On the sideline of a ministerial retreat in Ibadan, Oyo State, Minister of Mines and Steel Development, Mr Olalekan Adegbite, speaks to DARE ADEKANMBI on the clamour for states to take ownership of the solid minerals in their domains, effort to revive the Ajaokuta Steel project among others.
Many people have been saying for us to have fiscal federalism, there is the need for the state governments to be allowed to take charge of the minerals in their states. What is your take about this?
There are two angles from which you can look at. One, if you’re talking fiscal federalism, what do you say about oil and gas? Nobody is complaining about oil and gas which are also minerals in the ground. In fact, in most countries in Africa, the minister for mines is also the minister for petroleum because it is considered a mineral in the ground as well. Now everybody seems to have benefited from this and nobody complained when they were spending oil money. They did not consider at that time that only Rivers State should administer it and not the Federal Government. They did not consider that Akwa Ibom should administer it. So, what is sauce for the goose is sauce for the gander. I think it is only proper that if they find other minerals elsewhere that the Federal Government shall also administer it.
Secondly, if you look at it from a business point of view, it is easier to have one administrator than to have a multiplicity of administrators. You could imagine if an investor is coming to Nigeria to mine and he goes to Oyo State and they give him condition A and he goes to Kwara State and they give him condition B and he goes to Benue and he gets condition C. How is such a person going to cope? It will be difficult for them because it is the same business and they have different criteria to do business in different states. You could have up to about 16 different demands from different states because there are a few companies that mine in several locations. So, it is better if it is centrally administered, which is what we are doing now. Investors come to us. We have a set of rules, but we are not excluding the states. The states are allowed to practise, but like we said, not as sovereigns. States are allowed to start their own business venture and then they come and participate in mining as well. In terms of governance, they are allowed to participate in the governance of the sector through MIRENCO, which is a mineral environmental committee within the state and the governor is empowered to choose the chairman of MIRENCO. It is a very powerful body in every state that interfaces with all stakeholders: government, investor, community, and all stakeholders. So, the governor, from the vantage point of having the chairman of MIRENCO, is also participating in the governance of the sector. These are the ways we are carrying the sub-nationals along.
Do they get revenue?
Of course, like they get revenue from oil. Number one, they get 13 per cent derivation and then the rest is thrown into a pool that they also share. In oil revenue, everybody gets revenue from the Federation Account, but the states where the oil is sourced first of all get the 13 per cent derivation. It is the same principle. Every state gets a 13 per cent derivation from the royalties collected and then they get to share in the general purse. Everybody benefits.
So, you think because of this reason it is better that to leave it with the Federal Government?
Yes, it is better. If we say today that we want everybody to administer their minerals, I can simply tell you some states will not survive without the oil money. This is because before they can develop the minerals to a point where they earn revenue, they would have starved and they would not be able to pay the workers. For most people today, it is the revenue from the Federal Government that some states rely on. And if you want to say okay, let everybody as of today go with the minerals including the oil-producing people because they have liquid ones which are oil and gas, who will suffer? Oil is well developed. They will keep making money and keep the money for themselves. For those who have other minerals, it will take them a while to develop them. Maybe the shortest it would take is about five years. In those five years, how will they feed? How will they survive with no revenue coming from anywhere?
But there is the argument that in every state of the federation, we have minerals deposited in large quantities and so every state should be able to survive in they look inwards.
Yes, even those that are deposited, it takes a while to develop such minerals. A lot of people don’t understand what minerals are all about. Yes, there are minerals, and there is lithium in your ground, but before it can become money before we can develop it to start making money requires a minimum of five years. It is because people do not understand it, even the oil and gas that we have, do you know they discovered oil in some northern states? Have they started making money from it? It might take the next 10 years before they make a kobo out of it. It takes development. There is an exploration to discover the quantum, the quality and then you have to design the mine and how to extract the mineral because each mineral has its own unique way. The way it presents itself there, the way it can be brought to the surface in the most economical manner, is all about how you design the mines. And then after designing the mines, you start to mine, bring it to the surface, process it and then sell it to make money. That whole process can take up to 10 years. So, what happens in the interim?
The issue of resource control and minerals control has come to the fore as presidential candidates traverse the length and breadth of the country campaigning. Of course, it is one issue that is very sensitive. Some of them are talking about it already that it is the way to go.
