Fayemi unveils robust plan to expand Nigeria’s N400bn mining sector

Nigeria’s perennially underperforming mining sector may finally gain traction to add more value to the national economy, as Kayode Fayemi, minister of solid minerals development, on Monday, unveiled plan, he says is capable of transforming the entire N400 billion sector from a marginal player to a team leader in shaping the economic fortunes of the country.

Addressing a maiden press conference on Monday, Fayemi said his focus would be to leverage investments and address the huge funding challenges in the sector and also bring the informal miners into the mainstream.

But Fayemi warned that going forward, the Mining Act would be firmly enforced as he gave the March 2016 deadline for all companies with mining licences that have failed or refused to put them into active commercial use to comply or have them revoked.

He said his ministry would focus a lot on industrial minerals that would help reduce import substitution and cut down on foreign exchange spent on importation of input for the manufacturing sector.

Funding in the sector has been a challenge, for the sector which Fayemi noted was capable of generating a million direct jobs and many indirect jobs, contribute double digit figures to the GDP and could also generate revenues as much as the oil sector.

However, total capital allocated to the solid minerals’ ministry in 2015 was only N1 billion, out of which only N352 million has been released.

Another constraint is that the banking industry’s contribution to the mining sector is less than 1 percent.

In order to remedy this situation, Fayemi said he would work to revive the solid minerals development fund, he said needed to be structured in a manner that reflected the sector as a business and not a commission development project.

The minister informed that he had already met Godwin Emefiele, the CBN governor and all bank executives at the just concluded bankers’ retreat to ensure that the fund, seen as a financial asset but which has not received any funding since being set up beside the recurrent expenditure to pay staff salaries.

“While we make every effort to get the Federal Government to support it, we are planning to restructure it to be like the NIRSAL fund that becomes the basis for funding the agriculture sector,” he said.

He also disclosed that a constructive mechanism has been started with the Central Bank of Nigeria (CBN) and commercial lenders, with the aim of raising funds so as to broaden lending options for Nigerian miners.

Nigeria is known to have at least 44 known mineral assets, including precious minerals, base metals, bulk minerals, as well as rare earth minerals.

“We are in early stage of the discussion with the CBN and various financial institutions. I have just received the feedback from the committee set up to look into this,” he stated.

At the moment, much of Nigeria’s mining is conducted informally at levels as high as 80 percent in some regions of the country.

This, Fayemi said, could be reversed by making the moribund Ajaokuta Steel and many other steel plants like it to work, and that the country would have a direction on the company by first quarter of 2016.

“We need to fix Ajaokuta and we will do it,” he further stressed.

Fayemi noted that based on current data from the ministry of solid minerals development, Nigeria’s solid mineral sector contributes a paltry 0.34 percent to gross domestic product (GDP), amounting to about N400 billion.

“While this is a significant role, it is smaller than its true potential, as the vast majority of our mining assets are yet to be exploited,” Fayemi said.