De-risking mining to woo foreign investors

Nigeria is a haven for 44 unexploited minerals in over 500 sites across the 36 states and the Federal Capital Territory (FCT). Despite this enormous potential, her mining sector is yet to attract substantial investor-interest to position it as a major revenue earner like oil. But, the narrative is changing. This is because of various fiscal and regulatory incentives put in place by the Federal Government to de-risk the sector and woo investors. Assistant Editor CHIKODI OKEREOCHA reports.

It was a hugely rewarding international engagement. And going by the deluge of inquiries and interest shown by prospective investors and development partners in the mining sector after last week’s “2020 Mining in Indaba”, Cape Town, South Africa, the fortunes of the sector appears set for a dramatic turnaround.

The 26th Africa’s leading mining investment forum held from February 3 to 6, this year. The forum, like previous editions, united investors, mining firms, governments and other stakeholders from around the world to learn and network, toward advancing mining on the continent.

Expectedly, Nigeria latched on the unparallelled deal-making opportunities presented by the world’s largest mining investment forum to showcase her rich mineral endowments, the investment opportunities, and the various mouth-watering incentives available to prospective investors.

The Minister of Mines and Steel Development, Olamilekan Adegbite, who led a team of experts and heads of agencies under the ministry to forum, brought investors and development partners up to speed with steps taken by Nigeria to de-risk the sector by improving its geo-scientific data.

Adegbite, who also spoke on the country’s efforts at developing a coherent downstream mineral policy to enhance its perception as a world-class mining destination, encouraged participants to take advantage of the far-reaching reforms and incentives  to support investors in the sector.

For instance, by the provision of Section 25 of the Mining Act, Adegbite said operators are granted exemptions from paying custom/import duties on imported plants and machinery.

The Act also gives allowance to a firm to set up a tax deductible reserve for environmental protection, mine rehabilitation, reclamation and mine closure costs. In other words, money for environmental remediation will be tax free.

He also informed them that mining firms also enjoy an accelerated capital allowance of 95 per cent on qualifying capital expenditure incurred in the year in which the investment is made, as well as tax holidays of between three and five years.

Also, firms may benefit from waiver of applicable royalties, even as there is the assurance that corporate income tax in the sector will range from 20 to 30 per cent, which, according to experts, is quite competitive in the international market.

Similarly, where a holder of a mineral title earns foreign exchange from the sale of its solid minerals, it may be permitted by the Central Bank of Nigeria (CBN) to retain a portion of same for use in acquiring spare parts and other input required for mining, which otherwise would not be available without the utilisation of such earnings.

Many legislations also provide for other forms of irresistible benefits, particularly to foreign investors, in that they protect their investments from expropriation. For instance, Adegbite said under the new legislation, there is room for 100 per cent ownership of mineral properties.

What this means is that prospective foreign investors, most of who have been holding back for fear of having their lawful and legitimate enterprises nationalised, can heave a sigh of relief, as their investments will no longer be taken away from them.

Adegbite stated that Nigeria has, indeed, made appreciable headway in evolving its mining industry. He said the country has improved its geo-scientific data base and developed a coherent downstream mineral policy, thus, enhancing its perception as a world-class mining destination.

The Nation learnt that the development of a robust geo-scientific data base was done through the National Integrated Mineral Exploration Project (NIMEP), which is the Federal Government’s flagship rapid response to the dearth of investible geoscience data.

Under NIMEP, the nation’s geo-scientific data is upgraded and expanded to de-risk the mining jurisdiction to make her potential more palatable to investors. Contracts have since been awarded to five certified exploration companies for further investigation into gold, lead, zinc, iron ore and rare earth metals.

The contracts are estimated at N14 billion ($45 million) and are to be undertaken nationwide. The result of the investigation will provide a commercially viable data that can be accessed by foreign investors to contribute to wealth creation, employment generation and to the national Gross Domestic Product (GDP).

The result of NIMEP, it was learnt, is expected to be released this year to further unlock the investment potential of the sector. Interestingly, minerals being investigated under Programme are considered priority minerals along the identified mineral corridors in Nigeria.

At the end of the exercise, the viable areas or mineral corridors will be delineated into concession blocks for interested investors to bid.

On its part, the Nigerian Geological Survey Agency (NGSA), which coordinates the NIMEP project, has undertaken more ground investigations nationwide to upgrade the national minerals data base to a more investible level. All geological data are being archived in a digitalisation programme handled by the British Geological Survey (BGS).

