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Ajaokuta Steel Company: It’s A Shame We Haven’t Put It To Use – Fayemi

The Minister of Mines and Steel, Dr. Kayode Fayemi has been speaking about recent developments in the ministry.

Among some of the issues he raised were the rebranding concept, the problems surrounding the Ajaokuta Steel Company which he attributed to the level of corruption especially by previous governments as well as access to loans by small scale miners.

He unveiled his plans during an exclusive interview on Channels Television’s Question Time.

Has the change of name from Ministry of Solid Minerals to Mines and Steels aided the ministry in term of revenue drive and diversifying the economy?

Well, you know symbols are important. Yes, we often do dwell more on the substance of work that we do but people want to know the entire gamut of the responsibilities that this ministry has and that is what informed the change of name back to the Ministry of Mines and Steel. If it were to be left to me, I would even probably call it something else, I would want it to be broader, Mineral Resources may be because steel is just one component of the metals that we have, we have other metals beyond steel. But I think, for now, it’s adequate, it captures the essence of the work the ministry is doing, it also underscores the importance of steel amongst many metals that we have as a major driver of manufacturing in our country.

Let’s look at the structure for the effective delivery, we have to look at the yearnings of investors calling for an independent regulatory system for the Mining sector.

Well, the structure that we met as the ministry, as the policy making vehicle for delivering all of government’s objectives in this area and it also has a range of regulatory mechanisms including the Mineral Licensing Agency – the Mining Cadastral Office, the Mines Environmental Compliance department, the Mines Inspectorate department as well as the Artisanal and Small Scales Miners department. Don’t forget that all of these actually came under the Mines Inspectorates’ department which is an old vehicle that predates Nigeria’s independence.

So it’s that Mines Inspectorates’ department that was unbundled into those other departments that I have mentioned in addition to the Mining Cadastral Office. But what the committee that I set up came up with and which they revealed that we had with the various industry players, as well as the states and host communities arrived at is that it is important to have an independent regulatory agency that houses all of these various components of it and work is advance in that direction.

The new legal frame work has been drafted with the Ministry of Justice for its own review which is the standard practice and it will now go to the cabinet before it eventually lands in the National Assembly for conversion from a bill into a law.

Looking into your roadmap, it emphasises the need to strengthen small and artisanal miners. So how have you been able to strengthen these people in terms of having the capacity, the capital, resources and wherewithal to invest and get actively engaged in the mining sector?

Actually one of the key things we’ve done, you recall that the last time you spoke to me about this, I made it clear that 80 per cent of the operators in this sector are in that broad category that you mentioned – Artisanal and small scale miners. What we’ve since done is to encourage them to form themselves into cooperatives. In another week or two, we would be launching a N2.5bn loan scheme for those artisanal and small scale miners. We have worked out the framework with the Miners Association of Nigeria, with the Bank of Industry and our own Solid Minerals development funding the ministry and this is really a pilot scheme because we believe that in a number of ways, we can support them from being artisanal to becoming small scale and from small scale to becoming junior miners.

Do you have an effective structure for a proper certification of the small and artisanal miners?

Oh yes, we actually have small scale mining licence. And I want to make a distinction between the artisanal miners and the small scale miners. I mean if you can do business in the region of about N10m, we no longer think you’re that artisanal anymore. Between N10m to N100m, so you are a small scale miner because mining is a capital intensive venture.

But between N10,000 to N10m, you are an artisanal miner, but what you need is to find a way to achieve an economies of scale and it is only when you come together with other players in your category and become a cooperative that we can interface with you and support you either with machinery or with operating capital, which is often what is lacking in that segment of the equation and we can then structure it in such a way that the money that we loan you or the Bank of Industry that we want to use, the DFI that we are using for this loans you, we can ensure that whatever you are selling, you sell it to a mineral-buying center that can be monitored.

You are talking of N2.5bn, how many small and artisanal miners are you anticipating to benefit from this scheme?

Well, it depends. The bulk of that will help those who are willing to come together in a cooperative and this is not a grant, this is a loan scheme with a loan interest rate. We are looking at an interest rate of between five to seven per cent, that’s what we are negotiating with the development finance institutions we are working with. But the important point is that people begin to see value in the formalising their involvement in the mining sector because the informal nature of the sector is what we consider to be a challenge. It will not grow if it continues to be informal. We cannot have a proper record of the volume of trade taking place in this sector if it remains informal. But the more of them we can bring into the formal structure, the better it is for them.
So how many are you anticipating?

