On the road to shared mining prosperity

Mining

Mining

On March 1, 2016, a multi-stakeholder committee was set-up to develop a roadmap for the transformation of the mining and metals sector. The Nigerian Minerals and Mining Act (2007), with globally competitive sector incentives has been in place since 2007.

However, the sector’s growth and contributions to GDP have remained less than ideal, as it accounted for only about N400 billion in GDP, or about 0.33% in 2015. Therefore, we began a process to deepen reforms, attract new investors and collaborate with a wide network of partners and stakeholders to build an attractive mining ecosystem.

On March 31, the committee delivered a draft roadmap for the rejuvenation of the mining sector, which I briefly summarise: 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. Nigeria will achieve this by focusing on using its mining assets to drive domestic industrialisation initially, and then migrate to winning in global markets. The strategy calls for a value chain based growth plan.

Building a competitive mining value chain means firms operating in Nigeria must compete on quality and cost versus global peers. Making Nigerian mining competitive means government and private sector have to share the responsibility of investing in key drivers of success such as public geosciences data 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.

The ministry’s next step as agreed at the recent National Economic Council (NEC) retreat is to swiftly share the roadmap with state governors as well as other stakeholders. We will be doing that and commencing a process for integrating their feedback into the roadmap.

As the feedback process unfolds, in parallel, we will establish an implementation team to 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, as well as their esteemed members will continue to provide critical advisory support going forward.

We will ensure all recommendations within the draft document are considered in the best interest of the nation. For example, a key recommendation is improving access to finance for miners and the sector. We intend to also intensify our engagement with the industry, financiers and professional associations to ensure a collaborative atmosphere in rebuilding mining finance.

As soon as the stakeholder review process is concluded, we shall make this road map available to the general public, so the set direction is clear, and everyone can track it as we proceed. The expectations of us are high, and we will work tirelessly to live up to them based on transparent metrics.

As this is a living document, the implementation team will continue to refine it periodically, and ensure we remain aligned as the nation embarks on this journey of sustainable mining development. At the end we want to ensure this is a national document that is supported across board, and outlives any administration. The journey for sustainability for the sector has to be a continuous one.

While rejuvenating mining is a cardinal campaign promise of the APC government, in the end, a successful delivery of the promise will be to the benefit of all Nigerians. Mining is a prosperity multiplier for many host communities and states in that it will provide both direct and indirect opportunities for many Nigerians, from engineers to truck drivers to lawyers to market women.

That said, it is also important that a note of caution be sounded. Mining has not been and will never be the source of overnight, easy monies. Companies have to place smart bets based on geosciences data the ministry helps create. Sometimes the companies are right and they upgrade their exploration licences into mining licences, creating even more jobs. Sometimes they are wrong and such capital expenditures have to be written off, with attendant job losses. Mining also carries a significant environmental burden that we must mitigate in a sustainable manner. All of us inside 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 a government is to create the most enabling environment to support risk taking by investors who ultimately are the ones that can help create the most jobs. We will do ourselves and our best interest a disservice if we insist on extracting unearned profits upfront.
Dr. Kayode Fayemi, Minister of Solid Minerals Development, made these remarks (excerpts) when the Solid Minerals Roadmap Committee submitted the draft report on Thursday, March 31, 2016.



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