Energy  

‘Solid minerals do not belong to host states’

Olamilekan Adegbite is Nigeria’s Minister of Solid Minerals and Steel Development

Olamilekan Adegbite is Nigeria’s Minister of Solid Minerals and Steel Development. At an interactive session with journalists in Lagos, he spoke about resistance by state governments to contribute revenues from mining into the Federation Account for sharing and moves by his Ministry to convince them of the accrued benefits. He equally spoke about challenges in the mining sector and efforts to attract big investors to boost economic growth. Clara Nwachukwu and Femi Adekoya were there. Excerpts:

What is the state of Nigerian mining sector?
We first started in 1904 in the south, and at a point in time, Nigerian was a no mining nation, which is before oil and gas.
Nigeria exported tin from Jos and coal from Enugu and of course, there were also other minerals that we exported. But with the advent of oil and gas, our focus shifted away from mining, and of course, mining went into doldrums.

We focused on oil and gas, which is also mining of liquid mineral, and with that came a lot of good fortune. But now, the world is looking away from hydrocarbon. We are talking about climate change, the earth is warming up, and everybody is looking elsewhere.

Some countries have set targets in the near future when they will ban forte fuel vehicles; so, all vehicles that you will find before long will be electrical.

Nigeria needs to prepare well ahead of time for this because there will come a time when you will not be able to sell your fuel anymore. It will no longer be attractive; nobody wants oil, and everybody will be using this mineral to power other things. Hence, the mandate of Mr. President to refocus the economy away from just oil and gas into mining and steel development, and of course agriculture. To do that mining, Nigeria is the big player left but predominantly artisanal.
Artisanal miners are of three kinds: ‘illegal’ miners, artisanal miners, and peripheral or part-time miners, who may shift back and forth between formal, illegal, and artisanal mining.

Solid minerals are in Nigeria in abundance, everywhere in Nigeria you find one thing or another, so most of these people just want to till the land, not going so deep, they find some minerals, and they sell them in raw form. They of course make a living, and then they go back and decide who continues. These kinds of people are not formalised, and the government does not realise anything from them.

What is delaying formal mining exploration in Nigeria, and what are you doing to make the sector compete with the likes of oil and gas?
Nigeria is the second largest producer of minerals, but the government hasn’t made sufficient effort to explore it, so what do we do? We need formal mining in Nigeria, you need to bring the right investors to come and do mining in Nigeria, and that is what we are trying to do.

We go out in different fora to attract the right foreign investors. We have them in UK, we have in Durban in South Africa, Australia, Taiwan, and so on.

Eventually, miners all over the world gather at these different fora, this is where we go to sell Nigeria’s potential to them. Nigeria has a lot of things, so a lot of efforts have been going on. At this point, I must acknowledge my predecessors in office, who have been going out there to show what Nigeria has.

We have got to a point now that almost everyone in the mining industry all over the world is aware that Nigeria has minerals. But the foreign investors are shy of the risk involved, they want to be sure that when they come into Nigeria, it will be profitable for them and of course they will make their money quickly.

Nigerian government has invested in exploration, prior to my coming to office, President Muhammed Buhari released a sum of money from the Natural Resource Fund to the Ministry, and they call it Intervention Fund. The sum of N30 billion was released to the Ministry in 2017/18. Out of this amount, almost half, about N15 billion, has been committed.

It is for the National Integrated Minerals Exploration Project (NIMEP), exploration where seven strategic minerals have been selected for the country.

These are coal, bitumen, limestone, iron ore, barite, gold, and lead. These minerals are the seven minerals that were identified at that time that we need to promote for investors to come in. Now, these seven minerals are being explored where they occur.

What we are trying to do with this NIMEP project is to establish data such that we will present this data to investors. We can tell them that we have got gold in this area and the quantity.

Basically, it is what the NIMEP is doing and it is a good investment; this is a project that started before I came into the office, and we should be having the final data result very soon.

Hopefully, looking at the first quarter of this year, we will have the final result. With this data, we will stand a better chance to please our would-be investors to come into Nigeria and come and build on the data that we have done.

They will need to do just a little more work to get to the bankable stage against the risks in the sector.

We are telling them and assuring them that these minerals exist in these locations, at this depth and this is the extent, so this will reassure investors to come into Nigeria.

What support do you think your Ministry can give to the downstream sector?
Previously, our downstream sector was not properly regulated, what we had were a lot of people mining. A lot of them are artisanal miners and if I may say, it is the few illegal miners who go out there to mine and whatever they get from the mine they export in the raw form; people are exporting iron ore, lead, zinc, tin and all that, without any value-added.

So, we are developing a downstream policy to encourage everybody; investors will come in to build a formidable plan. When you mine gold, you don’t have to export it like that because gold can be refined in pure form, and then it can be sold in gold bars. And I must say that there is a presidential initiative at this point, where the Central Bank of Nigeria (CBN), will be buying gold that is produced in Nigeria.

This, of course, is very good for miners and for investors because you have that option; you can either sell your gold to the CBN or you take it abroad. But CBN is better for you because they could avoid all those costs in travelling out for you. CBN has agreed to keep 10% of the foreign reserve in gold.

It is common knowledge that most government companies that were sold and not functional are usually exposed to asset stripping. Ajaokuta Steel Company has allegedly experienced the same. What is your Ministry doing about it?
A lot of people have different sentiments and inadequate information about Ajaokuta. You talked about assets stripping in Ajaokuta, but there is nothing like that at all. You need to go to Ajaokuta; the assets are there. When the Soviet people left Ajaokuta, they left so much in terms of spares that would last several years in Ajaokuta.

