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Proposed $500m investment raises hopes for mining sector




Efforts to revitalize Nigeria’s mining sector received a prominent boost on Friday when the Executive Secretary, Solid Mineral Development Fund, Hajia Fatima Shinkafi, disclosed the Fund’s proposed investment of $500 million in the sector.

Shinkafi, who made this known during a presentation on financing operations in the mining sector, as part of the just concluded 2020 Nigeria Mining Week, assured that the Fund will also unlock $1.5 billion of investment as it is poised to promote private sector-led investments.

Nigeria has sizable untapped deposits of metals, including iron ore, gold, zinc and lead, but almost all extraction is done on a small-scale or manual basis. Available statistics show that Nigeria’s gold valued at $1.3 billion has been illegally taken to Dubai in the last two years as informal exports indicate tremendous potential of $2.2 billion worth of gold, tin and lead illegally exported out of Nigeria from 2016 to 2018.

It is also on record that Nigeria’s artisanal gold production has almost doubled since 2015 without any major investment recorded during the period under review. Till date, the country only produces just two per cent of the total gold production volumes with an estimated 84 metric tonnes in Africa.

The Nigeria Mining Week has established itself over the past five years as the preferred mining showcase for technology providers where business happens. It is the one annual B2B gathering for the entire mining value chain in Nigeria where the hot issues get tackled and has become a key driver for the industry to leap forward.

The annual gathering aims at providing support for the development of the local workforce and the mechanisation of the industry and facilitating the dialogue between private and public sectors across the value chain, to boost the future of mining in Nigeria through collaboration and partnerships.

The conference and exhibition are organised by Miners Association Nigeria, MAN, and is hosted by the Ministry of Mines and Steel Development in association with Clarion Events and PwC.

This year, the federal government has reaffirmed its commitment to the rapid development of the country’s mining sector in the post COVID-19 pandemic environment, with a target to increase the sector’s contribution to gross domestic product (GDP) to 3% by 2025, from less than 0.1% currently.

This was the message from Minister of Mines and Steel Development, Architect Olamilekan Adegbite, while addressing the opening session of the mining week digital event. The first session titled “Mining as a driver of economic recovery: Collaboration for a dynamic industry” featured speakers from the Power and Environment ministries, the Senate Committee on Solid Minerals, Mines, Steel Development and Metallurgy, the Solid Mineral Development Fund (SMDF), Miners Association of Nigeria (MAN) and PWC Nigeria.

Setting the tone for the event, the opening discussion provided an overview of the Nigerian mining industry and an understanding of how key stakeholders can collaborate  to unlock mining exploration, production, processing and export activities which will contribute to the nation’s economy as a whole.

Lamenting that mining, which contributed about 12 per cent of the country’s GDP in the 1950s is now neglected, the minister said the government intended using the mining week to kick-start the process of bringing back the glorious days of mining and put Nigeria back on the mining map of the world.

“This year, we are hoping to have 2,000 participants from all over the world that will join us. We are looking forward to attracting big formal sector mining companies into Nigeria,” he added.

Adegbite reaffirmed the country’s commitment to grow its mining sector, saying that the success of the Nigeria Mining Week is a unique platform for achieving this success.

Incidentally, the conference came at a time Nigeria’s first industrial gold project is on course to enter production, with its success being crucial for boosting mining in the country.  Thor Explorations Ltd is spending $98 million to develop the project, which will have an annual average output of 80,000 ounces. The Canada-based company’s Segilola mine in Osun State should yield gold by the end of the first quarter of 2021, Adegbite told reporters in Abuja recently.

Thor is “the proverbial company that dares to jump in the shark-infested water and see whether it survives,” Adegbite said. According to the minister, progress at Segilola will be key to attracting other mining companies to Nigeria, especially as the country offers incentives including tax holidays and customs waivers on imported equipment..


.Also speaking, president of the Miners’ Association of Nigeria, Alhaji Sani Shehu, said , “The annual gathering is aimed at providing support for the development of the local workforce and the mechanization of the industry and at facilitating the dialogue between private and public sectors across the value chain, to boost the future of mining in Nigeria through collaboration and partnerships.”

He added that with a network of industry leaders, investors, visionaries and pioneers, transforming the face of mining in the country, Nigeria Mining Week would afford the opportunity to uncover the latest projects, meet new partners, and land new deals”.

Fueling the boost

In her presentation, Hajia Shinkafi said: “The SMDF has been structured and positioned and is ready to invest $500 million to unlock $1.5 billion in third party investments and financing in the mining sector.  We are here to promote private sector-led investments, although we do have a social investment angle to the fund.

She, however, acknowledged that a major challenge in the sector, which is funding mining operations and being perceived as high risk by financiers from various financial institutions.

She also explained that most financiers are cautious about this area of mining business in Nigeria, and asserted that private capital will remain a challenge, because many of the projects in the country are at stage 1 or 2, “which are the stages where exploration and the feasibility studies take place. We hope to move projects to further stages where financiers are more comfortable to get involved.”

“The official mandate of the SMDF is to act as a catalyst to spur development of Nigeria’s mining sector by undertaking targeted sustainable, profit-oriented investments and interventions in key areas, in close coordination with stakeholders in the sector.

“We need to do things differently. Often implementation is the problem and an innovative approach is needed such as a combination of tools to solve the problems in the mining sector.”

However, she expressed optimism that, “now, with post-COVID, I am very hopeful, the human race is resilient. We need to be innovative with regards to finance.

“The fund will address the financial gaps across the mining value chain, including geoscience activities, exploration, equipment financing, mine development, production, infrastructure and capacity building.” She made it clear that SMDF is “not a commercial bank, but a partner. We co-fund projects.”

According to her, the nation’s mining sector could annually generate $15 billion, which also has an estimated value of gold of 1 million ounces to 60 million ounces if scaled up based on an estimated ratio of inferred reserves to inferred resources.

“If we were to match the oil and gas production levels the sector would generate annual revenues of $15-billion. This is not something we can continue to ignore”, she said.

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