High expectations have been placed on the development of the solid minerals sector since the President Muhammadu Buhari’s government announced its plans to diversify the economy with the minerals sector playing a key role the Ruth Tene Natsa, writes that the government is taking the agenda for the revival of the sector serious.
The news that the federal government had renegotiated the concession agreement of the of the Nigerian In Ore Mining company(NIOMCO) with Global steel Holdings has no doubt re-awakened the belief that the President Buhari-led government is committed to the revitalisation of the erstwhile solid minerals sector.
Speaking on the new concession, through the minister of solid minerals development, Dr Kayode Fayemi,who led the federal government’s side in the mediation process, said with the new agreement on NIOMCO, the next step was to commence the process of taking over Ajaokuta and ensuring that it was given out to a serious operator with proven technical and financial capacity.
“It is our expectation that we would accomplish two things- bring NIOMCO to full function and starts the process of retaking Ajaokuta and then give it to a new operator.With this, we will move from being just a mineral nation to a mining nation.
“Once the first phase of the agreement is accomplished, it is the intention of the government to quickly move into accomplishing the objectives of concessioning the Ajaokuta steel plant to the most competent operator who meets the requirements of credible track record, technical capacity and financial competence.
“Overall, we are confident that this landmark settlement is a pointer to what to expect in the government’s determination to fix the Nigerian mining sector. This is one of the key milestones in the road map for the growth and development of the Nigerian mining sector and I want to thank our team from the federal ministries of Justice and solid minerals for their hard work and also thank GSHL for sticking to the provisions of the laws in seeking resolutions to the problem,” he said.
Fayemi described the settlement as a landmark development that would help the diversification plans of the President Muhammadu Buhari-led administration.
The GSHL chairman, Mr Mittal, said the company waited for eight years to achieve this amicable settlement.
He said his organisation was committed to the objectives of the agreement and guaranteed supply to Ajaokuta plant and Delta Steel Company, after which it would sell what was left to other interested parties.
He assured the government of its readiness to commence operation soon, adding that in the next two years Nigeria would begin to produce steel.
No doubt Nigeria is a mining destination with over 44 minerals spread across the various states and communities of the nation.
According to the minister,“We have reasons to believe that available data of our reserves understates what the Almighty God has blessed our country with in many cases.”
The minister said during a media briefing in Abuja that some short- term actions would accelerate investor confidence in the Nigerian mining industry.
He assured that the ministry would take several steps including finalising market and technical diagnostics through creating a consistent mining industry, revenue generation through upgrading of the mining cadastre office and efficient reviewing of overlapping and ineffective mining titles, strengthening the institutional support given to the artisanal and small -scale miners(ASMs), finalising privatisation exercise through an audit of privatised assets in partnership with the Bureau of Public Enterprises(BPE), ensuring capacity building and forming a business and investment support team among others.
The minister who spoke based on current data said that the sector makes up about 0.34 per cent of the gross domestic product(GDP), noting that based on current official rates, the mining sector contributes N400billion in value and was optimistic that the sector could create double digits in the next decade with direct and indirect economic impacts on households
He assured that this could be achieved using emerging mining strategy which focuses on aspirations to build a sustainably global mining sector.
Fayemi expressed worry that one of the reasons why the sector had produced below expectation in the past was as a result of the low investment placed on exploration, as he noted that in the past two years, Nigeria had spent less than $500,000 on exploration activities considering the huge resources and huge expanse of geo data the nation had to contend with.
Another major promise by the minister was to revive the mines police which is a statutory body in partnership with the Nigerian police force to help in monitoring the activities of miners across the nation.
Questions raised on the funding of the sector, particularly the $120million World Bank loan was also effectively tackled as the minister assured that the loan was judiciously used.
He however lamented that the Solid Minerals Development Fund(SMDF) had however remain unfunded since its formation in 2012.
Speaking on the many challenges that had hindered development in the sector, Fayemi listed both external and internal factors. He noted that the global decline in the prices of mining products has put mines and mining houses under tremendous pressure as top mining houses also withdrew from investing in the sector.
Despite the above challenges, the minister is optimistic and sees an opportunity to jump start the market growth using a mix of domestic mining houses, junior mining companies and global miners, particularly with the domestic demand for industrial minerals and metals, particularly in the construction industry, focussing on working with other MDAs.
He maintained that the internal challenges were of a different nature and not of a supply demand issue, but rather of limited and in some cases, non- existing infrastructure like roads, rail, power, and insufficient data with existing geological data dating as far back as 50 years with no updating /upgrading.
He also lamented the absence of incentives for states to become involved in mining as taxes and royalties were not available to them.
Other challenges he maintained include the activities of illegal miners and community challenges.
“Funding has been a challenge partially because the sector has not been a focus area for both government and financial institutions. Over the past five years for example, the total capital allocation to the ministry and its agencies in the federal budget had been less than N10billion. And out of the N1billion allocated in 2015, only N352 million was released.
“ Equally access to finance has been practically non-existent from the banking industry, indeed as at today , the banking sectors exposure to the sector is less than 1 per cent of its total portfolio,” the minister said.
He said that government haS commenced constructive engagement with the Central Bank of Nigeria (CBN) and with commercial lenders to sharpen commercial options for Nigerian miners.
Source : Leadership