Buhari sincere about diversifying economy —Mines and Steel minister

Minister of Mines and Steel Development, Mr Olamilekan Adegbite, on a recent courtesy visit to TRIBUNE House, Ibadan, spoke on activities of his ministry. Excerpts:

 

OUR mandate as a ministry

President Muhammadu Buhari gave us a mandate to, through the Ministry of Mining and Steel Development, diversify the economy, to reduce our reliance on oil and gas, create employment especially for the youth and generate revenue for the economy. That is our focus in the ministry.

 

Plans to resuscitate Ajaokuta Steel Mill

Ajaokuta Steel Company Ltd is a company that can be regarded as a child that refuses to live. There had been several attempts in the past to resuscitate Ajaokuta and it seems bedeviled by myriad of problems. But, President Muhammadu Buhari said we must get it right this time. This is because if we get Ajaokuta right, it portends a lot of positivity for Nigeria, in terms of employment generation. The plant itself is meant to employ about 1,000 engineers because the technology being used there is called the blast furnace technology which you don’t switch off. So, there are three shifts on a daily basis and the plant keeps churning out liquid steel. Also, there will be opportunities in the upstream sector. About 14 minerals go into the production of steel and people will be engaged in this. Fortunately, for us in Nigeria, we have those 14 minerals. The whole idea is to encourage entrepreneurs to go into these. Someone might want manganese which is one of the things we use in steel production. We find a location for such person to mine manganese, then, we give a forward contract of between 10 to 20 years. Once you are sure of your market, your financiers will give you money. The best clay found for Ajaokuta is in Oshiele, Abeokuta, when it was being built.

In the downstream, there is a lot there too. When Ajaokuta was conceptualized, three steel rolling mills were also built at that time in Osogbo, Jos and Katsina. These steel rolling mills are moribund today, though they have been privatized. But, if Ajaokuta were to come alive, these industries will come alive as well because they are supposed to be off-takers from Ajaokuta to produce. So, for them to be active, they need to start importing what they need, which will make them less competitive and they won’t be able to sell and that is why they are comatose. If Ajaokuta were to come alive, all these companies will come up again and they will employ so many other people.

Besides that, Ajaokuta portends a good omen. If we are able to start it, producing liquid steel, then we can catapult ourselves into that industrial area, we can now say Nigeria is an industrial nation as we will be able to make anything. Most of the things we need here are steel based. We can make cars, fabricate anything once you have your mould, formwork, you will be able to form anything. These are the advantages and President Muhammadu Buhari is pursuing this diligently.

During the time of President Olusegun Obasanjo, we concessioned it to the Americans, it didn’t work out. So, this time around, the President said we want a government to government agreement. While we were in Russia last year, at the Russian-African summit between October 23rd and 24th, there was a bilateral agreement and we got a commitment of the Russian president to help Nigeria to complete and put Ajaokuta to work. But unfortunately that process has been slowed down by the pandemic. We had exchanged documents, signed a few things, had several meetings. The company that was nominated by the Russian government to come in; in fact, they nominated the company that built Ajaokuta originally under the Soviet Union, that is TPE, to come back to complete it. They were about coming in to do a technical audit and give us a bill and we can begin to put Ajaokuta to work. The beauty of what we are doing now is that the President said we should not use Nigerian money again for the project. We have thrown a lot of money into Ajaokuta, now is the time to stop. The President’s position is that let Ajaokuta make a business case for itself which we have done and we have got funds pledged by several people. As of today, about five people are on ground. We have Afrexim Bank that has pledged a billion dollars; we have the Russian export centre that pledged about 450million dollars; we have got a company called Strongholt that is bringing about three billion dollars; there is a Swiss company called Inova that is bringing three billion dollars to the table. So, by the time we get to which money to use, we are spoilt for choice but we need to go through the audit. On that aspect, the President is trying to fulfill his mandate to make sure that we revive Ajaokuta and thereby benefit Nigerians.

 

When will Ajaokuta steel mill become operational?

