This among others was contained in a communique issued at the end of a two-day workshop on financing the Nigerian solid minerals sector through the capital market and the critical role of the commodities exchanges.
According to the communique, there is a need for the capital market community to ensure that the market infrastructure that supports the bringing mining ventures to the capital market is in place while protecting investors.
“All stakeholders should be involved in promoting sustainable practices and ESG standards within the mining industry while the FMMSD is to ensure the availability of geoscience data, given that it is essential alongside relevant market data in enabling intermediaries and commodities exchanges to structure products for the mining industry, it stated.
The participants also agreed that the FMMSD should collaborate with the SEC and other stakeholders to develop capacity in the industry and address the issue of interference in mining activities by the State Government, which is identified as a major challenge faced by mining companies. In this regard, the FMMSD is to take concrete steps to resolve the conflict in State and Federal laws as well as overlapping oversight.
“SEC and FMMSD to interface on how to utilize the Feasibility Studies and Competent Persons’ Report (FSCR) to enhance due diligence in the fundraising process while key stakeholders are expected to collaborate in continuously de-risking the mining value chain to encourage confidence in prospective investors and venture partners,” it said.
Executive Commissioner Operations of the SEC, Dayo Obisan, said the solid minerals sector possesses immense transformative potential for sustainable economic growth in Nigeria capable of contributing significantly to economic diversification and sustainable development goals.
Obisan said: “With over 44 minerals discovered across the Federation, the mining industry can play a vital role in diversifying our economy away from crude oil dependency. The FMMSD has embarked on various initiatives to increase the sector’s contribution to Nigeria’s GDP from 0.5 per cent to approximately three per cent by 2025.
“However, despite the sector’s vast potential, the mining industry in Nigeria has faced significant challenges, with one of the most critical being inadequate access to capital. The traditional sources of capital, such as bank loans are a total mismatch in terms of capital structuring for the project types in the mining sector, leading to the importance of long-term sources of funding required for mining projects.”
He said financiers’ perceptions of the high risks associated with mining have led to limited opportunities for raising capital, making it a pressing concern to attract strategic investors into the sector adding that the sector requires investments in various stages, from exploration to development, and investors need to be convinced of the potential for quick wins in mining.
“Today, we come together to address these challenges by providing appropriate capital structuring and creating an enabling environment for mining companies to raise funds through the capital market.
“We all acknowledge that the success of any industry, including mining, is heavily reliant on access to adequate and sustainable funding. The peculiarities of the mining sector, such as high upfront capital requirements and lengthy development periods, make it essential for players in this industry to have access to long-term financing. This is where the capital market steps in as a catalyst for economic transformation.
To address the financing challenges faced by the mining industry, the SEC Commissioner said stakeholders must recognize the crucial role of the capital market in providing much-needed funding for large-scale mining projects as the capital market offers a wide array of financial instruments and products, attracting long-term investments and diversified sources of funding.
