FG plans N25bn low interest loan facility for miners

Nigeria’s minister of Solid minerals, Kayode Fayemi has announced that his ministry is providing an initial N25bn loan facility to miners as federal government repositions the sector to attract investments and contribute more to the economy.

The funding will be disbursed through the existing Development Finance Institutions (DFIs), the minister said at the second day of the 6th Sustainability in the Extractive Industries (SITEI) Conference, in Abuja.

The minister explained that the funding will come in form of low interest loans, focused towards building the sector, supporting the industry, while ensuring that they attract more banks.

Globally, mining business is quite capital intensive and in Nigeria, funding has largely bedeviled the sector which government now see as a good strategy to diversify the struggling economy.

Apart from the Development Finance Institutions, Nigerian commercial lenders are averse to lending to miners, only two banks in the country have mining desks.

Fayemi shares the view that the government should de-risk the sector so that banks and potential investors could be attracted.

“We have decided at the level of the Ministry to put in at initial stage N2.5bn to our DFIs, as a Pilot project to our small scale miners, who have been able to show proof of what they have been able to do.

“We are working with our DFIS to finalise modalities, so that they could access this money.

“It is not a grant,” Fayemi clarified.

According to him, the money is geared towards encouraging the local miners and growing the industry. “We give the DFIs money through the banks and develop the template that would guide access to the money. We would ensure monitoring and evaluation of the process.”

The minister said apart from this, the government is also supporting bigger players, so that they can do exploration and also transition to production.

Acting President Yemi Osinbajo had earlier announced government was providing N30bn intervention fund for the Solid minerals ministry through the mining sector component of the country’s natural resources development fund.

He had said fund will partly help provide cheap loans and grants to industry participants as well as for direct investing in foundational infrastructure.”

Speaking at the SITEI Event, Fayemi said government is also working with the Nigerian stock exchange to introduce mining bonds.

“We are working with the Nigerian Sovereign Wealth Fund to develop an investment vehicle for mining, which is huge sum of money close to $500 million‎. We are also targeting junior miners, whose projects have long gestation periods,” Fayemi explained.

With understanding that mining is not just a local business, government is now working with some global institutions, including the London stock Exchange to expose the Nigerian mining sector to the world and attract serious players.

“To do all of this, we are also ensuring that the Legal side is also sorted out,” he added.

The minister also observed that Nigeria cannot globalise its mining industry with obsolete laws and the regulations which are not competitive enough, hence the ongoing review.

“The Nigerian Mining and Mineral Act by and Large is ‎a good law, it is a 10 year old and we are reviewing it currently to fill gaps we have received as feedbacks from players in the industry.

He said government is also tackling the issue of value addition and discouraging raw exportation of the country’s minerals.

He said for instance, Nigeria which is one of the most endowed in terms of Bitumen in the world imports 80 percent of Bitumen used.

“We are working with the customs on this. We are encouraging our companies and given them 18 months before we can come down heavily against them.”

“We do not take kindly to raw exportation of our minerals because it can be processed, beneficiated and there are companies that are adding value now to what they produce. We need to work and support them,” he told the conference participants.

He also said the federal government is collaborating with states and have already developed road map and mechanisms to guarantee legal strategies that will allow states to play actively in the mining sector.

“We said the states can set up a company, approach government for a license and use that to mine.

“States have latched onto that. We have also organised a session with them on how you run a Special Purpose Vehicle in the mining and mineral sector.

He said as a result, virtually all states of the federation have approached his ministry for mining license over the last year.
“Just a week ago, we gave Ondo state government a license for Bitumen exploration and we have been doing this with many states. Ondo state set up the Bitumen Exploration Company of Nigeria  (BECON)

He said they are also looking at bringing states into the licencing regime by ensuring they have a role to play in the consent ratification.

 

ONYINYE NWACHUKWU, HARRISON EDEH & SEYI ANJORIN