Protocols and Introduction
I wish to express my profound gratitude for the honour and privilege of being asked to deliver this keynote address at this important occasion. Nigerian Mining and Geosciences Society (NMGS) is one of the highly respected professional bodies in Nigeria. I also wish to thank members of this society for the awards given to me and the Minister of State, Hon. Abubakar Bawa BWARI as Honorary Fellows of this Society. My fifteen months at the helm of affairs has shown that the NMGS has come of age, contributing immensely to the development and sustenance of progress attained in the sector. Your efforts have yielded support for the Mining sector providing a solid platform for meaningful industries activities.
The theme for this conference “The Extractive Industry: Imperatives for Wealth Creation & Employment Generation” should be regarded as a wakeup call to all Nigerians. This re–awakening means a renewed zeal to pursue the onerous task of developing the nation’s minerals and metals sector. Since I became the minister of mines & steel development, I have come to understand the stiff challenges facing the sector in Nigeria. The prognosis of this situation is that the mineral and metal sector holds the key for economic diversification in Nigeria which is a condition for job and wealth creation.
To create wealth and build an economy something needs to be created – whether it be commodity products, agriculture, mining or mass production – wealth only comes from creation. Services do not build an economy, they assist in distributing the wealth of the creators.
Hence the mining and mining services industry is a vital source of economic activity and jobs in Nigeria and a major contributor to national income and wealth creation. Technical and business innovation is continually needed to maintain the industry’s international competitiveness and to ensure that mining is conducted in an environmentally sustainable manner that is aligned with society’s expectations. The value of all aspects of mining to Nigeria is encapsulated in the Mining Value Chain, extending from exploration and discovery through mining and processing to waste disposal. Along the chain, there are critical areas of industrial activity wherein improved efficiencies can markedly increase the value of Nigeria’s mineral resources, and aid in the discovery of new resources, thus creating enormous opportunities for wealth creation culminating in economic growth.
It is heartwarming that Mr. President had continuously reiterated the commitment of his administration to the diversification of the revenue base of our country. Expectedly, attention has shifted towards non-oil export such as solid minerals and agriculture as remediating strategy for bringing back our ailing economy. It is worthy to note that a sustainable and well – governed mining sector has the capacity to:
- Garner resources for national development;
- Create capacity for downstream value addition via establishment of resource based processing industries;
- Create capacity up – stream value addition through development of resource supply/inputs for the sector goods, consumables, technology, and general services;
- Create potential for job creation and entrepreneurship through the development of artisanal and small-scale mining.
The Proposed Growth Strategy to Unlock Our Full Potential to achieve wealth creation and employment generation
To rebuild the sector and unlock its full potential, the Ministry is pursuing a focused strategic agenda. Last year, when I attended your conference in Ilorin, I gave an assessment of what I found and our plans for rebuild the sector. That plan was recently articulated in a roadmap that will guide how we grow the industry over the next 2 decades. The road map which was approved by the Federal Executive Council August last year has the following highlights:
- Aspiration: Our aspiration is to build a world-class minerals and mining ecosystem designed to serve a targeted domestic and export market for minerals and ores.
- Where to Play: We will achieve this by focusing on Nigeria’s minerals, mining and related processing industry over a 3 phase period:
- Phase 1: Nigeria will seek to rebuild market confidence in its minerals and mining sector and win over domestic users of industrial minerals that are currently imported. During this Phase, Nigeria will also seek to expand use of its energy minerals. This phase will likely last about 2 – 3 years.
- Phase 2: Nigeria will focus on expanding our domestic ore and mineral asset processing industry. This phase will last about 5 to 10 years.
- Phase 3: Nigeria should seek to return to global ore and mineral markets at a market competitive price point. We expect this to coincide with the next commodity upswing.
- Key Enablers: Finally, strategy without the appropriate set of enablers will remain just a plan. Working alongside the private sector, other MDAs and in partnership with the legislative branch, we will facilitate investment in a range of enablers including bulk handling terminals, railroad and rolling stock capacity, technical and engineering capacity, regulatory reform, reorganization of the Ministry itself, and expansion of access to financing to drive sector transformation.
Key Success Factors and Implementation Plan
Rebuilding Nigeria’s mining sectors is a function of success on 6 key dimensions. These are:
- Clear Minerals & Steel Focus: We need to ensure that our industrial and energy minerals strategy prioritizes domestic utilization of our assets, including getting our steel sector to provide a solid backbone for the manufacturing and industrial economy. We are working assiduously to resolve once and for all the Ajaokuta situation. Just last year we signed a modified concession agreement with Global infrastructure Limited of India.
- Institutions and Governance: We are rebuilding the organizational and functional capabilities of the supervising Ministry, and ensure the regulatory framework is enforced. The capacity of our officers is being enhanced through a variety of incentives. Oversees training, local capacity building, intensive engagements with industry, improved mobility, and enhanced security for field officers – cooperation with ONSA, DSS, police and Civil Defence Corps. Moreover, my ministry has entered into cooperation with National Civil Defence Corps to promote Mines Field security. Also the inspector General of Police has approved the revival of the Mines Police to protect mine sites and our reserves.