Resource control or whatever you call it is a constitutional matter. If everybody in the country decides to come together and change the constitution so that everybody gets their things, so be it. But I have given a scenario of what will happen. That is better imagined than experienced. There are some states in this country, if they don’t have the allocation from the Federal Government on a monthly basis, they will not be able to pay their salaries, and the economy of such states might collapse. You can imagine the civil servants in the states, the amount of money they collect from the government. Look at the multiplying effect of that salary when they go to the market, buy goods, send their kids to school and they have families and all that. If that were to be gone, that kind of state will collapse all in the name of resource control. And before you begin to develop your own minerals and start making from them, what happens in those interim years?
The states are already complaining that the money that is coming is no longer what it used to be. Are you suggesting that it is high time for them to begin to look inwards, and develop minerals, even if it will take five to 10 years, if they start now…?
You see, the truth of the matter is that as it is now, they are doing that. I just got a letter from a state governor asking for some licences for their company. So, a lot of states are actually doing what you are saying already, but they are not doing it as states. They are doing it as corporates. I can tell you for sure, Osun State has a lot of licences with which they are running Omoluabi Mining Company. That is the name of their company. There is Nasarawa Mining Company. So, every state has its own mining company. And you know the way it is in Nigeria, the law is that the company that mines actually has the money. They only pay royalties. For instance, if you find something worth N1 billion, you only pay about three to five per cent to government as royalty. The rest is yours. The rest will take care of their costs and of course there will be profit. So we have companies that are already making money from this. When they say the money coming from the government has reduced, that is the money coming to the Federation Account has reduced, we need to look at the causes. Generally, oil is not selling because of the pandemic and reduced demand.
And people are already looking away from fossil fuels
Yes, and then what is coming in terms of revenue from that is reduced by subsidy, NNPC has to defray its cost. This is a fact. People are willing to buy fuel at an exorbitant rate when there is scarcity. People go beside the road to buy fuel at N250 or N350 a litre, but the moment the Federal Government wants to take it to that price, everybody will start complaining. That is the hypocrisy of it. Without selling at the economic price, you can’t get investments. People will not come into the sector. Only the Federal Government imports fuel and they are importing at a subsidy because of the value of the naira vis- a-vis the foreign exchange and all that. So that is what is happening and the money being sunk into the subsidy goes mostly to the elite and that is what people don’t know. How many people have cars? It is the elite that are benefiting; some people have four to five cars and buy fuel at subsidised rates. The poor people move in public vehilces that mostly run on diesel which is not subsidised. It is deregulated. Most of the buses you see on the road use diesel. The train that everybody goes in uses diesel and that is the transportation for the masses. So, the masses are not subsidised. It is the elite that are being subsidised and that is what everybody needs to get. The people, who have four to five cars, buy fuel, travel and enjoy themselves, are the ones being subsidised. The masses, whenever they want to go out, travel in buses and most of these buses are diesel-based. So, until we get these facts and imbibe them, then we can start getting our head out of this subsidy. The money that is being spent on subsidies could be used on other infrastructure, benefit the masses, use to further education or health, but there is a lot of money going into subsidy right now which is not sustainable.
You are responsible for licensing companies across the country. Why then do we have the issue of illegal miners in Zamfara mining gold as well as Osun states? Is it that the ministry is not doing its oversight in terms of monitoring what goes on on these sites and making sure that it is those who are licensed that are allowed to practise?
Generally, it is human nature to cut corners. There is illegality everywhere. Is the police responsible for the man that is stealing? Somebody that breaks the window of his neighbour’s house and goes in there to steal, is it the owner of the house that is not securing his house? There is that tendency in human beings to cut corners. It is now left for the government to minimise if you cannot eliminate it and that is what we are doing. Yes, some people, for whatever reason, maybe because of their perverted sense of justice, they go there and do things illegally; that is why I said it is perverted because this process is so simple and it is not so expensive to get the licence. Some people, like I said, because of their perverted sense of what is right or wrong, go and do it illegally. But then once the law catches up with them, they are brought to book. We cannot, in every society of the world, go and check it, prevent crime totally. There is no society in this world that can say there is no crime. There will always be deviants, people who will want to do things differently and go outside the law. Some people do it deliberately, while some do it for other reasons. So, in Nigeria, it is not different. People do illegal mining and within our means, we are checkmating that. Like I said in another forum, we react to such because there are monitoring systems. From the community themselves, they can alert us and we will stop them. We have our own officers on the field. They can discover that. We have a satellite-based system in the office which we can also pick that up and we will react to it. But as to the people going to do illegality, you can’t prevent it. We can’t prevent it because we don’t know what anybody is going to do next. But as soon as we discover it, of course, we move against it and that is what we are doing.