I believe that there is providence in everything. Some may not have that kind of faith. I am convinced in my mind that we are doing the right thing and Ajaokuta will come to fruition before the end of Buhari’s tenure. There are challenges. When we were in Russia, last year, nobody thought of a pandemic. The Russians were supposed to come in in March for their technical audit which would have been completed by June. The contractor should have been on site now working. But COVID-19 is a challenge. We have lost time; almost the whole of the year has been lost because that audit has not been done. But we believe that because we have sincerity of purpose and with God on our side, we will achieve it. I have a strong belief in that because it is something that is good and something good attracts what is good. There is no ulterior motive with resuscitating Ajaokuta; it is for the good of the country and I pray that it comes to pass. We were looking at end of 2022 when we were discussing in October last year but nobody thought of a pandemic that would paralyse the whole world. By now, the audit should have been done, we would have had the bill, negotiated on that and they would have moved to site to start the work. But we are still hoping in God to achieve it because of what it portends for the country.

 

What is being done to promote mining?

On mining, Nigeria has several minerals. As of the last count, we have discovered 44 minerals in Nigeria. Before independence, the minerals were the commodities sustaining Nigeria’s economy before the advent of oil and gas. Crude oil was discovered in about 1958 but before then, Nigeria was quoted on the London Metal Exchange for all our minerals. We were exporting tin from Jos; exporting coal from Enugu; we were the highest exporter of Columbite to the world. But with the advent of oil and gas and the immediate gratification in that, we shifted focus. The indigenization decree in 1972/1973 slammed a death knell on mining because the few expatriate companies that were doing mining in Nigeria left. Since then, we shifted our focus. Now we are having problems as we cannot control the price of oil in the international market. Every time there is a little shift, we catch a cold in Nigeria. Some will say that this is also extractive but with a difference. With the lessons learnt in oil and gas, we must not make the same mistake in mining. In oil and gas, we were exporting crude oil and importing refined petroleum, which is bad. So, we said in mining, we must make sure that the technology is retained in Nigeria, the value chain is retained in Nigeria thereby creating employment. And because we know that what we will be mining is finite, just like oil and gas, what is most important is that in that process, the human capital should be developed with technology and training of our people. This is so that when we don’t have this anymore, that human capital development will be our asset. So we are saying that nobody should export raw ore anymore. Whatever you mine must be processed in Nigeria. Hence, we are designating certain areas as economic clusters and around the mining sites.

Government is providing the enablers to make sure that people come in there to refine whatever they have done. Government does not have to provide the equipment; we won’t be the processor; but we will provide the enablers to make sure that at that point, power is there in terms of piping gas, so entrepreneurs can come in and put in place plants like tin smelter so that instead of exporting tin ore, you do the smelting and you are exporting out of Nigeria. And that is encapsulated in our downstream policy. This downstream policy will make sure that nobody exports raw ore out of Nigeria.

Also, we will introduce pre-shipment inspection. Hitherto, people would export silver and call it lead and our royalties is based on the value of what you are exporting, which is five per cent. If a container of silver is about N200million, but you declare N20million, it means we will be charging you five percent of N20million instead of five percent of N200million. So, you are cheating government. To this end, we are introducing pre-shipment so that people who have the knowledge and equipment can check instantaneously and determine what you are exporting and pay the proper royalty. Besides that, by the time you refine, each mineral will have been separated. Minerals are rarely found pure as they usually come with accompanying minerals. Once we refine, everything is separated and we know what you are exporting.

Presently in Nigeria, mining is artisanal based. Some will say 95 percent of mining in Nigeria is artisanal. These are Nigerians who are into subsistence mining, after their daily bread and these are people that have traditionally done mining, some just found the minerals in their backyard and they are mining. So, what government is doing is not to criminalise these people, though they are not legal, rather we are organizing them into recognizable groups for them to benefit from incentives that government has put in place. One of these incentives is funding. Government has a fund with the Bank of Industry which is very inexpensive. At five percent interest rate, these people can access this fund, if they meet the conditions. Besides that, we give them training. There is a department in the ministry called Artisanal and small scale mining department. That department essentially goes out there to recognise these people wherever they are located, they take their biometrics and encourage them to come together in groups that are recognizable. Once this is done, they can now extend all these benefits like training, equipment, funding, to them. This is to also enhance employment. If you are to declare about two or three million people engaged in artisanal mining illegal, you are going to create more problems. We are encouraging them to work, toe the path of legality. What government benefits is that once they are formalized, government can now realise the royalties due. Right now, they are not captured; they mine and sell and it is not captured in the economy. But if you are able to bring them in, regulate them, government can collect royalties from this same set of people as well. We want to put mining on the map so that mining can begin to, if not rival oil, be a suitable replacement especially in times of uncertainties like this when people are not buying oil or the price is so low.

