FG Plans Intervention Fund for Mining Sector

• To complete bidding round for bitumen licence before Dec
Seni Durojaiye

In line with the drive to diversify the economy and create jobs through the solid minerals sector, the Federal Government has planned the establishment of an intervention mining fund.

Minister of Solid Minerals Development, Kayode Fayemi, disclosed this during a breakfast meeting organised by Stanbic IBTC Bank with investors in the iron and steel sector in Lagos at the weekend.

Fayemi, according to a statement by his Special Assistant on Media, Mr. Yinka Oyebode, noted that the fund was designed as incentives for local miners and investors in the bid to stimulate growth in the sector.
He said the ministry was already working with the Central Bank of Nigeria (CBN), the Bankers Committee and the Bank of Industry (BoI) to achieve this.

Pointing out that the intervention fund was part of the incentives government is putting in place to increase local production, he stated that the ministry was committed to exploiting the nation’s mineral endowments in an environmentally sustainable manner and establish a vibrant minerals and metal industry for wealth creation, poverty reduction, promotion of economic growth and significant contribution to the country’s GDP.

Fayemi decried a situation where the country currently imports an estimated $3.3 billion of processed steel and associated derivatives representing 80 per cent of the $4.2 billion total metal products imported per year.

He said despite the country’s relatively robust iron ore reserves, there were only 30 steel rolling mills in the country, with combined installed capacity of 6.5MT/annum. Only 18 are operational, producing about 2.8 MT/annum using 100 per cent scrap metal.

He was optimistic the government would realise its plan for a major turnaround in the sector, through a strategic support for the local and foreign investors as well as creating enabling environments, through the right policy, for mining activities. He commended a few banks that have created solid minerals desks and urged others to look into that direction as well.

In another development, the federal government is set to commence bidding process for prospective investors to explore the vast bitumen deposit in the country.

Speaking during a working visit to bitumen-bearing communities in Agbabu area, Ondo State at the weekend, Fayemi said the bidding round for licence would be for serious investors with proven work and financial plans.

Stating that the licence issuing process would be completed before the end of the year, he, however, assured the communities of government’s readiness to protect their interest through the right policy and regulations.
Nigeria has the second largest deposit of bitumen in the world, spanning approximately 120 kilometres.

Fayemi, in company of top officials of the ministry, checked samples of bitumen in Agbabu, Ilubirin and Lado. He later had interactive sessions with leaders of the communities, where he assured them of government’s support.
“We want your minerals to work for you, and we are fully ready to assist your communities to ensure that you get the best from the process”, Fayemi told the community leaders.

The minister said the federal government would partner the states, investors and the communities to ensure that the enabling environment was created. He assured them that within the next six months massive work would commence on the bitumen project.

Explaining some of the policies that would be put in place, Fayemi said emphasis would be placed on exploration and exploitation of the mineral.

Lamenting that about 80 per cent of asphaltic materials used for road construction in the country was still being imported in spite of the vast bitumen deposit, Fayemi said government would focus on ensuring that serious investors who have proven work and financial plans are given licences.

“Priority will be given to investors that would build processing plants. The processing plants will boost local production, which will in turn will help us meet local demands and create job opportunities for our youths.”, the minister said.

Fayemi stated that the major focus of the ministry was to ensure that the contribution of the solid minerals to the Gross Domestic Product (GDP) records a significant improvement from 0.3 per cent to at least 10 per cent in the near future.

Noting that the mining sector had witnessed extensive reforms since 1999, which essentially crystallised around the Nigerian Minerals and Mining Act of 2007, Fayemi said the country was again on the path to providing a transparent and workable regulatory and policy environment for a private sector- led mining.

Aside the regulatory framework which is geared towards protecting local and foreign investments, He said a lot of incentives have been put in place to encourage serious minded investors.
“The serious investors will get tax holidays and would be encouraged to bring in mining equipment duty free,” he said.

Local investors, according to the minister, would be supported through access to funding as well as equipment leasing. He however urged prospective investors to be prepared to play according to set rules and standards “ the ministry would surely subject activities of the investors to proper monitoring in order to ensure compliance with laid down procedures and guidelines.”, the Minister added.

Spokesman for Agbabu community, High Chief Toyin Enate, while welcoming the minister, lauded the President Muhammadu Buhari administration for its commitment to the bitumen project.
He said the minister’s decision to encourage state government to engage in mining was a positive step towards the realisation of the government’s diversification plan.

Meanwhile, in Ondo State has hailed the plans to allow state governments engage in mining activities. The state governor, Dr. Olusegun Mimiko, said the decision to allow states participate in mineral mining is a demonstration of the commitment of the federal government to diversify the economy and stimulate economic growth.

Mimiko stated this while receiving Fayemi in his office at the weekend. Fayemi who was on a two-day working visit to Ondo State, had paid a courtesy visit to the governor with top officials of the ministry.

The minister, who briefed the governor on his inspection of bitumen deposit in the state, also presented him copies of the Mining Roadmap designed by the ministry.

Mimiko said the decision to allow state government engage in mining has created some excitement, and has proved that the federal government is committed to the diversification plan.

He said Ondo State was set to take advantage of the development by exploring its vast bitumen deposit, a development that has led to a partnership with a foreign investment company. He said the federal government’s decision showed it is conscious of the sensibility of the states.

“The vibration from your ministry since you came in as minister has been quite positive. You are conscious of our sensibilities. We will collaborate with the federal government all the way,” said Mimiko.

He also revealed that the state government has acquired 90 per cent equity stake in the Bitumen Investment Company and is ready to utilise its mining licences for bitumen exploration.