Solid mineral sector sees $500million proposed fund unlocking more investment

The Executive Secretary, Solid Mineral Development Fund, Fatima Shinkafi, said at the ongoing mining week that the Fund is looking at unlocking $1.5 billion worth of investment with the proposed $500 million funds.

Shinkafi made this known during a presentation on financing operations in the mining sector, where she assured that the Fund is expected to attract $1.5 billion private sector-led investment.

She said: “We are here to promote private sector-led investments, although we do have a social investment angle to the fund.”

She acknowledged however that a major challenge in the sector, which is funding mining operations and being perceived as high risk by financiers from various financial institutions.

She also explained that most financiers are cautious about this area of mining business in Nigeria, explaining further that private capital will remain a challenge because many of the projects in the country are at stage 1 or 2, “which are the stages where exploration and the feasibility studies take place. We hope to move projects to further stages where financiers are more comfortable to get involved.”

According to Shinkafi, “The official mandate of the SMDF is to act as a catalyst to spur development of Nigeria’s mining sector by undertaking targeted sustainable, profit-oriented investments and interventions in key areas, in close coordination with stakeholders in the sector.

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“We need to do things differently. Often implementation is the problem and an innovative approach is needed such as a combination of tools to solve the problems in the mining sector.”

“The fund will address the financial gaps across the mining value chain, including geoscience activities, exploration, equipment financing, mine development, production, infrastructure, and capacity building.” She made it clear that SMDF is “not a commercial bank, but a partner. We co-fund projects.”

Meanwhile, she said the nation’s mining sector could annually generate $15 billion, which also has an estimated value of gold of 1 million ounces to 60 million ounces if scaled up based on an estimated ratio of inferred reserves to inferred resources. “If we were to match the oil and gas production levels the sector would generate annual revenues of $15 billion. This is not something we can continue to ignore,” she said.

According to her, Nigerian gold valued at $1.3-billion has been illegally taken to Dubai in the last two years as informal exports indicate the tremendous potential of $2.2 billion worth of gold, tin, and lead illegally exported out of Nigeria from 2016-2018.

In her presentation, it indicated that Nigeria’s artisanal gold production has almost doubled since 2015 without any major investment recorded during the period under review, which she made it known that to date the country only produces just two percent of the total gold production volumes with an estimated 84 metric tonnes in Africa.