NGSA is a parastatal under the Ministry of Mines and Steel Development. It is the custodian of the nation’s geosciences information. The agency was established by an Act of the National Assembly on May 22, 2006 to  provide relevant and up-to-date geosciences information for investors.

Adegbite believes that effective mining is based on good quality geological and mineral information systems. The building of a strong geosciences base was, therefore, part of his articulated strategies to woe investors and position mining as Nigeria’s next oil.

It was the minister’s idea of enhancing Nigeria’s competitiveness as a world-class mineral exploration destination capable of attracting serious private sector investments.

The Minister in his keynote address said Nigeria is endowed with 44  various mineral types that occur in commercial quantities in more than 500 locations across the 36 states and the Federal Capital Territory (FCT). He said seven of these minerals, including coal, iron ore, bitumen, gold, limestone, lead/zinc and barite have been tagged as strategic for development.

He explained that the designation of these minerals as strategic stemmed from their potential to make significant contributions to Nigeria’s development.

“These strategic mineral assets are available across the federation as proven reserves.  We are also adopting a forward-thinking approach, by developing the strategic minerals of the future. These include minor metals such as titanium and cobalt, which are vital to futuristic industries, such as telecoms and electric vehicle manufacturing,” Adegbite said.

The Minister, welcoming investors with interest in the aforementioned strategic minerals, added that the establishment of the Investment Promotion and Mineral Trade Department was indicative of the nation’s zeal and preparedness to welcome global investment partners.

“We will strengthen the Investment Promotion and Mineral Trade Department to provide the necessary assistance investors will demand,” he assured the investors.

As part of the government’s aggressive investment drive, the ministry set up the Investment Promotion and Mineral Trade Department. It also went a notch higher by strengthening the department to provide information on investment opportunities in the industry as well as areas of linkages in the downstream segment of the mining industry.

Adegbite told the prospective investors that the structural reforms embarked upon in the sector were predicated on the principle that the government serves as a business-friendly regulator, providing the enabling environment for businesses to thrive. He said under this concept, the private sector is viewed as the catalyst of growth that will drive the sector forward.

“It is indeed a vision anchored on the foundation of eight key legislative and institutional reforms, of which the expected cumulative effect is to engender a competitive legal and regulatory framework for the sector. Underlining the vision is a strict promotion of a transparent regime that empowers patrons to build trust and ensure accountability,” he said.

The minister said, for example, that the “first-come-first-serve” and non-discretionary granting of mineral titles’policy of the Mining Cadastral Office, ensures the issuance of six licences and permits on exploration and mineral production, as well as granting of licences between 30  and 45 days using the rules and regulations.

Investment inquiries pour in

The Director=General/CEO, National Steel Raw Materials Exploration Agency (NSRMEA), Umar Hassan, confirmed that responses from would-be investors were positive as many of them have indicated interest in visiting Nigeria to explore opportunities in the mining sector.

Describing the forum as very successful, he said going by the number of investors that sought to meet the Minister, with the desire to seek for opportunities, a new dawn is in the offing for the sector and, by extension, the economy.

Hassan, who was on the trip to Mining Indaba, told The Nation that the outcome of the NIMEP project is also being keenly awaited by investors, with investors already lining up for copies of the report. He also said experiences shared by investors also helped to convince others to take interest in the sector.

The NSRMEA boss noted that some of the events at Mining Indaba that have given hope of a major turnaround in the fortunes of the sector included presentations on mining projects, highlighting developments and progress made on exploration and exploitation activities.

He said this was to attract investors to acquire equity/invest in such projects or attract more investors to the mining jurisdictions hosting such projects.

Hassan also said topical issues were discussed in form of panel discussions to share experiences and advocating for change of attitude in cases where attitudinal changes are required for the interest of the mining industry.

According to him, advances in new technologies were also key areas of such discussions, for example, the use of artificial intelligence and automation in mining.

Other discussions centered on practices that end users and investors can put in place to support sustainable mining practices.

Exhibition of products and services and meetings/networking also took place. In those meetings, equipment/services were presented to participants, investment issues discussed or meetings held with investors seeking investment opportunities.

Nigeria’s participation at Mining Ndaba, South Africa, came shortly after a similar “Investors’ Forum in London,” where Adegbite also led a  team of experts and top officials of agencies under the ministry to United Kingdom (UK) to showcase the country’s mineral and mining potential to prospective global investors.

According to him, the ongoing investment drive isin line with the mandate of the ministry to scale-up the capacities of the sector by transforming it into a strategic catalyst for domestic growth, in terms of job creation and increased revenue, while achieving a high optimal level of global relevance.

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