The Federal Government is trying a whole lot to shore up its revenue, bring people into the tax net and ensure that more money is available for infrastructure and other developments. How is the non-oil mineral sector coming to the rescue in this regard?
Well, I will say we remain at what we will call a potential. The potential is huge, but then like I told you before, we need to develop these things and it is until the sector is fully developed before we can start to make money. Some countries are making, like during the COVID-19 years, Australia made I think it was $40 billion from minerals alone. That is a country that has not stopped mining for maybe the last 200 years. These are old jurisdictions. Canada has always been mining. In Nigeria, we did a bit of mining until we discovered oil and gas and stopped mining totally. There was a point when mining was at zero in Nigeria. So, we are beginning to start again, and then we have to learn to crawl, to walk before you can run. So, we will get there eventually, where the kind of revenue that comes from revenue will be fantastic because the potential is there. Look at how much they are selling lithium and gold! Look at how much they are selling copper in the world! Even tin has become so expensive. Nigeria is known for having one of the best tin in the world from the Plateau. Look at coal, it has come back into demand. And we have got plenty of coal, billions and billions of tonnages in terms of deposits. So, for the potential to become a reality, we need to develop them. Somebody needs to develop the mines and start production. It is only when you produce that you can now process and sell. So, the potential remains. Then, we have to put in. a lot of investments to attain that reality.
Talking about steel development now, a lot of discourse about why it has been difficult for Nigeria to produce even a single bar of steel for industrialisation and all kinds of development does it worry you that Ajaokuta Steel…
Everybody is fixated on Ajaokuta.
Your question is not exactly factual because actually Ajaokuta has produced reinforcements. In fact, at a point in this country, a lot of people relied on the reinforcement produced from Ajaokuta. Ajaokuta was producing.
That was a long time ago.
What I’m trying to tell you is that even as we speak, Nigeria is producing steel. It just so happens that Ajaokuta is a Federal Government Company that has failed which we are trying to resuscitate. But there are so many other companies that are producing steel. We have all established this and it is known that the Federal Government is not a good business person and that is what has been proven in Ajaokuta. Whenever the Federal Government gets involved in a business, it doesn’t turn out well. But as I speak with you there are so many companies that are producing steel in this country today and are doing very well. One is coming up in southern Kaduna and will be commissioned very soon. There is a very big one in Kwara State, Ilorin, that is doing very well. There are a lot of them that are in Ogijo, from Sagamu to Ikorodu road. That is a big axis for steel production and over the country. There are some in Ota that are producing steel and all over country people are producing steel.
But are they meeting all local demands?
That is what I am saying. We are not meeting local demands yet. Because we don’t have the critical mass yet where we produce and then begin to export. But to say we are not producing at all in Nigeria is not true. The private sector is producing. It is like you said, it has not met local demands and we still have to import. Yes, and this is what the government is doing now. Having realised its limitations when it comes to running a company like Ajaokuta, the Federal Government has realised its limitations. What we are trying to do now is to go into a form of partnership, get somebody to come into Ajaokuta on an equity basis and run it and we have done this successfully. Look at the way our telecoms were before we brought in all the private sector. When it was strictly NITEL, I could still remember the time when everybody was carrying a ladder, begging one young man, oh please come to my house and fix my line. That is how it was. Can you believe it now, everybody, even a kid has a phone now. Did we ever think this time would come? You see adults, MDs and managers, following a young man about, and he’ll be saying he doesn’t have time because if you don’t dance to his tune, he will not fix your wire on a pole or in a box. But today, nobody cares about that. We all communicate and you can talk to someone in America as you are sitting in your room, you can talk to Australia, and you can talk to anybody in the world, just from where you are seated. What brought that about? Privatisation. When you throw it open, there is competition, even when these telephone companies came, some of them were saying, per second billing was not possible. If you made a call of 10 seconds, you paid for a minute. An indigenous company came and changed that. So that tells you that the more players we have in a sector, the better for us. And that is what the Federal Government is doing, and yes, we put the infrastructure in place. The company has all the facilities and the facilities are still good. Maybe we need to refurbish and do some renewal, but with the right investment, Ajaokuta will produce steel and that will help local production. It is designed is in phases: one, two and three. By the time it comes into the final phase which is even expandable beyond that, you can expand to phases four and five, but the original design takes care of three phases. By the time it comes to phase three, it will almost meet local demand and of course, whoever the partner is that the Nigerian government chooses eventually, they might expand to phases four and five and start exporting steel beyond Nigeria to our neighbours. So, as I said, Nigeria is producing, and we have issues now. As far as Ajaokuta Company is concerned, it is a Federal Government’s company and it has been proven without a doubt that government is not a good business entity.
