Nigeria began a plan to grow the contribution of the mining sector from the current 0.3% to 3% of national GDP in the next five years. What has motivated this focus?
Before the discovery of oil in 1958 and the boom that ensued in the following decades, Nigeria’s primary focus used to be mining, particularly coal, tin, as well as exports of columbite. However, the immediate gratification resulting from the oil sector shifted the economic focus almost entirely on petroleum, to the detriment of mining and other sectors, which has predisposed the economy to high risks given the volatility and unpredictability of the oil price on the international markets. Since 2007, Nigeria has begun a plan to diversify the economy away from its centrality on oil and gas, starting with the promulgation of a mining act to guide the industry. At one point in our history, mining made up 20% of the total GDP, but now we are down to about 0.6%; we hope this figure will grow to 3%-5% by 2025. More than boosting revenue, we hope mining will also create job opportunities.
What actions have been taken to revamp the industry and incentivize investment?
The current administration, in office since 2015, has been particularly adamant about developing strategic sectors such as mining and agriculture. In mining, the first step was to create an online cadastre system for the management of mining titles, which can be conveniently accessed from anywhere in the world. Mining has received extra-budgetary funding of between US$50 to US$80 million to finance exploration and kick-start interest in the sector. Besides providing this data, we also realized it was key to implement fiscal incentives for would-be investors: mining operators in Nigeria can now benefit from having their mining equipment shipped to Nigeria duty-free; moreover, we have instituted a tax holiday for an initial period of three years, extendable to five years. Also, foreign entities have the right to own 100% of local companies, as well as enjoying 100% capital allowance.
What is Nigeria’s mineral prospectivity and what data is available in this regard?
Based on our exploration activities including aeromagnetic surveys, we have identified 44 minerals on the Nigerian territory, of which gold, coal, iron ore, limestone, lead zinc, silver, cobalt and coltan are amongst the most important. Although we have not completed deep exploration across all 44, we selected seven strategic minerals, compiling comprehensive data through our sovereign geological agency. Gold discoveries have been the most exciting, and we are currently at the stage of deriving bankable data on potential deposits. We have presented the data collected to date at international roadshows and trade events, as well as making all the information available online.
Canadian junior Thor Explorations, one of the first movers in Nigeria, has made a gold discovery of over 1 million oz in the south-west of the country, and is now at the construction stage, on track to produce the first oz by next year. This is an encouraging starting point and a success story that we hope will inspire other investors.
What opportunities do you see in mining as a vehicle for downstream beneficiation and job creation?
Since coming into office last year, a downstream policy has been a key focus of my mandate. Many industries in Nigeria import their raw materials, even though many of these constituents are present in the country. What we lack is the capacity to process them. The new policy is looking to discourage the exportation of raw haul and instead enable the development of processing plants around Nigeria to add value to the chain and increase local employment. We would like to foster investment to create economic hubs around mining centers. By substituting expensive imports, we would be able to also conserve foreign exchange. This policy has been crystalized since August 2019, and we hope to see the first results by the end of this year.
How is Nigeria approaching artisanal mining?
Artisanal miners represent a large proportion of current mining activity at around 90% of all mining. Rather than criminalizing artisanal miners, the government accepts them as aboriginal Nigerians looking for subsistence means. As a first step in formalizing these actors, we needed to know who they are, so we started by capturing their biometric data. Today, we offer free training on better mining methods, as well as offering equipment and funding- small scale miners benefit from 5% interest rates on bank loans, while commercial banks normally lend from rates of 20% upwards. By integrating artisanal workers into the formal sector, they also become subject to paying royalties, in this way creating a mutually beneficial relationship.
What is your final message?
Nigeria is the next frontier for mining, with an open and transparent licenses system, as well as fresh, completely unexplored ground, and thus easy metallurgy and cheap operating costs: if mining costs in well-established jurisdictions can amount to about US$270/oz, in Nigeria this number goes as low as US$80. We invite and welcome investors to seize this opportunity.