BUILDING PARTNERSHIP FOR MINING SECTOR GROWTH AND SHARED PROSPERITY
Protocols and Introduction
I am pleased to deliver the ministerial welcome address on the occasion of the 1st Nigeria Mining Week, organized by the Miners Association of Nigeria, in partnership with Dolf Madi Consulting, and in association with iPAD Nigeria, and PricewaterhouseCoopers. This conference is also fully endorsed by the Ministry of Mines and Steel Development, so, if I may start my remarks on this note, please permit me to draw your attention to the fact that this event is a child of promise, birthed by several mothers.
Some months back, we had the honour of facilitating a consultative session with some of the organizers of this conference. They all had their different visions and ideas of how a mining conference should be organized, but I took it upon myself to convince them to rather build on some of their existing partnerships, and pool ideas and resources together, to have a harmonized event that would be more impactful. The result is what we are seeing today, some of the most influential stakeholders in the sector have collaborated in putting this conference together, affirming the truism by Aristotle that “the whole is greater than the sum of its parts.” I therefore commend the organizers who have worked very hard, for demonstrating the new spirit of collaboration and partnerships that we are carefully nurturing in the sector, which we consider important in our efforts to deliver on our mandates.
The Need for Partnerships That Work
This administration highly esteems the ethos of collaboration, inclusion and broad based participation of all stakeholders in governance. We have established a consistent pattern of engaging and listening to stakeholders as necessary, to secure their input into policy formulation and implementation. We also encourage a very active media, civic sector, and enlightened citizenry, to hold us to account and provide constructive criticism when necessary. We spend considerable time engaging with the public because we believe it is imperative for us to mobilize Nigerians to go beyond the usual cynicism and distrust of their government, and to rally us all behind government’s efforts to reposition our economy. This is not a task that government can do alone. If we are to bring about sustainable development, and serve our long term national interests, all stakeholders must work together with government.
In the Mining sector, we have found these guiding principles particularly instructive in our efforts to reposition the sector, to achieve our mandates of increasing Mining’s contribution to GDP and creating jobs, while delivering shared prosperity to all stakeholders. Many well intentioned policies and programmes initiated in the past, achieved very little impact because it lacked the broad based buy-in and support from critical stakeholders – we are therefore guided by history. This partnership approach has been in force in the development of a Roadmap for the sector. We started by ensuring the Roadmap committee comprised representatives of every stakeholder group.
This multi-stakeholder committee submitted the draft roadmap on March 31, 2016, which was subsequently taken through an extensive feedback/validation process which included a two-day workshop with state governments and other stakeholders held in Kaduna state on May 5, 2016. It wasn’t until we had given industry stakeholders opportunities to make their input, did we approach the Federal Executive Council for approval. A number of ideas that emanated from the stakeholder engagements were incorporated into the Roadmap. Ladies and gentlemen, I am therefore pleased to announce that FEC has since approved the Mining Sector Roadmap on August 31, 2016, which now provides a pathway for the sustainable turnaround and growth of the mining and metals sector, over the short, medium, and long term. The highlights of the Roadmap and Key Success Factors in Our Implementation Plan are as follows:
- Clear Minerals & Steel Focus: We have ensured 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.
- Institutions and Governance: We are rebuilding the organizational and functional capabilities of the supervising Ministry, and ensuring the regulatory framework is enforced. That means for example that we revive and use the Mining Police to protect mine sites and our reserves, establish a Super Regulatory Agency, and ensure the effectiveness and efficiency of all departments and agencies under the Ministry.
- Stakeholder Engagement: We are improving the engagement of states with the minerals and mining sector, particularly around financial participation, revenue sharing, and recognizing the oversight of the federal government. We also will work hard 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.
- Geosciences data and information: Improving our collection and dissemination of geosciences data is also a critical enabler of success. Nigeria needs to know what we have and in what grades and quantities in order to plan more effectively.
- 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 are establishing 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.
- 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 steady supply of talent required by the sector in the future, as well as investing in infrastructure, gender equity, and improved access to finance.
It is therefore heartening to learn that many of the topics being addressed during this conference are priority areas that the Roadmap seeks to address.
Looking Ahead: The State of the Mineral Sector and the Possibilities Ahead
Ladies and gentlemen, I am certain that considering government functionaries always seize every opportunity to reiterate the place of the mining sector in the Federal Government’s economic priorities, there is no doubt in our minds that this administration is committed to executing our vision of diversifying our economy’s revenue base from dependence on Oil, and positioning the Mining sector to play an increasingly prominent role in revenue generation and jobs creation. I must however warn that the mining sector is one that requires a lot of patience. Yes, there are quick-wins in the industry which we have already started achieving; however, repositioning the sector sustainably requires consistency in policy and unrelenting political will to achieve. The challenges we face in the industry have taken several years to calcify and will not disappear overnight.
