‘ We need to de- risk mining sector for improved investment flow’
Adeyemo Titilope, the Managing Director of Geocardinal Limited, in this interview with KINGSLEY JEREMIAH, delves into strategies for fostering the growth of Nigeria’s mining sector amid mounting pressure on oil revenue.
There is advocacy for a national mining company as a way of getting more from the mining sector. What’s your opinion on this?
THE National Assembly is currently considering a bill to establish a special- purpose vehicle at the national level, limiting the influence of certain entities. This move aims to create a more open environment for private companies, encouraging widespread participation and investment.
The goal is to involve everyone in the mining sector, reminiscent of the past Nigerian Mining Corporation, which, despite inefficiency, laid the groundwork for such initiatives.
Capacity building is identified as a critical need, as many individuals lack clarity on their objectives within the sector. Notably, successful mining companies often involve foreign investors, who bring capital, technology, and expertise. Indigenous efforts have struggled due to limited access to capital and expertise.
Government policies, such as requiring the processing of resources like lithium before export, aimed to stimulate e the development of a value chain within the country. ountry. This approach witnessed in the last administration’s ministration’s policies, aimed to create jobs and positively impact the entire value chain. But right ht now, a lot of people are still exporting the raw materials even through the ports.
Nigeria’s mining laws are lauded as among the best globally, partly due ue to the influence of Obiageli Ezekwesili, who ho drew inspiration from Canadian laws. This s reflected a commitment to establishing a robust bust legal framework that aligns with international tional standards and facilitates sustainable and nd inclusive growth within the mining sector.
The government needs to o address the inherent risks in the mining sector, ector, like the derisking undertaken in the he oil industry. Unlike oil exploration, where government and individual partnerships rtnerships are crucial to mitigate the financial ancial impact of unsuccessful wells, the e mining sector lacks de- risking mechanisms. anisms.
Exploration in mining is a 50/ 50 proposition, with potential ial business collapse if desired d outcomes aren’t achieved. ved. Government intervention n is essential to de- risk the sec- tor, encouraging exploration by generating accurate data through well- supervised initiatives. Supporting institutions like the Nigerian Meteorological Centre financially can ensure the robust generation and supervision of relevant data.
With de- risking measures es in place and reliable data available, entrepreneurs can then access funds from institutions like the Bank of Industry. However, a notable absence is the lack of mining desks in commercial banks, hindering direct engagement with the banking sector due to perceived risks associated with mining ventures. To truly foster growth, there’s a need for comprehensive derisking strategies, government support, and collaborative efforts involving financial institutions in the mining sector.
Oil and gas are waning, and attention is coming to solid minerals, especially those for clean energy. Where do you see Nigeria in this?
We are incredibly fortunate to be in Nigeria, a land we believe is blessed by God and governed as a Republic under divine influence. One notable advantage we possess is the widespread availability of resources. With clean energy elements such as lithium, graphite, and copper are found in various states, except for the Niger Delta region, which I’m not entirely certain about regarding clean light. In Kwara, Abuja, and Nasarawa, we know these resources exist, but the crucial factor is understanding their quality. For us to engage in international commerce and leverage these resources effectively, it becomes imperative for the government to invest in assessing and documenting the quality of these valuable elements. Lithium and graphite, being principal components of clean energy, hold immense potential for economic growth g and global g collaboration.
However, without accurate data on their quality, it becomes challenging to negotiate and establish their worth in the international market.
Consider the analogy of a well in Nasarawa. Just as oil wells provide quantifiable data on expected yields, the government needs to take a simil a r approach in assessing the quality and quantity of our solid mineral resources in each state. This will not only enable us to understand the value of the resources but also establish a basis for sustainable development.
Drawing a parallel with the oil industry, where barrels are meticulously tracked, the same level of precision should be applied to our other valuable resources. This entails continuous monitoring, quantifying the extraction, and maintaining a record of the depletion over time. Additionally, the government should take a proactive role in assigning a cost value to these resources, ensuring that the wealth generated directly benefits the specific state.
Government is reportedly struggling to finance basic operations. Don’t you think the private sector should take on this role?
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The challenge persists in the mining sector, with nearly two decades of consistent efforts. The government must treat this matter seriously, even if it involves seeking loans for development and establishing a trust fund dedicated to the sector. Initiatives like geographical scan, resembling a peek into the land’s potential, have been introduced, emphasising not just revenue collection but a balanced return in termsof terms of resources. Like the success achieved in the health sector, where strategic investments eliminated the need for health tourism, focusing on responsible resource utilisation in the mining sector can yield substantial benefits. Just as Abacha foresaw the importance of a well- equipped National Hospital to curb health tourism, the government needs to recognise the parallel need for a robust approach in the mineral sector.
The commitment to generating accurate and comprehensive data is paramount. The analogy to the health sector draws a clear parallel – just as national hospitals need to meet international standards, the mining sector’s success hinges on the government’s dedication to building a solid foundation of reliable data. Reflecting on Abacha’s foresight, it becomes evident that without a serious commitment to gathering data, the full potential of the mineral sector cannot be realised.
We are incredibly fortunate to be in Nigeria, a land we believe is blessed by God and governed as a Republic under divine influence. One notable advantage we possess is the widespread availability of resources.
Are the skills here to develop the sector, especially now that the world is focusing on solid mineral resources for clean energy?
The lamentable state of skill development, particularly in the solid mineral sector, falls below acceptable standards, with even individuals within the ministry lacking the necessary technical know- how. The private sector, exemplified by companies like Emirate Lithium, recognises the potential and importance of the sector, prompting them to seek investments from international platforms like the New York Stock Exchange. They bring in expertise from America and Germany to develop their sites, acknowledging the magnitude of the task. While the private sector strives to contribute, individual efforts, no matter how substantial, might fall short in unleashing the true potential of the solid mineral sector.
To address this, the government must take a proactive role in development. Allocating funds to specific zones, such as the southwest, with a substantial budget ranging from N20 billion to N50 billion, can be a step in the right direction. This strategic approach allows for focused development, ensuring that allocated funds are substantial enough to make a meaningful impact. The government must move beyond sporadic disbursements, like the N40 million to Nasarawa, and implement comprehensive plans that address the root issues.
Mere M token amounts risk being insufficient, ending end up merely sustaining immediate needs without wit fostering the long- term growth and development dev the sector requires. In essence, for the solid mineral sector to thrive, the government me needs to shift its approach, focusing on sustained tain and substantial investments, strategic development dev plans, and fostering partnerships to bring b in the required expertise. This will not only onl elevate the sector but also position Nigeria asa as a formidable player in the global solid mineral market. ma
The sta age affe
The concept of federalism, akin to the American model, mo holds promise for the solid mineral sector in Nigeria. The 2007 law designates mineral ownership ow to the federal government, granting states sta the authority to establish sub- national companies com as special- purpose vehicles. This empowers em states to apply for licenses within their the regions, fostering localised control over mining min activities.
However, H some states have not fully embraced this thi opportunity, perhaps opting for shortcuts. The law provides a clear framework for states to establish est companies, like Osun’s Segilola Company Com or Kaduna’s mining development company, com as special- purpose vehicles. These entities can then apply for licenses within their state, enabling ena them to manage and even sublet mining operations responsibly.
Under U this framework, Nasarawa state government, me for instance, has the legal authority to acquire acq mines in Zamfara, as permitted by law when wh operating through their own company.