The conception was for Ajaokuta, Itape and Aladja Steel in Warri, for all three to be connected. At some point, some spares were moved from Ajaokuta to Aladja to repair what was missing there, so there is nothing like assets stripping in Ajaokuta because it stands on its own. A lot of people say there is a budget about N2billion to pay salaries in Ajaokuta and this salary is what is keeping Ajaokuta; otherwise, it would have been a ghost town. The sum is being used for maintaining the equipment; so they don’t dry up.

Can you give us an insight into the contribution of the solid minerals sector to the country’s Gross Domestic Product?
Yes, if we do a little research, we would realise things have changed. As of 2005 when the data started to be recorded, we were contributing less than 0.3 per cent to the GDP; as of 2018, it increased to 0.5 per cent.

It was quite an improvement like about less than a billion naira as revenue for mining. In 2019, it was the highest in history; we exceeded N5 billion. In 2018, we had about N3.7billion, and 2017 was our highest, it was about N4 billion. But, these figures are mere estimates, not approximate. For 2019, we will have a higher figure soon, but it is definitely going to be over N5 billion. Since the government returned attention to the sector, there have been gradual improvements in revenue contribution.

Over the years, successive governments have paid lip service to an exploration of the mineral resources apart from oil. What is being done to turn the potential resources to reality because it is not helping the country?
Yes, if you have lost focus along the way, you have to find your way back. From a sector that is not contributing anything at all, it may be small now, but it is a gradual ride.

If you look at the chart graphically, it is going up- from less than N100 million, it is close to N5 billion and more than that as revenue. However, as big miners are coming, this will be a significant leap for Nigeria in terms of revenue.

What measures are being put in place to fast track mineral resources exploration?
We currently have quite a number of foreign investors. Some of them are not as prominent.

We have Kogi Iron which is listed in the Australia Store Exchange. We have African Iron, which is composed of some people who are more or fewer Nigerians, they are also listed.

The largest investment in 2019 in the sector is actually in steel, a company that is based in Nigeria and the steel plant is somewhere in Kaduna State. I was there about three weeks ago.

There are quite a number of investors that are coming up in Nigeria, I don’t want to advertise anybody, apart from talc exploration there are a lot of people like that.

We know that Russia, then under the Soviet Union, built the Ajaokuta Plant. Is Russia coming to build a new company or renovate it?
The Russians are coming to build and run the place on a build-operate-and-transfer model. They will operate it for a while and transfer it to Nigeria. That is what we are working on so that the project will not involve Nigerian money.

They are going to build and operate it for a while to realise some revenue from them until it bounces back to Nigeria.

We have tried a concession about two times in the past which did not work, and that was strictly commercial. This is why we tried this option now, using government to government. Whichever company is recommended to us by the Russians, will be backed by the Russian government.

Most mines are under the control of states. How are the governors responding to the steps being taken by your ministry?
Yes, we have seen about four understanding governors. I don’t want to mention names; there is a governor I told about the steps we will be taking, but he kicked against it, saying the resources belong to the state. But I gave him a simple analogy that, if tomorrow, the government of Rivers and other oil-producing states insist on controlling the oil in their domain, there will be no money to go the Federal Allocation for sharing every month. You have got a lot of potential in all the states, but before the potential is realised, a lot of states in Nigeria will collapse.

The governors have their concerns, but so far, so good, the governors are listening. And of course, we continue to dialogue with them, and they are beginning to realise that we can do it together just like we have done in the oil and gas sector.

What will be the new conception of Ajaokuta Steel Company, will it be a standalone or an integrated steel plant to feed others like Aladja Steel Company, which are more or less moribund?

You placed the Aladja and the Ajaokuta the other way round. Yes, it was an integrated system. Everybody relies on the Ajaokuta; it is supposed to produce for Aladja.

The same thing applies to Oshogbo, Jos and Katsina. Those ones are built along with Ajaokuta, but Ajaokuta will produce the raw material which can be converted to other goods, and that is the basic thing. But when everything went down, some of these firms were privatised, and they are no longer with us. But Ajaokuta is the mother that produces, and this industry, of course, will be a major pillar for the country’s revenue generation. For instance, Aladja is in private hands now, and the people who bought it came to my office. They want to import billet to produce in Aladja, and they found out that couldn’t work.

You can’t bring billet into Nigeria and start producing reinforcement; your cost is already beyond the market price for steel, so you can’t compete. Ajaokuta is the way out. By the time Ajaokuta produces the raw materials for all the industry including Aladja, which is now a privatised, of course, Ajaokuta will deal with them commercially- Osogbo, Jos, Katsina, and also people that will come after that.

We know that Nigeria and Russia have reached an agreement on completing the Ajaokuta plant. How will the project be funded?
African Export-Import Bank (Afreximbank) is bringing $1billion to the table, and the Russia Export Centre is bringing $460million; these are the amount so far. It is a slow process because we are dealing with the government; the funny thing was that while we were in Sochi, the agreement was reached between Presidents Vladimir Putin and Muhammadu Buhari. Immediately after the meeting, we contacted the office at home, we drafted an MoU quickly and gave it to the Russians, and they said it is not done that way.

So, I have to give the MoU to our own Foreign Affairs Ministry, which is the way they do government-to-government business. We couldn’t do it quickly, so we brought it back home, sent it to the Foreign Affair, which will, in turn, send it to the Foreign Affairs Ministry in Russia, and then now send to the ministry.

So, it is a foreign concept but it is better for us. Definitely, we will get there; we have done things commercially in the past, which never worked. I think we should be patient with this government-to-government thing, it will work for us. At the end of this month, it should be signed.

Receive News Alerts on Whatsapp: +2348136370421


No comments yet

Related