 

Focus on gold exploration

One thing that is selling now, because of the uncertainty in the world, is gold and Nigeria has that in abundance. About two and a half months ago, we presented a gold bar to Mr President which was purchased by the Central Bank of Nigeria. That is a demonstration that Nigeria has gold which we can buy in naira but can be used to shore up our foreign reserves. That LBMA gold bar that was bought then for N168million has gone up to over N200milion today. Nigeria has been able to gain that without selling oil or gas, just through its own local gold. That means we can earn foreign exchange with our gold deposits. Once gold is in the CBN vault, it is counted as part of our reserves and we are in a better position, in terms of balance of payment. But we want to go beyond putting bullion in the CBN vault, we want to do more. If you take a small chunk of gold worth about 10,000 dollars and take it to Dubai and Dubai will take exactly the amount of gold and turn it into jewelry, that 10,000 dollars becomes maybe one million dollars because they have turned it into something of beauty. Why don’t we retain such value in Nigeria? We are therefore in a process to train the trainers. We are selecting one person per state; in fact about 45 people have been selected all over the country. We are bringing in some experts to train these people for nine months in jewelry making. These people will now be supported to set up training centres in every state of the federation to train other people so that from our gold and silver, we can begin to make jewelry locally. There was a gold Dubar that we had in Kano, last month. We chose Kano because it has been known for that trade. So, Kano and Lagos are the possible candidates where we can build a souk so people can come from all over the world to buy. These are some of the things to stimulate the economy and let things happen for us. All these we are doing to contribute to our mandate of employment, revenue generation and diversification of the economy.

Currently, they are mining gold in Osun which is the first formal mining company in Nigeria. It is a Canadian company called Thor Explorations that started the process. By the end of the first quarter of next year, they will start to export gold from their mines. Fortunately, we have some refineries that have been licensed in Nigeria so they may not need to take it out to refine, rather they can refine locally and thereafter either sell abroad or to our people here who use them to make jewelry. We are confident that this will augur well for the economy.

 

Why building a rail line to Maradi is of utmost importance

Outside our sector, the President is trying. He inherited a lot of infrastructure projects that are necessary and he doesn’t have any ego when it comes to this. About 95 percent of the projects that are being done from 2015 till date are inherited projects. President Buhari is not insistent on starting his own. He has completed Abuja-Kaduna rail line, that project was started during the time of President Olusegun Obasanjo. Now, they have completed Lagos-Ibadan. We have signed on on Ibadan to Kano. Just past Wednesday, we approved at council another rail line going to Maradi, Niger Republic, which has dominated the social media. People do not see the benefits in that. Maybe we have not explained ourselves to the people why this is being done. Nigeria with its pride of place in West Africa, is losing to its neighbours. There are a few countries in Africa that are landlocked: Niger Republic, Chad, Burkina Faso. They need to bring in goods through the ports and Nigeria will have been the best place for them but there is no infrastructure. When goods land at Apapa port, they put it on flat beds and start moving them up country. One of their complaints is corruption. You clear your goods at Apapa and have to meet about 20 Customs points before you get to Sokoto, for example. Every time they stop you, you have to shed weight. So, everybody is running away. Benin Republic said they wanted to do a lateral rail into Nigeria and we didn’t agree to that because goods will come into Benin Republic and they will be able to ship it across. We declined because it will be to our disadvantage. We said let people come and use Nigerian ports and that is why the Lagos-Kano line is very important and the line now going to Katsina and Niger Republic is an offshoot of that. It is to increase activities in our ports, generate more employment, more revenue. The beauty of that particular project is that it is a German company that proposed it, it’s being funded by the GermanExim bank, 100 percent. The interest rate is 2.8 percent; the Ministry of Finance is finalizing the details of the loan but they will build it which is narrow gauge but new. Maradi is about 20 kilometres outside our border into Niger Republic so we can now transport goods to our neighbours and from there distribute anywhere. They can also pick up that rail line and take it all the way maybe to Morocco, Egypt. This is part of infrastructural design for growth. There are necessary pains we must go through. We borrow a lot for infrastructure, not for trivialities but for growth. Our decisions are well thought-out; the people in government are part of us. We do feel what the people are feeling. It is a cycle; some people are in administration today and some other people will come in later. We have been to the lowest of the lows and for us to come back we have to go through the pains to create a better Nigeria and for our children and children’s children to come.

