, and Country Chief Executive Officer, Khaled El-Dokani, sought information on the social spending of the company in Mfamosing. The request specifically demanded to know the identity of the projects, location, and cost of the projects. This request was not acceded to despite reminders and acknowledgement of receipt.
Lafarge’s inconsistent social spending reports and the decline to give insight to the FOI request raise more questions on the state of the Community Development Agreement in Mfamosing, making spending on this provision mandatory.
Social expenditures are often the only real benefits for resource-rich communities. Still, members of the Mfamosing community say they do not have in their community one-tenth of the spending reported to be made by Lafarge.
A community leader, Okon Akpan, said for about two decades of Lafarge operation in Mfamosing, the only social projects the company has embarked upon is the provision of boreholes, renovation of one healthcare centre, renovation of a primary school, renovation of a town hall, and the renovation of the Paramount Ruler abode.
The community says there is no scholarship programme by Lafarge; rather, what they have is recent financial assistance of N100,000 to four students in the community. Community members said this was accompanied by tailoring apprenticeship programmes to 18 community members.
Yet, a community stakeholder, Francis Bassey, insists that Lafarge is insincere in its expenditure claims.” With what they have claimed to spend, why can’t Lafarge mention the particular community and the amount they spent in that community?” Bassey queried.
This was corroborated by a youth leader in the community, Raphael Effiong, who challenged Lafarge to sit with the community in a town hall and come clean on its acclaimed expenditures by pointing to the projects, the cost amount and the contractors awarded the projects.
*This investigation republished from TheMail is supported by Policy Alert with funding from Open Society Initiative for West Africa (OSIWA)*