The debate continues on how we missed our opportunities in the past to leverage our vast resources to industrialise and become a great nation. How, in spite of the blessing that Oil boom after Oil boom was supposed to be to us, Nigeria’s Oil rather stunted our development potentials and further divided us in our struggles to have access to oil rent. Needless to say, the verdict of history is that we did not take advantage of our oil wealth over the past decades to become an economic superpower, but rather indulged in wanton waste, and further lost traction in our development journey, reversing the modest gains we had achieved in the growth of other important sectors such as our Mining and Agriculture sectors, as well as the supporting institutions that sustain economic growth, such as our tax-based revenue generating capacities.
As far as the Mining sector is concerned however, we have since 1999 begun to find our way out of the woods. I must emphasise that before now, the sector has witnessed some positive developments and what we are doing is building on the efforts already established by our ministerial predecessors. Successive administrations since 1999 have conducted reforms based on an important philosophical principle: government as an administrator-regulator, and the recognition of the private sector as owner-operator. Key elements of the reformist platform include but are not limited to the following:
- Development of the Nigerian Minerals and Mining Act, 2007
- Development of the National Minerals and Metals Policy, 2008
- Development of the Nigerian Minerals and Mining Regulations, 2011
- Establishment of the Mining Cadastre Office (MCO) for mineral rights management
- Establishment of the Nigerian Institute of Mining and Geosciences (NIMG)
- Establishment of control departments for Mines Environmental Compliance (MEC) and Artisanal and Small Scale Mining (ASM)
The Act and the supporting body of regulation have been designed to give Nigeria a competitive legal and regulatory framework for the sector. For example, in the design and set-up of the Mining Cadastre Office as the sole issuer of mineral titles today, a great deal of effort went into understanding the best practices globally. The Cadastre’s predecessor entity had overseen a cumbersome process fraught with unclear licenses, limited control, inefficiency, opacity and long delays. For this reason, the reformed Mining Cadastre office adopted a “first-come-first-served” and non-discretionary granting of mineral titles rule. Today, the MCO issues 6 types of licenses and permits to cover all activities from exploration to mineral production. Licenses can be granted in 30 – 45 days using transparent rules and regulations.
On the Road to Shared Mining Prosperity: So Far, So Good
In about two weeks, it will be a full year since ministerial appointments were made by President Muhammadu Buhari, and we will mark the milestone by rendering accounts of our stewardship on this critical national assignment. I must however take advantage of this opportunity to give highlights of the significant shifts and major achievements we all have worked together to achieve so far.
- Development of a new roadmap for the transformation of the minerals and metals sector by a multi-stakeholder Committee. This identified key challenges hindering the sector from significantly contributing to the GDP and outlined strategies with timelines for tackling the observed challenges. The road map has been approved by the Federal Executive Council and is scheduled for public presentation on 7th November 2016.
- Secured improved funding of the mining sector through:
- Increased budgetary allocation; and
- Intervention Funds from the Natural Resources Development Fund (NRDF) and International Development Partners through the World Bank.
While the funds from the NRDF will be utilized for geosciences data generation, improved minesfield security, monitoring and enforcement of the provisions of the Nigerian Minerals and Mining Act 2007 and its Regulations of 2011 amongst others, the funds from the International Development Partners will be used for implementing Nigeria Mineral Sector Support for Economic Diversification (MinDiver) Project.
The MinDiver will amongst others, provide assistance to a selection of mineral exploration and/or mining projects in order to assist in their development. The project will give attention to identified strategic minerals (gold, lead-zinc ores, iron ore, barite and limestone), tin ore, tantalite, columbite, gemstones and kaolin, precious stones. An advert for expression of interest was placed in the national dailies recently. I urge operators to exploit the opportunity this funding provides to advance their mining projects.
- Engaging our development partners towards implementing signed MOUs, especially those that border on geosciences data generation, storage and dissemination – an aspect considered vital in attracting mining investment into the country. Arrangements are being concluded to sign a Memorandum of Understanding between the Nigerian Geological Survey Agency and its Chinese counterpart, the Geological Survey of China (CGS) on a geosciences data generation programme, after the signing of a global MoU between the Ministry of Mines and Steel Development and the Chinese Ministry of Land and Resources.
- Improving revenue generation/collection through:
- Identification and blocking of revenue leakages;
- Review of royalty rates to reflect current commodity prices; and
- Review of mineral licensing fees to discourage mineral title speculation.
- The target of the Ministry is to achieve 5% contribution to the GDP by 2020 as against the current 0.34%.
- Facilitating Infrastructural Development through collaboration with relevant Ministries, Departments and Agencies (MDAs). Current works being carried out on the standard gauge rail line from Warri – Ajaokuta – Abuja – Kaduna – Kano and the dredging of the inland waterways will go a long way in lowering haulage costs for mineral commodities thus making previously unattractive mineral assets very attractive.