- Stakeholder Engagement: We need to improve the engagement of states with the minerals and mining sector, particularly around financial participation, revenue sharing, and recognizing the oversight of the federal government. The roadmap already dwells on this and States are being taken into consideration – ranging from the establishment of the Council on Mining and Mineral Resources Development to the extension of derivation principle of 13% to mineral resources extraction at the State level. In line with this initiative, few weeks ago I commenced a nationwide tour of mining sites and meeting with stakeholders in Kaduna, Lagos and Ogun States. The essence is to ensure that all parties recognize their social responsibilities so we avoid issues similar to the oil sector.
- Industry participants: We are working to attract a diverse portfolio of participants from artisanal miners to junior explorers to mining majors into the industry. Our goal is to build a sector that is competitive and supportive of our overall job creation aspirations for Nigerians. To this end we have concretize our effort towards organization of artisanal miners into cooperatives nationwide. Also the Prototype Mineral Buying Centres in Zamfara, Benue, Ebonyi and Sokoto had been handed over to state as Mineral Support Centres. While at the same time, encouraging the establishment of privately owned Mineral Buying Centres. Last year, my Ministry also organized a Special Purpose Vehicle Workshop to sensitize the states on how to effectively partake in the management of their resource wealth.
- Geosciences data and information: Improving our collection and dissemination of geosciences data is also a critical enabler of success. Nigeria needs to know what it has and in what grades and quantities in order to plan more effectively. The Nigerian Geological Survey Agency is presently being repositioned to unearth the mineral endowment of the country. Additionally, a significant chunk of our N30bn intervention fund is going to exploration activities and I am sure that many of you have seen the advertisement.
- Access to Finance: We have commenced a systematic effort to build knowledge and confidence among Nigerian financial institutions to support mining projects. In addition, we intend to establish the Nigerian Solid Minerals Investment Fund, structured as a private sector oriented investment outfit to provide financing to private sector-led projects in the mining sector. The Federal Government recently approved about N30bn from the Natural Resources Fund to promote exploration for new minerals and improve the regulatory frameworks in the Ministry. The Ministry through the Federal Government is also negotiating a US$150mn loan From the World bank to commence the Mindiver Project aimed at further resuscitating the ailing sector. Today, the Bank’s Board is meeting in Washington to consider the concessional loan.
- Enabling environment: Finally, we must also create the appropriate environment to support enterprise. That will require building technical and managerial skills, and capabilities locally to ensure the supply of steady talent required by the sector in the future, as well as investing in infrastructure, gender equity, and improved access to finance.
In order to ensure that the above initiatives are properly executed, late last year I inaugurated the Mining Implementation Strategy Team (MIST) in the Ministry to oversee the work required to deliver success. The team which is led by the President of this great Society Professor Gbenga Okunola is drawn from a mix of the Ministry and outside talent to ensure we stay focused on execution and results without distracting from the core regulatory role of government. We will be providing quarterly updates on our successes and challenges, with an initial focus on getting domestic industrial demand on track again.
Should Nigeria successfully implement the proposed recommendations, growth is expected to return to the sector in the form of new exploration activity, operations and production from active mining, functional (and expanded) processing and refining capacity, and higher value-addition in exports. Already, we are seeing the green shoots of growth if we go by the evidence coming out of the NBS The net outcome will be the creation of thousands of direct jobs and potentially hundreds of thousands of indirect jobs. We anticipate contribution to mining GDP to exceed $25 billion by 2026 as industries are better able to use the output of the sector, substituting for imports. Analysis conducted by major stakeholders in the solid minerals sector, the Association of Metal Exporters of Nigeria, also indicates that we can generate at least N5 trillion annually from mining and exporting of its vast solid mineral deposits.
Opportunities in the Nigerian Mining Sector
Ladies and gentlemen, permit me to quickly give a run down of possible areas of opportunities in our mining sector in the course of this session – it is vast indeed. I, however, hope to start a conversation that will hopefully lead to more robust engagements between serious prospects and officials of our ministry, as well as other industry stakeholders – in order to provide the necessary guidance for those interested in participating in the industry. We must, however, remember that Government remains committed to its role of stimulating the deepening of the industry as facilitators, not necessarily as active players. Prospective investors are therefore encouraged to similarly engage current investors and other stakeholders that are better positioned to speak to the business opportunities. Private sector players are better positioned to leverage the ‘truly Nigerian’ creative spirit, in spotting emerging opportunities while we as government do as much as possible to help them succeed, knowing that the outcome of their success will help in addressing key government priorities such as creating jobs and increasing revenue.
Opportunities in Core Mining
Nigeria is well endowed with diverse mineral types – in fact – every single local government in Nigeria is blessed with one mineral resource or the other. Most of these minerals are at different levels of exploration and some are yet to be discovered. There are unprecedented opportunities for professionals with relevant skills to engage in mineral prospecting and exploration. I already referred to this earlier under our initiative on exploration.