So, how long are we looking at before Ajaokuta starts production again?
Well, when I came to office in 2019, the promise we gave and we thought we could do was for Ajaokuta to produce by the third quarter of 2022. Of course, that plan was halted by COVID-19, which took 2020 and 2021 from us and even part of 2022. As it were today, what we hope to achieve is to be able to be able to concession Ajaokuta before we leave office in May. That process started since last year and we intend to give it to the right investor, and this time, somebody who is going to bring in equity put in the own money and run Ajaokuta. It is a process we have looked at. It is something that can be done within a year to 18 months. So, if we get the right investor in before we leave this year, we could say comfortably by early 2025, Ajaokuta will start producing. That will give them at least 18 to 24 months before they can begin to produce.
What are you doing to ensure that the private companies put quality steel in the market so that this issue of fingering the bad quality of used in the cases of building collapse…
When you go into building collapse, it is actually outside my purview as a Minister of Mines and Steel, but it is exactly my speciality. I am an architect by profession and I have done a lot of buildings myself. So, this is an area where I have the competence to speak from the private sector capacity, and I can tell you first and foremost that it is not true that all local steel is bad. As I told you, at a point in time, the reference point for reinforcement in this country was the Ajaokuta production. In recent times, Delta Steel, which is now Premium Steel, produced quality steel that even the top companies in Nigeria doing the major bridges would only buy from Premium Steel. I am sorry I had to mention a name. I am not advertising anybody. But the issue of regulation in terms of standard belongs squarely with the Standard Organisation of Nigeria (SON) which is a parastatal under the Ministry of Industry, Trade and Investment. They regulate standards and I can tell you that within their limits, they are trying their best. Wherever they find such inadequacies, they confiscate such materials. But to reduce building collapse, it is not just in materials. It is a whole gamut of things. We have to look at the people who use quacks as their consultants. It is not enough to say you have the training, you must also have tutelage before you can tell yourself that you are good enough to work in the field. I trained as an architect at the university. I have a Master’s degree in architecture, and I have another Master’s degree in Construction Management, but that was not enough. I had to go through tutelage. I had to work under an experienced architectural firm before I could now go out on my own and say yes, I am ready to start working. And even then, you start with small buildings and learn through experience as you grow and that is also for all other professions whether it is structural engineering, mechanical, electrical, and even quantity surveying because these are the fields in the building industry. Everybody must go through proper tutelage under professionals who will supervise you before you can say you are ready to do it. If you have a good design from all the consultants and you follow it with good supervision, it will even prevent fake materials because before steel can be used on any site, the consultant must insist on tests, that is, they will do that test in a qualified lab. Also, there is what we call the cube test for concrete. We test stones. A lot of people don’t know that stones have different strengths. The aggregate we use have different strengths. You can test them; some aggregates are stronger than others. What you ordinarily use in a building that will stay may not be adequate when you are trying to build a bridge. So, all this is known by the professionals who are the ones that will guide others. So, if the client engages with proper people, he can go home to sleep, and he doesn’t even have to worry about fake materials. But when those materials come to the site, they will not pass the test and will not even be used.
So, I will put collapsed buildings squarely with the professionals not just with the professionals, but with the clients. Because as the client, you want to make sure you get the right people to do your building for you. But people want to cut corners. It is called pennywise, pound foolish. You either pay the consultant the proper fee or your whole building comes down and when your building comes down, you are the loser. You can imagine somebody building 20 something storey building and they have reached about 18 floors and the whole thing comes down. Look at the billions they have lost. But if they have just used consultants, maybe the total money taken by the consultants for such a project will be about N250 million or N500 million, but in this case, they have lost over N10 billion because they want to cut corners, they will go and take engineers that are not tested, they don’t have experience, they don’t know what to look out for on-site, they don’t even know how to supervise. And then, in a particular case, I am not castigating anybody. The client was casting concrete by himself. How do you monitor the strength? How do you do the cube test to know the strength of the concrete? When they are casting a slab, the contractor is obliged, on a proper site, to take cubes and take them for the test, seven days, you check 14 days, you check 28 days. If, for instance, the cubes fail that, the engineer already knows that the slab is not safe. They can bring it down safely without endangering anybody. But when such a test is not done, you put a slab there, and concrete has a funny way, it is plastic. It doesn’t fail all of a sudden. It will fail gradually until it reaches a critical point and comes down. So, even bad concrete will not fall immediately, it might stay for a while unless it is really poor concrete. It will stay for a while. It will support some load, if you are lucky, it will fail during construction, when there are not so many people there. But there are some that have been known to fail even when people have moved in. Without being too technical, the yield graph is very gradual the way it fails. When it reaches a critical point, there is a total failure. There are tell-tale signs for people who know. You will start seeing cracks, very difficult to notice, and then those cracks become wide and they are mostly vertical cracks because we can have some cracks which are from plaster cracks, maybe the workmanship of the plaster is not good. But when you start seeing structural cracks, people who know, know what to look for. And then that is the warning. If people are already living there, you tell them to stop. If it is under construction, you can stop and do the remedy quickly. You can bring down the structure safely and rebuild. So, this is actually what happens. SON, I am sure, tries its best to make sure that the standards are there too and as I said, there are always deviant people. They know what they are doing is not good, and they know this steel is not meeting the standard, but they are still doing it. So, when they are caught, they make sure that they are apprehended and face the law.
