Presentation by

Dr. Kayode Fayemi, CON

Minister

at the

Sectoral Debates of the House of Representatives

Session on the

Solid Minerals Sector

House of Representatives, National Assembly, Abuja, F.C.T. Nigeria

Tuesday, May 17, 2016

Protocols;

Rt. Hon Speaker;

Principal Officers of the House;

Distinguished Chairman, House Committee on Solid Minerals;

Honourable Members of the House;

Members of the Press;

Distinguished Ladies and Gentlemen;

I am honoured to stand before you in this hallowed chamber today, to share our vision with you, and to engage and debate constructively on how the Solid Minerals Sector can contribute maximally to this administration’s priority agenda of Economic Diversification.

I am here today with our Minister of State Hon. Abubakar Bawa Bwari, as well as other senior officials of our ministry. We at the Federal Ministry of Solid Minerals Development consider the legislative arm of government as critical stakeholders in the development of the sector. We use this opportunity to thank you for your sustained support of our efforts and your assurances of commitment to our cause, which you have demonstrated by convening today’s session.

I stand before you today, cognizant that as honourable representatives of the people, I am standing before the people – fellow Nigerians, who have a right to accountability in governance. I therefore also consider this an opportunity to give account of our stewardship so far in repositioning the Solid Minerals sector.

Economic Diversification – a Long Overdue National Priority

Rt. Hon. Speaker, distinguished members, ladies and gentlemen, as we are all aware, His Excellency President Muhammadu Buhari in his wisdom has made it clear that the diversification of our economy is a priority agenda of this administration. This position is a long overdue national priority which previous administrations had failed to pay attention to. Today, we are forced to face the realities of the vulnerability of our economy due to our overdependence on crude oil as our main source of revenue. Our continued dependence on oil as the mainstay of her economy is an unsustainable strategic weakness that is inimical to our long term economic growth and development.

We are glad that the exigencies of our time has occasioned a new thinking which this administration is championing, which includes amongst other objectives, the repositioning of our Solid Minerals sector as one of the frontiers of our diversification efforts.

Today’s presentation will therefore provide a high-level overview on the following issues as a precursor to what I hope will be a robust debate thereafter:

1. The State of the Nigerian Mining Sector

2. The Key Challenges to Full Potential

3. The Proposed Growth Strategy to Unlock our Full Potential

4. The Partnership We hope to Forge to Drive Success

The State of the Nigerian Mining Sector

Nigeria’s minerals and mining sector is still largely underdeveloped despite its glorious past and abundance of mineral resources for development. These minerals can be categorized according to use into five broad groups:

• Industrial minerals such as barite, kaolin, gypsum, feldspar, limestone)
• Energy minerals such as bitumen, lignite, uranium)
• Metallic ore minerals such as gold, cassiterite, columbite, iron ore, lead-zinc, copper)
• Construction minerals such as granite, gravel, laterite, sand)
• Precious stones such as sapphire, tourmaline, emerald, topaz, amethyst, garnet, etc.)

These mineral assets are available across the federation in varying mixes and proven reserves.  No corner of Nigeria today is lacking in solid mineral assets.  There is ample geological evidence that confirms a truth we have always intuited – that every zone, region and state in Nigeria has something to bring to the national table of resource riches. The task now is to effectively administer them for the good of all Nigerians and it provides a superb opportunity to build wealth even if the global mining sector is at the bottom of a cyclical downturn

Be that as it may, in 2015, the sector contributed approximately 0.33% to the gross domestic product of the country. This contribution is a reversal from historically higher percentages (about 4-5% in the 1960s-70s). Our policy goal is to return to a contribution level of 5% – 7% over the next 10 – 15 years, and the recently approved Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) is very supportive of that aspiration.

To rebuild the sector, Nigerian governments since 1999 have conducted reforms based on an important philosophical principle: government as an administrator-regulator, and the acceptance of the private sector as owner-operator. Key elements of the reformist platform include but are not limited to the following:

• Restating the constitutional exclusivity of the control of mineral resources by the Federal Government
• Development of the 2007 Nigerian Minerals and Mining Act
• Development of the 2008 National Minerals and Metals Policy
• Development of the 2011 Nigerian Minerals and Mining Regulations
• Establishment of the Mining Cadastre Office (MCO) for mineral rights management
• Establishment of the Nigerian Institute of Mining and Geosciences (NIMG)
• Enhanced geoscience data collection across Nigeria
• Establishment of control departments for Mines Environmental Compliance (MEC) and Artisanal and Small Scale Mining (ASM)

The Act and the supporting body of regulation have been designed to give Nigeria a world class legal and regulatory framework for the sector.  For example, in the design and set-up of the Mining Cadastre Office as the sole issuer of mineral titles today, a great deal of effort went into understanding the best practices globally. The Cadastre’s predecessor had overseen a cumbersome process fraught with unclear licenses, limited control, inefficiency, opacity and long delays.  For this reason, the reformed Mining Cadastre office adopted a “first-come-first-served” and non-discretionary granting of mineral titles rule.  Today, the MCO issues 6 types of licenses and permits to cover all activities from exploration to mineral production. Licenses can be granted in 30 – 45 days using transparent rules and regulations.

The Key Challenges to Full Potential

As important as these progressive steps have been, Nigeria can and should do more to build prosperity. Nigeria’s minerals and mining sector has underperformed since the 1970s, initially as a result of poor policy choices which subsequently became compounded by deterioration in the fiscal regime, infrastructure, and the shortage of investment quality geosciences data. Stretched over two decades, these challenges have since become a growth limiting constraint on the sector’s full potential.

We can categorize the sector’s challenges into 5 groups all internally focused. While we have external challenges i.e. the state of global commodity prices and markets, as seen for example in the fall of in Chinese and Indian demand, as well as Tata Steel’s exit from the UK market, these are events outside of our control. What we control is how cost efficient and competitive our mining industrial value chain is.  Thus our focus today is on factors that are an internal issue to Nigeria.  I will speak briefly to each one.

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