Executive, legislative discord threatens investments in mining sector
There are indications that the current squabble between Nigeria’s executive and legislative arms of government over an ideal model for the solid minerals sector’s development, is chasing away existing and potential investors, especially those from the international scene.
Both arms of government, for trust reasons, have held on to their opposing stands, thus making the investment coast unclear for major stakeholders.
The lawmakers are of the view that the government should spend requisite resources to resuscitate failed projects in the sector as well as other projects. But the executive is canvassing a private sector-driven model, which it hopes to propel via some recent private mineral deals.
One of the deals has African Natural Resources and Mines Limited, a local company with ties to Nigeria’s biggest steel producer, African Industries Limited, discovering iron ore in Kaduna State, with the plan to develop it into a $600 million integrated steel and ore company.
Nigerian mining sector is gradually becoming the toast of both local and foreign investors, given the vast business opportunities it presents. The country currently has over 44 known types of minerals of varying mixes and of proven quantities, of which some are concentrated in certain regions.
Despite the sector’s huge potential, the Nigerian economy had yet to significantly feel its impacts amid the level of activities recorded so far. Corroborating this, government says the solid minerals sector has been rudimentary and predominantly undertaken by small entrepreneurs and unlicensed, unskilled individuals.
Stating the position of the executive, the Minister of Mines and Steel Development, Abubakar Bawa Bwari, said: “Government wants to be more of an enabler and a regulator than a participant. We don’t want to put in money there. We want everything to be private-sector driven.”
But legislators argue that projects like Ajaokuta Steel Company, that has been largely idle for about four decades, should be owned by the government because the selling price may be too low, and previous private concessions failed.The Senate, last week, approved a bill that requires the government to spend $1 billion to complete Ajaokuta Steel. That amount could be doubled if the Senate also endorses a resolution that the government must recover Nigeria’s National Iron Ore Mining Company (NIOMCO), from a concessionaire, and prepare it for operation. Ajaokuta Steel and NIOMCO have been dogged by ownership disputes and incomplete infrastructure.
Despite Federal Government’s move to develop a roadmap, which is aimed at growing the industry, some stakeholders have identified opaqueness, corruption, poor corporate governance and disorganisation in the industry as major hurdles to be surmounted.It will be recalled that the Federal Government, in July this year, approved the sum of N12.7 billion for mineral exploration data generation for investors and operators in the mining sector. This was expected to create jobs, raise the sector’s contribution to the GDP and promote sustainable mining.
Even with this, significant progress has not been seen in the sector as the issue of data generation, retrieval and storage, are yet to be explored. Bwari had identified lack of effective government policies to guide and regulate the activities of operators in the sector and lack of commitment by persons assigned to run public enterprises as some of the challenges militating against the sector.
Others he said were: corruption and economic sabotage by Nigerians, unfavourable and sometimes inconsistent fiscal policies and inadequate and expensive power supply with the attendant danger of power generating sets.
President Muhammadu Buhari, some months ago, said his administration has been vindicated in its assumption that the nation’s endowment in solid mineral resources has the potential to create employment, increase revenue and reduce poverty.
He confirmed government’s policies targeted atincreasing budgetary allocation to the Ministry of Mines and Steel Development, the formalisation of illegal mining, approval of funds from the Natural Resources Development Fund to support small miners, enhancing capacity and human capital development.
The president also noted that the strengthening of the regulatory framework, enhanced transparency in the licensing process, and the ease of doing business, were also aimed at giving the industry a lift.But amid these claims, stakeholders in the industry have continued to decry the neglect of the sector, the abysmal corrupt tendencies prevalent in it and the opaqueness characterising operations in the industry, especially in terms of industry data.