Interview: KAYODE FAYEMI
What is Nigeria doing to improve the investment attractiveness of its mining sector?
KAYODE FAYEMI: We are enhancing activities as outlined in the road map in terms of regulatory certainty, incentives for investment, infrastructural development and geological data generation, while reorganising and formalising small-scale mining. We are also solving legacy litigation around assets like steel and aluminium plants.
The government has increased funding to the sector, and an intervention fund of roughly $100m was recently put in place. That has never happened before, and the fund focuses on exploration activities and access to finance for projects that have the opportunity to cross over from exploration to production. We also benefit from the mining investment fund we have in partnership with the Nigeria Sovereign Investment Authority, which provides opportunities and access for junior-level mining professionals, helping them to develop the full value chain from geological prospects to production and processing. Recently there was also the discovery of a large deposit of nickel by an Australian company in Kaduna State, and we are increasing our efforts on processing for asphalt construction.
How comprehensive is the bank of geological data?
FAYEMI: We have an agency that focuses exclusively on geological data, the Nigerian Geological Survey Agency, which is currently working in 32 states of the federation updating the mineral map for the benefit of both local and foreign investors, who are keen on getting a sense of what is available and how bankable it is, in terms of accessing finance. That first level of geological prospectivity is being updated, but we are moving to the next stage, which consists of partnering with other geological data agencies around the world. Among them are the Council of Bio-Sciences in South Africa, the China Geological Survey, the Moroccan Geological Agency and the US Geological Survey. In 2016 we started entering memoranda of understanding with all of these state-led geological agencies. The third level involves partnering with private sector exploration companies that focus exclusively on this and may have greater incentive to help organise a much more detailed bank of geological data. In addition, private explorations are happening at the same time. The reasonable expectation is that within the next 12-18 months we should have a huge bank of information, both on the greenfield and brownfield sites.
What are the challenges facing mining operators?
FAYEMI: The major challenge remains perception, but this is turning around. Even on the Fraser Index Nigeria is beginning to climb slightly, which was not the case before. There is a lot more interest in Nigeria, partly because mining is coming gradually out of recession and people are beginning to look at longer-term possibilities. Perception is still a challenge but it is one that can be overcome if we continue with our roadmap the way it is.
The second challenge is regulatory certainty: no investor wants to come into terrain where they don’t have a clear sense of integrity of contracts, and clarity of the laws, regulations and incentives. We are working on reinforcing and strengthening rather than changing the law. We analysed the regulatory framework when we took office 20 months ago, discussed it with stakeholders and found areas where there are gaps. The law has been in place for 10 years now, so it has been tested and there are issues that have arisen out of that. Some issues were not dealt with, and we believe that the strengthening of the law, and the strengthening of the partnership between states and the federal authority, would assist us greatly in resolving those issues. We are working with the legislator to improve those aspects that are a concern, but not to the point of overhauling the law completely and creating more uncertainty. The law remains essentially what it has always been but the gaps will be addressed administratively and ultimately legislatively. For now we are focusing on the former.
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