How many are we anticipating? I’ve said to you that we have 80 per cent of those involved in mining in Nigeria in the artisanal and small scale sector. If we can succeed in bringing even 30 per cent of that into cooperative structures, and another 20 per cent into formal small scale licencing arrangement, that would be a significant measure for us that increasingly people are formalising the operations in the mining sector.

Your ministry has been embroiled in a never-ending war with illegal miners and some of them are claiming that they have a proper certification according to the Mining Act of 2007.

I don’t know what you mean by that. I give the licences, it is my responsibility to sign these licences. And if this ministry tells you that people are operating illegally, you better believe it because we would not just say that irresponsibly. I have just recently been at a notoriously illegal mining operation somewhere in Plateau state, in Zurak, with the National Security Adviser of this country and the Governor of Plateau state. Mining licences have categories – we have a Reconnaissance licence, it just gives you the right to go and scout, just survey what is there. You move from that, you come to us and get an exploration licence.

An Exploration licence does not give you the right to mine. It gives you the right to test what you have found and you also must come back to us to say “Okay, I have found this and I need a Mineral Export licence because I want to send it to a laboratory in Ghana or South Africa or Australia.” You need to get certification from us before you even send it out if you don’t want to send it locally. The only licence that allows you to enter into a commercial operation is the Small scale mining licence, the Quarry licence for quarry operators and the mining lease. If you do not have any of these three, your operation is criminal if you mine with the intention of exporting and selling what you have mined. So if somebody has an Exploration licence and is mining, it’s illegal; there is no other way to describe it unless you have converted and there are steps to take before you convert an Exploration licence into a mining lease.

Then the Vice President when he was in acting capacity signed in the Executive order on the ease of doing business. Are you thinking of creating a one-stop shop in such a way they could bypass as bottlenecks and the Administrative bureaucracy because you’ve talked about three rigourous processes now – reconnaissance, exploration then mining.

Are you looking at how you can make it easier for people to participate thereby stimulating economic growth?

One key way we are currently developing is the entire automation of the process. Automation allows you to even check what is available before you even come to us. You can check whether an area you are interested in and the particular mineral that you want to explore is available to be licenced.

So you cough through, even coming all to way to Nigeria if you want to do that to get this information online; we will make this available online. And we are working with the investment centre we have at the Ministry of Trade Corporation because we have a mining department there, you have mining officers there too that can be approached.

Is there enough awareness to this because many people say the mining has been shrouded in secrecy?

Well, we have an investment promotion centre in the ministry that tends to give as much information as possible.

I’ve also told you what we are doing to make this information available online. We are also working very closely with the Ministry of Trade and Investment and we have our officials there to provide the necessary information on what is happening. The truth of the matter is that if you dig, you will find. But if you are not curious enough to dig, even if we throw the information at you, you may not be able to make much use of that information.

So, it is our duty as a ministry to open up the space and make the information as available as possible. And that’s why we are always actively engaging both the local mining promotion event as well as in the core international mining activities – The mining in Darbar you will find us there, the African Indaba in Australia, you will find the ministry there, the PDAC in Canada, the Mines and Money conference in London, we always make sure we showcase what Nigeria is doing in all of that. We are also locally organising Mining summit.

In terms of Foreign Direct Investment, what has been the impact of the ministry?

We’ve had a lot more interest showing in the mining sector in Nigeria both in terms of concrete exploration activities as well as even associated mining activities like leasing of equipment. There’s been an intense increase in activities which is in fact in direct contradiction to the recession that Nigeria is experiencing.

You remember you expressed some optimism in which some people felt was a kind of unrestrained optimism about the potential of the mining sector. Two years after that, would you say you have delivered on your promise?

Well that optimism (that optimism) was not misplaced. If you check the National Bureau of Statistics figures, you will know that mining and maybe Agriculture are the only two sectors that have actually grown at a time that the country is experiencing a lot of challenges but we can still do a lot more than we’ve done.

