Bassey Udo:Premium Times
With Nigeria’s cash cow, the oil and gas sector, currently experiencing some strain, with declining global crude oil prices exerting pressures on the economy, Nigerians’ attention shifts to the solid minerals sector in search of alternative backing for the economy.
The Minister of Mining and Steel Development, Kayode Fayemi, in an exclusive interview with PREMIUM TIMES’ Bassey Udo, said the government’s plan to reactivate the multi-billion dollar Ajaokuta Steel Company, in particular, and the steel sector, in general, is on course. Excerpts:
PT: Government is talking about diversification of the economy in view of the negative impact of declining global crude oil prices on its revenue. But, the solid minerals sector appears not ready to move in and fill that gap. What’s holding it back?
Fayemi: There is always the wrong perception that automatically sees the solid minerals sector, particularly mining, as the immediate alternative to the challenges the country is facing in the oil and gas sector. It is quite understandable.
In the face of pressure, people must begin to look for where the resources would come from. Having listened to the president on the campaign trail, and since he assumed office, he’s never hidden his focus on agriculture and mining as the priority sectors.
However, the point must be made that mining is not exactly a quick-win sector. In order for the country to turn mining into what we really envision it to be – that is move from a mineral-rich country to a mining nation – a number of steps have to be put in place, particularly as we are starting from below zero level. Mining is an abandoned sector, for want of a better word.
Focus has been lacking over decades from successive governments. Luckily, we now have a government that is desirous of changing that. Unfortunately, government is trying to do that at a time commodity prices in the minerals sector, as you rightly pointed out, are also facing their own challenge. What applies to oil and gas also applies to mining.
But, this administration’s approach is to say: “Fine, mining is not going to produce the dollars tomorrow. But, we can make mining to acquire the necessary pre-requisites to become a serious alternative for industrialisation, import substitution, high grade export, etc.”
What we need to achieve this target is, first, to ensure our geological prospectivity, or data gathering processes in the mining sector, is qualitative and of investment grade.
Second, we have to ensure our legal and regulatory environment is not also subject to policy summersaults, which has been a huge challenge.
We cannot say today we are offering a period of tax holiday, as our law says, as part of incentives, or ensure mining equipment are duty-free, or we have a pioneer status for people setting up new industries in the sector, and tomorrow decide to change that. The market would not react positively to that kind of situation. So, consistency of our legal and regulatory environment is very critical.
Third, we must strengthen the relationship between federal and the states. If mining is going to work in Nigeria, the tripartite arrangement between the investors, federal government (issuing the licenses) and the state governments (where the resources are located), must align seamlessly.
The way government is going about it is to sort it out administratively, since doing so legislatively would take a long time.
But, there is still nothing to ensure overall that the business environment is also conducive to investments in mining. It is highly capital intensive. Government cannot do it unless it also plays its part as a country, because we are competing against people who are already established, even in West Africa.
Countries like Ghana, Burkina Faso, Cote’Ivoire, Mali and others are far ahead of Nigeria, in terms of mining, expenditure on exploration and regulatory environment. That is the challenge, which is contained in the new road map for the development of the sector. That has successfully been put through the Executive Council of the Federation.
Now that the road map is being implemented, in order to sort out the relationship between state and federal governments, for the first time government is setting up a National Council on Mining, which is equivalent to the National Councils on Environment and Health, in which both state and federal governments as well as related agencies, civil society groups, non-governmental and academic institutions, would always come together as critical stakeholders, to look at the issues affecting the mining sector and agree on the way forward.
This is the first time this is happening. It is contained in the road map, which also contains a super regulatory agency to help strengthen the regulatory environment we talked about earlier.
The agency now houses the mining cadastral office, that issues the operational licenses to prospective investors; mining inspectorate division, that monitors what’s happening in the sector – issues of illegal, informal or irregular operators in the sector, as well as our mines’ environmental compliance directorate, which looks at issues relating to health and safety practices, to enable government tackle some of these issues there are to deal with in Zamfara or Shakira village in Niger State as well as other instances of fake mining practices.
The last time I interacted with PREMIUM TIMES, we were talking about government’s vision for the sector. Now, there is a plan in place, which is being faithfully implemented.We are receiving a lot of support from both government and international institutions very interested in what are happening in the sector. The President is very keen on the plan.
PT: The issue of pioneer status granted companies coming to do business in Nigeria has taken a controversial connotation, because of waivers, tax holidays and other incentives involved. Why would the government choose to incur such huge losses on behalf of companies coming to do business to make profit?
Fayemi: The solid minerals sector is a very competitive environment. If we are going to ask companies to come and invest, we have to encourage them. This is what is happening in Ghana and other mining destinations around the world.