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Nigeria has proposed an increased budget estimate for the mining sector

Nigeria has proposed an increased budget estimate for the mining sectorPhoto: Debswana

By Ademola Adebayo

While it is important to note that the implementation of the 2016 budget would be ongoing till May 2017, the President Muhammadu Buhari's administration has proposed an increased budget estimate for the mining sector in the 2017 budget proposal.

"Our work plan and budget for the year 2017 is inexorably guided by the provisions of the roadmap, particularly the immediate short, medium and long term targets we have set," the minister of Mines and Steel Development, Dr. Kayode Fayemi, said during a media briefing towards the close of 2016 on the ministry's journey so far.

According to the minister, the government would continue to work to make the nation's mining sector more competitive in the global mining space, and relevant to domestic needs and strategic sovereign goals.

Fayemi said the government, in line with the recently designed roadmap, would focus on priority areas of competitive advantage to drive growth of the sector.
Using the roadmap as a strategic guide

According to Dr. Fayemi, specific objectives of the roadmap that would guide the ministry's work in 2017 and include; the setting up of the Mining Implementation and Strategy Team (MIST) to drive the effective execution of the roadmap; the set-up of the Council of Mining and Mineral Resources, restructuring and reorganisation of the ministry for more efficient operations, and enforcement of established laws and regulations governing the mining sector.

Also contained in the roadmap is the need to effectively expand the coverage, resolution, and access to geosciences data in Nigeria, and the development of the full value chain capacity, from exploration to mines development, to processing and beneficiation. Already, officials saddled with this task have commenced processes that will see Nigeria updating its obsolete geosciences data.

Another prominent feature of the roadmap that the ministry would undertake is the commencement of the process of working with national and state legislatures and governments to address gaps, and resolve conflicts in mineral resource legislation. harmonizing (financial) incentives for attracting mining majors and juniors to Nigeria and catalyse investments in infrastructure.

World Bank support will drive the mining sector

Year 2017 is expected to see the full commencement of the substantive World Bank support programmee - the Mineral Sector Support for Economic Diversification Project (MinDiver) - which will be part of an overall mechanism through which the initiatives of the roadmap are expected to be realized.

According to Dr. Fayemi, MinDiver will be financed primarily through a loan from the World Bank and has been designed to deliver results in three phases: the short-term results (1-2 years post implementation), medium term results (3-5 years) and longer-term results (5+ years), in line with the roadmap.

He noted that "the MinDiver project will seek to develop the downstream sector and enhance competitiveness by providing practical technical assistance based on "proof of concept" investment/transaction and bring assets to a higher developed stage within the conventional mining cycle."

Opening of bids for Bitumen blocks

Nigeria's priority minerals will be those for which data exists around their continued commercial viability (e.g. proven reserves). The minister gave seven of such mineral resources as - iron ore, coal, bitumen, limestone, lead/zinc, gold, and barite. They have been identified as key for Nigeria's domestic industrialization and infrastructure requirements.

"In addition, selective emphasis will be placed on other mineral assets that are critical to existing downstream projects (e.g. manganese for the steel industry). For example, before the end of Quarter 1, 2017, the Bitumen blocks would be available for interested investors to bid," Fayemi said.

Industry regulation

The establishment of a mega regulatory agency which is critical for the industry is also expected to take effect this year. It is expected to comprise the existing Mining Cadastre Office as well as the Mines Inspectorate, Artisanal and Small Scale Mining; and Mines Environmental Compliance departments, as contained in the approved roadmap. This new agency, according to the ministry, would have the full independence and powers to effectively regulate the industry in a much more transparent and efficient manner, in keeping with global best practices.

Financial sector participation

Given the capital intensive nature of the mining sector, and the highly speculative return on investments especially during exploration, the FG is working with the Nigerian Sovereign Investment Authority, the Nigerian Stock Exchange and others to assemble a $600m investment fund for the sector this year has commenced capacity building on mining finance within banks and financial institutions, in order to build their knowledge assets in the sector.

Accordingly, Dr. Fayemi said given government's efforts towards increasing the funding and revenue profile of the sector, there is need for all stakeholders to partner with it, take advantage of the available funding provisions and operate in accordance with global best practices in mining to realise the dream of making Nigeria a mining destination.
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