The Federal Ministry of Mines and Steel Development says it would invest N2.5 billion in development finance institutions (DFIs) as a pilot project to support small-scale miners to transit into more established miners.
The Minister, Kayode Fayemi, who disclosed this at the sixth Sustainability in the Extractive Industries, SITEI, conference in Abuja, Thursday, said the investment would help provide loans to the miners at a low-interest rate.
The minister said the DFIs would finalize modalities and ensure that potential beneficiaries have access to the money to boost their capacity to participate in the development of the sector.
“We are working with the Nigerian Stock Exchange, NSE to introduce mining bonds. We are also working with the Nigerian Sovereign Wealth Fund, NSWF, to develop an investment vehicle for mining, which costs $500 million so investors around the world can invest and support the industry, especially small-scale projects with long gestation period and the huge likelihood of success,” he said.
On operationalizing the framework for globalizing Nigeria’s local economy, Mr. Fayemi observed the mining industry was not contributing what it should to Nigeria’s gross domestic product, GDP.
The bulk of the miners (about 80 percent), he said were small-scale miners, many of which were illegal operators.
Prior to the present administration, the minister said the output from the mining sector used to constitute about 0.3 percent of Nigeria’s GDP, pointing out that the contribution from the sector, under the administration now, had improved to about 0.5 percent.
To create the environment that would attract international investment, the minister explained that investors coming into the business of mining must be ready to meet international standards.
“Mining is an international business, and your proposal must be independently verifiable and investment bankable. You need verifiable geological data. To have knowledge of the nature and commercial viability of the minerals, in terms of quality and quantity. Geological prospecting is an international key element,” Mr Fayemi said.
He encouraged investors from the private sector to invest in the mining industry, pledging to support private sector initiatives that met the approved operational standards.
Mr. Fayemi said the Nigerian mining sector had the best incentives worldwide, with mining equipment importation attracting duty-free rates, and a tax holiday for between three to five years for companies just setting up.
He said the ministry has resolved to make the sector less risky for those in commercial environments to find mining more interesting and viable, while also encouraging companies to give equity to their local communities.
On laws governing the mining sector, the Minister said although the 10-year-old laws were in line with global standards, the ministry had not been able to effectively enforce them.
To resolve the problem Mr. Fayemi said all regulatory bodies would be collapsed into one central unit.
Other efforts made by the ministry to build the sector include a partnership with Nigerian Customs Service, NCS, to discourage raw exportation of Nigerian minerals and re-establishing the Miner’s Police to ensure law enforcement in the mining sector.
The minister lamented the dearth of mining desks in commercial banks across the country, except First City Monument Bank, FCMB and Stanbic IBTC.
The ministry’s vision, he said, was for all commercial banks to have mining desks in all their branches.
“The ministry has sat with states to mend the loopholes in the law. States can build their own mining company and the ministry would give the company license to carry out mining activities,” he said.
On environmental issues, likely to surface with the exploitation of mining resources, like the situation in the Niger Delta region, with the exploitation of oil and gas, the minister said appropriate steps have been taken to check such crisis.
“Government will not issue any license to any prospective miner without first seeing the environment al impact assessment, EIA, report, to determine areas of possible impact to the environment as a result of the exploitation of the resources in the area,” Mr. Fayemi said.