Opportunities in Beneficiation
Most minerals are exported as raw materials without adding value through beneficiation or processing. This has resulted into loss of great revenue for the country. There exist abundant opportunities for mineral beneficiation especially to provide feed stock for intra-sector industrialization. The Minerals such as coal, tin, lead, iron ore, clays, kaolin could serve as entry point for many beneficiation processes. A case in point as mentioned earlier is limestone which through adequate processing has led to self-sufficiency in cement production thus adding value to the sector and creating jobs.
Opportunities in Supporting Industries
Mining is the foundation for modern industrialization. Industrial minerals most times are used in their natural state or after beneficiation either as raw materials or as additives in a wide range of applications. Most industries such as steel use limestone, manganese, coal as basic raw materials. Bauxite is the main raw material for aluminum industry while the fertilizer industry relies on phosphate, gypsum. Ceramics industry is supported by clay minerals. Kaolin as an industrial mineral is used in manufacture of paint, paper coating, and filling.
Moreover, a lot of industry and employment are expected along the mining sector value chain. The exploitation for coal resources in time past led to the establishment of rail infrastructure from Enugu to Port-Harcourt. Moreover, tin ore mining in Jos led to establishment of Makeri Smelter and a Power Plant in Jos (NESCO plant).
Opportunities in Support Services
For those interested, but who are not technically grounded in the geosciences, vast opportunities still abound in the Mining industry for you. There are opportunities for practitioners from other sectors to participate on the sides of every node in the mining value chain. Lawyers, Risk Analysts, and Business Service Consultants are required to support new companies entering into the market with business plans, feasibility studies, market research, etc.; Community Relations and Strategic Communications experts are needed to professionally engage stakeholders in the communities on behalf of companies when they begin prospecting and exploration in the fields. Also, just like in other mining jurisdictions, our industry will welcome Mining Specialist Blogs and Publications.
Governments renewed commitment to environmental justice requires Safety Experts for necessary Environment Impact Assessment; Considering Mining is a very risky endeavor, Doctors and Paramedics are needed on mines to respond to emergencies; even the welfare of different cadres of mining workers require such services as Catering and Hospitality, especially on very large mines.
Another area of opportunities is in equipment sales and leasing. Equipment used for mining is generally expensive, so not everyone in the mining industry can afford to buy all of the equipment they need. You could purchase these equipment to re-sell rent them out for a fee.
It is my honest opinion that numerous opportunities abound in this sector along the mining value chain to stimulate wealth creation and provision of employment for our teeming Youths. Nevertheless, I want to submit that for this nation to come out of economic doldrums we have to be humble, we must realize that no country has witnessed economic growth on a sustained basis in recent times without successfully integrating itself into global markets. For a country to grow, it has to be part of the global goods and services market and it must also be able to access global capital. And it is the private sector that holds the key to that integration.
If the private sector is going to deliver its full development potential in this regard, then we need to get the climate right for both domestic and foreign investment. If the private sector is to be the real engine of growth in a developing country like ours, the business leaders of tomorrow are going to emerge and lead the way; we must work together as partners to get some critical prerequisites in place. If academia is going to remain relevant, it must build links with industry and government in a mutually beneficial manner.
Ladies and Gentlemen, my vision for a New Nigeria is where development is embedded through inclusive economic growth, where wealth creation is the route out of poverty and where the private sector is the catalyst.
I want to say to you publicly, as vital players in this sector, I believe you have an incredibly important role to play in combating global poverty. We’re all in this together. I look forward to working with you but also realising that natural resource exploration is a wasting asset.
I am sure you all will agree with me that we cannot seriously talk about wealth creation through mining without addressing the issue of leakages in the mining sector in particular and the extractives industries in general. It is imperative that we take issues of accountability and transparency seriously, which will lead to increased confidence in the sector, and enable robust investments. As you may be aware, Nigeria is one of the signatories to the global Extractive Industries Transparency Initiative (EITI) (2003), and we established its local subset, NEITI, in 2004. The global watchdog of the extractive industry requires member countries, including Nigeria, to publish on a regular basis audit reports to apprise the citizens with current information and data on what extractive companies paid to governments in terms of royalties, taxes, levies, bonuses, rents etc. reconciled with what governments received from the companies for their business within the extractive industries.
So far, in the Mining sector, NEITI has conducted 5 audit cycles covering the sector in the periods 2007 to 2014. The reports revealed a progressive increase in royalties collection over the years.
Let me reiterate that the philosophical base and purpose of the global EITI which NEITI is implementing for our country, is that when information and data are provided on who paid what and who received what, the citizens including the civil society and media will be in a position to ask informed questions on the management of these resources. This public disclosure is crucial to this administration and Mr. President’s commitment to the anti-corruption is unshaken.
On this note, I wish you fruitful deliberations during this conference and look forward to your usual stimulating suggestions necessary to achieve inclusive economic growth for our nation.
Thank you for listening.
Dr. Kayode Fayemi
Minister of Mines and Steel Development