So, what level will you say you have taken the ministry since you assumed office?
Well, we thank God. It is not enough to blow one›s trumpet. Posterity will decide that, but as you said, within the mandate given, we have done so much. One of the key highlights of what we have done is that we have made the sector easier and more business-friendly. Now, you can take your licenses from the comfort of your home or offices from anywhere in the world. The Cadastre system now is online. In the past, if you are interested in mining as an individual and you are here, you have to get to Abuja before you can do anything. But now, even from Ibadan, you can do everything, make all the payments, and do everything. Also, the information system, the data about mining in Nigeria, which is based in the Nigerian Geological Survey Agency is also coming online. We are having a national geo-data centre, which, of course, from where you are seated, you are looking for a particular mineral, you can go on that platform and see the states and towns where you can find them. Ease of doing business, which is also attracting investors, because the man that is hearing about Nigeria doesn›t have to come to Nigeria to find out. He goes on the geo data centre, he finds out the facts, if he is interested in a particular mineral, he can pick that mineral out, go on the Cadastre system, register for a license even before stepping foot in Nigeria. So, those are some of the advantages. Then, of course, we have policies which I initiated, like the domestication policy, where we are saying now that, let us begin to do beneficiation to our raw ore. Don’t let us import raw ore again. Don’t let us go into the route of crude oil. We export crude oil; we import petroleum oil. So, we are saying that people should do beneficiation locally, which will create jobs and create wealth because once you export the raw one, you are exporting all the jobs and the wealth out. But the moment we create a company that will do processing, there are so many people that are employed in that process. Not just that, the material you now produce will become a source of raw materials for the industry that they don’t have to import it. For instance, in pharmaceutical industries, they import processed kaoline to do some of their drugs. The paint industry, use processed kaoline, cosmetics industry use it too. We have this kaoline, we export it out. Some people will process it and sell it to our pharmaceuticals, they buy it at forex, now, if you process locally, you have created jobs in the process. Now, you have made things easier because the companies are not using forex to get their raw materials. They get it locally and they can now sell their products internationally. Nigeria earns more foreign exchange; things are easier for everybody. So, that is one thing I am proud that we have done again, and so on and so forth. So, that is one thing I am proud that we have done again, and besides the ministry, which is one reason why we are here, one of the legacies I want to bequeath to the ministry is that we work together cohesively as a family. You know everybody working to support one another, where you are not so strong, I help you, where you are not so strong, you help me.
By May, President Muhammadu Buhari will be exiting office at the expiry of his second term, of course, some of you may be reappointed, but after office, what is your plan? You are from Ogun State, are you going to join politics, are you going to run? You are from Abeokuta?
Yes, I am from Abeokuta. Well, if anybody is going to run, he would have been in the race now. No, I am not thinking about running for public office.
Maybe we should just say it is not my inclination to run for public office or want to be this or that. It is not on my mind. So, I am not inclined in that direction even as we speak.
Or are you discouraged by the way the players are playing the game?
Look, politics is something that is essential because like people say, if you don’t have good people to run, the bad people will run and they will be the ones to decide for you. So, we encourage people who have the disposition, and who would like to do it. Yes, I try to encourage them and I support people who do because you must have good people in politics. That is the only way we can have good policies and then we can have good governance. So, those who do it, I salute them. But you see, just like I chose to be an architect when I was growing up, somebody else chose to be a doctor, another person chose to be a lawyer. So, that is it. People have dispositions and tendencies towards a particular thing, I just don’t have it.
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