What we’ve put in place are the structure that would make mining grow at an exponential rate and once these structures are there, it is easier to begin to notice. We’re doing a lot to retrieve and solve the problem of ASCON (Aluminium Smelter Company of Nigeria Ltd), Ikot-Abasi dealing with the issues relating to Ajaokuta steel plant.

We understand that the Federal Government to generate 30 per cent of its total power supply to the country from the Coal to Power project. Do you think this is feasible?

Well in a number of ways, we have the resources (the mineral resources) relating to that are here. Some we have conceded to the Bureau of Public Enterprises to concession to willing investors and almost on a weekly basis, people approach us here to do that – South Africa Mining Corporation, Polish Mining Corporation, you name them.

There are strong indications that the World Bank may not just be financing the Coal to Power project. Is this be a setback?

How can this be a setback? Nigeria is a sovereign state for goodness sake. When I read stories like this, I just shudder. Does Nigeria exist only on the sufferance of the World Bank?

But this is a capital intensive project?

It is a capital intensive project. There are people, there are investors that know the value of gaining access to our coal mines and what they could do to those coal mines in term of coal to power generation. Once you are not interested in just a quick phase, if you are in it for a long term, you know the benefits that will come from it.

So not having World Bank funding is not going to dissuade us. I might add that if we are so keen on international funding for it, the Africa Development Bank has expresses an interest to fund our Coal to Power initiative. So I don’t see that as a setback at all. It’s in fact as a fillip to push us to look for more creative ways, to look for serious minded investors to come into the sectors. And that’s exactly what we are doing.

What incentives are you creating?

The number of local, local investors are already creating power from coal. This is what people don’t particularly pay attention to. I can confirm to you today that Dangote cement factory in Obajana is generating 100 megawatt from coal and this is a recent development; Lafarge is generating almost a similar amount from coal. Ashakacem is also developing Coal to Power initiative, that’s just on a local scale. Then Adozu want to come in and do this on a much bigger scale. I don’t see any reason why it’s not possible to meet that target that the Ministry of Power has set for Coal to Power generation.

Let’s come to the issue of the Ajaokuta steel company. Many people feel that it’s a tragic, never-ending fairy-tale. What is the situation?

The status of the Ajaokuta steel company is that we are getting it back. It is a Federal Government of Nigeria’s owned company. Let’s start with that. Nigeria decided to concession it out to a private investor, that didn’t work out well. A government came, that government revoked the concession. We ended up in the London court of international arbitration. We have now resolved that mediation. What we are doing currently opposed mediation activities in the sense that we agreed to give the National Iron Mining Corp company back to the concessionaire whilst taking the Ajaokuta steel plant back into the Federal Government coffers with a view to re-concessioning it.

So that’s where we are currently?

Some people feel the Ajaokuta steel company has been an institutional conduit to siphon money from the coffers of the Federal Government.

Well it might have been, I don’t know, I have no evidence to suggest it’s a conduit but Nigeria has expended a lot of money – not less than $5bn has been expended on that particular facility and I think it’s a shame that we have not put it to use. So we as a government, President Buhari made that clear on a campaign trail that we would put Ajaokuta to use.

Let’s look at the 2007 Mining Act, do you think there are some necessary areas for amendment?

Well first and foremost, let me say that the Mining Act is a good law. I’ve always said that. But with every law, you on the basis of experience, discover gaps that need to be corrected and that’s precisely what has happened.

Some people are of the opinion that the Ministry of Mines and Steels Development may continue to grow up in the dark if it doesn’t deal with the unbridled influence of the cabals in the sector.

Well, no cabal call the shot here in the mining sector. We encourage all players. Yes, there are big players and we want the big players to thrive. At the same time, we want the big players to thrive at the detriment of the small scale players that are working hard to grow. It’s a complementary relationship, it’s not a conflictual one.

Before we wind down on this conversation now, how do you see the future of the mining sector in line with job creation, diversification of the economy and stimulating economic growth?

Mining depends on predictability and credibility. Mining will not thrive if we do not have resources put into mining. So one, we must ensure that we enforce the laws that are already said are good laws because part of the problems we’ve had is lack of enforcement. You see me going round Nigeria tackling illegal miners is to send a strong signal, but I’m not just doing it on my own. I have also set up a machinery. For the first time in 30 years, the Mine Police is back.

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