- Ajaokuta – We have facilitated the resolution of the litigation issues surrounding Ajaokuta Steel Company Limited and NIOMCO, Itakpe considered key, to Nigeria’s industrialization. With the resolution, Ajaokuta Steel Plant has been released to the Federal Government for operation or concession to a competent investor while GNIL will retain NIOMCO for a period of seven years with iron ore requirement of Ajaokuta guaranteed during this period. The resolution has therefore made it possible for the two facilities to add value to the Nigerian economy as against remaining a drain to the national economy.
- Facilitating the more effective operations of the Mines Surveillance Task Team aimed at minimizing illegal mining operations along with the negative impacts associated with such operations. This is in addition to the formalization and extension services being rendered by the Artisanal and Small Scale Mining Department of the Ministry for the purpose of making artisanal operations safer and sustainable.
- Revoked non-performing mineral titles in line with the provisions of the Nigerian Minerals and Mining Act, 2007 and its regulations of 2011 aimed at making such areas available for acquisition by financially and technically competent investors.
- Completed the revision of the Explosive Act. A draft copy of the revised Explosives Act is being vetted by the Office of the Federal Attorney General of the Federation and Minister of Justice in preparation for consideration of the Federal Executive Council.
- Cultivating Robust Partnerships and expanding the Role of State Governments in Mining Sector Growth – we have rightly identified as one of our priorities the need to improve our engagement of stakeholders at the sub-national level, particularly the state governments and communities. We realize that in order to give the states good reason to work with us, we need to create avenues for a greater degree of financial participation and revenue sharing. Accordingly, we have been able to secure approval for state governments to be beneficiaries of thirteen percent (13%) derivation from mining revenue. This is a significant shift, that signposts our commitment to facilitating a win-win situation for all stakeholders.
Also, in the spirit of cooperative federalism, we recognize our obligations to encourage a greater role for the states in the governance of the sector. To this end, we have established a Council of Mining and Mineral Resources, which will hold at least once a year with Commissioners responsible for Mining and Natural Resources at the states, as well as other relevant government officials at the federal level, academia, industry and civil society. This will be an avenue to discuss pertinent issues on the mining sector, which is of concern to the critical stakeholders. These regular meetings will also allow us the opportunity to track progress on agreed areas of collaboration.
We are also working with State Governors to revive the MIREMCO provisions of the Mining Act, so that all the key governance provisions are adhered to. We are also in the process of setting up zonal offices of the Cadastral function so that its operations are closer to the states, and there is as much transparency about the MCO as possible. Working with the National Assembly, and recognizing the role of States in implementing the Land Use Act, we will ensure alignment between the two key acts to prevent conflict. Finally, and equally importantly, we will work with States to find commercial means for them to co-invest alongside private companies to bring mining assets to market faster and more profitably.
It has been a very busy and productive year for us in Mining and we have succeeded in establishing the right foundations. But we must not rest on our oars. We will continue to nurture the right partnerships that will deliver the sustainable development of the Mining sector. Our vision for the coming years will see us deliver the following:
- Investor-friendly regulatory environment – sustained partnership approach to stakeholders and communities, collaborative partnership with selected mining companies; Artisanal miners regularized &. Supported; with sound environmental policies with increased number of proof of concept transactions brought to contractual close. Specifically, we will soon approach the National Assembly on the regulatory framework enshrined in the Roadmap, after extensive legal and legislative reviews.
- Geological prospectivity enhanced through an integrated geological database made publically accessible; Collaboration between GON, industry, academia &. tech. partners to support geoscience data collection. Provision of pre-competitive geoscientific information to mining companies to support economically viable exploration. The recent approval for the sector to access the Natural Resource Development Fund is informed by the need to focus on exploration.
- Import Substitution with an increased number of domestic manufacturers sourcing mining materials locally leading to economic impact in target areas;
- Formalisation of Artisanal Miners with an increase in the number of ASM operators inventoried, formalized, and supported through technical assistance; an increase in the percentage of mining exportation and production projects subject to formal environmental and safety inspections following good international practices; Increased production data collected from Artisanal, Small and Medium size mining operations; Coordinated Infrastructure Investments (Fit for purpose infrastructure, both to support development of sustainable mining communities and to access ports/Internal markets).
- Access to Finance: we are concertedly engaging key partners in the financial services sector such as the NSIA, the NSE and a number of the Development Finance Institutions, as well as encouraging the banking sector to increase their lending exposure to the mining sector, in order to de-risk the sector and provide more funding support for operators and other players in the Mining value chain.
- Collaboration between GON, industry, academia &. tech. partners to support geoscience data collection. Provision of pre-competitive geoscientific information to mining companies to support economically viable exploration
By and large, we are working to make Mining a major developmental catalyst for our dear country, and I count on the sustained support of all stakeholders in making this a reality. I thank you all for listening and wish you very successful deliberations.
Thank you for listening.
Dr. Kayode Fayemi, CON
Minister of Mines and Steel Development
Abuja, Nigeria | Tuesday, October 25, 2016