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Mining Not Source Of Easy Revenue, Fayemi Says On New Roadmap

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As the federal government and the Nigerian people seek more economically viable sectors to address the present challenges brought by the impact of failing  global oil prices, the Minister of Solid Minerals Development, Dr Kayode Fayemi has said mining has not been, and will never be, the source of overnight, easy revenues . Ruth Tene Natsa writes.

In his foreword in the Roadmap for the Growth and development of the Nigerian Mining Industry: On the Road To Shared Mining Prosperity, Fayemi said “Companies have to place smart bets based on geosciences data the Ministry can help create. Sometimes their bets pay off, leading them to expand from exploration into production, creating even more jobs and wealth for the country. Other times, they get it wrong and their capital expenditures in exploration have to be written off, with attendant job losses.

He noted that” Mining also carries a significant environmental burden that we must acknowledge and make plans to mitigate in a sustainable manner. All of us within and outside government should understand this cycle, and provide sincere support, as well as moderate our expectations in order to build a sector that can produce sound wealth from what is a wasting asset. Our role as Government is to create an enabling environment to support risk taking by investors who ultimately are the ones that can help create jobs. We will do ourselves and our best interest a disservice if we insist on extracting unearned profits upfront.

Dr Fayemi said “This roadmap represents our first major landmark in this transformation journey. In the 30 days following its inauguration, the committee worked to crystallize a coherent strategy to rejuvenate the mining sector, which I briefly summarise”

He said “Nigeria’s ambition should be to create a globally competitive sector capable of contributing to wealth creation, providing jobs and advancing our social and human security which he said can be achieved by focusing on using its mining assets to drive domestic industrialisation initially, and then migrate to winning in global markets”

The Minister said Building a competitive mining value chain means” firms operating in Nigeria must compete on quality and cost versus global peers. He added that making Nigerian mining competitive means the government and the private sector have to share the responsibility of investing in key drivers of success such as the availability of (and access to) public geosciences data that investors need, the appropriate infrastructure (e.g. railways and bulk ports, mine security networks), specialised technical talent, and of course, superb regulatory and enforcement capacity”.

“To ensure that the perspective represented by the roadmap is integrative of the many stakeholders around Nigeria, the ministry shared the roadmap with state governors, the National Economic Council and other key stakeholders. In addition, the Ministry participated in a May 2016 National Consultative Meeting generously hosted by Governor Nasir El-Rufai of Kaduna State, which was used to validate the roadmap” he said

He noted that “The Ministry has now completed incorporating the feedback from Kaduna as well as many written submissions received from mining companies, state governments, civil society groups, and other stakeholders. The input has been used to enrich the roadmap, and we now will move forward to implementation”.

Adding that “In this regard, the Ministry has established an implementation team that will coordinate the work of delivering the roadmap’s short, medium and long-term action items. We expect that the Roadmap Committee – ably co-chaired by Professors Ibrahim Garba and Siyan Malomo, and duly served by their esteemed members – will continue to provide the critical advisory support we need going forward”

The new team – the Mining Implementation and Strategy Team (MIST) – will focus on ensuring that the key policy, regulatory, technical, environmental and capacity choices necessary to revive and drive investment growth in mining will be taken without fail. We will speak more about the scope, composition and activities of the MIST in the near term.

All recommendations within this finalised document will be considered in the best interest of the nation. We will share the document with the Executive Council of the federation as a compendium.

The Roadmap stated that Nigeria’s minerals and mining sector is still largely underdeveloped despite its glorious past and abundance of mineral resources for development, including high value metallic minerals1, industrial minerals2, and energy minerals3. In 2015, the sector contributed approximately 0.33% to the gross domestic product of the country. This contribution is a reversal from the historically higher percentages (about 4-5% in the 1960s-70s).

However, following a decade of reforms starting in 1999, this contribution represents a cautiously optimistic restart of the development of the sector. The decade of reform saw key changes including, the passage of a new Nigerian Minerals and Mining Act (2007), a Nigerian Mineral and Metals Policy (2008), the creation of a modern Mining Cadastre system, the refinement of the tax code, and the expansion in airborne mapping of the country to sharpen knowledge of the mineral endowments. As important as these progress steps have been, Nigeria can and should do more. The sector faces several challenges with geosciences data and information, Industry participants, Stakeholders, Institutions, Governance and other enablers of the sector.

Ministry’s organisational design and regulatory agencies mix needs to be refined to ensure clear enforcement of its rules and separation of powers between the states and the Federal Government strictly enforced Key Enablers Moderate to High • Ancillary requirements for the proper functioning of the minerals and mining ecosystem such as talented labour, infrastructure – e.g. railroad, competitive financing systems, mine and asset security, and related support services – are missing In addition to these challenges listed, one of the most critical factors towards creating an enabling environment for exploration and mining is investor perception. Undue interference by communities and state governments, with expectations outside the provisions of the law/regulations cripple investments and the development of the mining sector. Uncertainty and inconsistency in state and federal laws, interpretation and enforcement will hamper development. The perception of a change of regime affecting laws also stalls investment and partnership. Fiscal policies that remain stable and predictable in the face of changing regimes improves transparency and fosters good governance within the sector. We address the need for strong communication strategies between the nation and the international community and between all stakeholders as one of the solutions towards benefits sharing, agreeable and accountable development of the minerals and mining sector. Based on an evaluation of the long-term opportunities that can be unlocked if additional transformation is embarked upon, the Committee believes that mining can deliver the jobs, prosperity and additional revenue for the country.

How to Win: Build a minerals and mining sector initially focusing on using its industrial mineral endowment to support its industrialisation. Government policy should seek to support private industry by building overall competitiveness (e.g. quality, price, loss ratios) and improving the ease of doing business, in collaboration with other government agencies.

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