 

How illegal mining activities are tackled

For a foreign mining company to be in Osun means we are getting it right. Yes, you hear the negative news about some of our traditional rulers being involved in nefarious activities. We are curbing that. We now have the mines police; you have a federal mines officer who is the head of affairs in every state on behalf of government. They try to nip this in the bud. Once we hear that there is an illegal activity somewhere, they go out and nip it in the bud. We work with the Nigeria Security and Civil Defence Corps (NSCDC) and the police to curb them. What they can’t handle at the state level is escalated upwards. Also, there is a security council at the federal level where the defence minister is in charge. We have the Chief of Army Staff, National Security Adviser, the Inspector General of Police, Director of State Services, and Commandant General of NSCDC. So, at that level, you can mobilise any force to counter illegalities wherever it is occurring and we have attained some success in that.

 

Environmental degradation from mining

That could have happened in the past. If you go to Jos, Plateau State, you find some old, abandoned mining sites but in the modern era, that will never happen. We have learnt a lot of lessons from the Niger Delta. To do mining in Nigeria today, you need to get what we call ‘consent’. Any land where you want to do mining is owned by some people, even if it is the state government. So, you must get the consent of the community people. For example, where Thor Exploration is doing mining in Osun, there are three communities involved. You must have the consent of every community. If anyone does not give consent, you cannot mine there. That means you need to convince the people of the benefits to them. When they give the consent, then you get your license to mine. The next stage is community agreement. These are graduated sets of promises, expectations for the people so that as the company prospers, the community must also prosper. The community agreement is to prevent a Niger Delta scenario where people protest against one company prospering while they remain the same. Also, you cannot mine without doing Environmental Impact Analysis. In that you must have your reclamation plan which must be certified by the Federal Ministry of Environment. Once this is approved, it becomes a bible that you must abide by. While you are mining, you must be environmentally conscious. And after mining, you must do reclamation so you won’t have abandoned mining sites like the tin sites in Jos. Part of the things we are doing is training so that people know about safer methods to separate minerals so you don’t endanger yourself and the people.

 

Why states don’t have control over mineral deposits in their domain

It is a constitutional issue. As of now, mining is on the exclusive list and when some governors raised this, the simple analogy is oil and gas. Oil and gas is also mining; you are just mining something that is liquid and now you want to mine something that is soild. The people in Niger Delta have supported this country for so long. Now because you found gold in your own backyard, you want to say the state government should control it. If today, Niger Delta people say they want to control their own oil, everybody should control their own mineral, a lot of states will fail. They will fail because before they are able to develop their mining sector to support the state, they won’t get money from oil and gas again. That is why we must be magnanimous to say that you are partaking in other people’s lunch, let us bring our own mother’s food to the table so everybody will share of it. States are allowed to participate in mining as corporates. They can form companies. Every state in the country has one mining company or the other with which they can participate but they cannot participate as subnationals or states.

 

Mining’s contribution to GDP and revenue projection of the ministry

The sector was doing about 0.06percent as of 2008 but now we are doing about 0.1percent which is about 1000 percent increase. But our projection is that we should be able to do five percent of the Gross Domestic Product (GDP) by 2025. By the time all the things we are doing come to fruition, we should achieve exponential growth.

 

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