Mining: Good roadmap, slow implementation

Mining has immense capacity to dislodge oil as the mainstay of Nigeria’s economy. But moves by the Federal Government to diversify its revenue base with the implementation of the roadmap for the sector’s development seem slow in yelding the desired results.  Assistant Editor CHIKODI OKEREOCHA writes on experts’ call for the translation of policy pronouncements into concrete actions. 

MINERALS FOUND IN COMMERCIAL QUANTITY

•Coal
•Limestone •Lead/Zinc
•Bitumen
•Barite
•Gold
•Iron ore

DESPERATE to diversify the economy from oil, the Federal Government unveiled two roadmaps for the mining within four years. The roadmaps – the first in April 2012 under the administration of former President Goodluck Jonathan and the other in September 2016 – were launched to stimulate rapid growth in the sector, often described as Nigeria’s goldmine.

The activities and time frame for their implementation were clearly spelt out in the second roadmap unlike in the former. The 2016 roadmap also created scenarios and models for its successful implementation and monitoring of activities.

Besides, it developed a consensus strategy for the buy-in of all stakeholders. In what many view as a clear departure from the 2012 roadmap, the new document showed government’s determination to create an independent regulator outside of the ministry.

But contrary to the conception, the ministry doubles as the facilitator for business opportunities in the industry and the regulator, resulting in conflicts of regulatory functions.

The regulatory agency was billed to be made up of the Inspectorate and Environmental Compliance departments of the ministry, with the Artisans and Small Scale units of the ministry forming part of the regulatory agency.

The 2016 roadmap had a commitment to grow the sector’s contribution to the Gross Domestic Product (GDP) to about three per cent by 2025.

It went a notch higher by identifying seven strategic minerals of commercial quantity to be given priority including, coal, limestone, lead/zinc, bitumen, barite, gold and iron ore.

The Partner/Mining Industry Leader, PwC Nigeria, Mr. Cyril Azobu, the 2016 roadmap seems to be more articulating. “It clearly determines what particular strategy we need to deploy in achieving that roadmap; it looks at across a chain from institution building to stakeholder management to management of players in the sector, funding  etc,” he told The Nation.

Azobu, other industry experts and stakeholders see the constitution of the Mining Implementation and Strategy Team (MIST) as the icing on the cake

He said: “I like the composition of the team because it included private sector players mostly and other stakeholders within the entire sector.”

Unfortunately, the 2016 roadmap is giving way to apprehension and the excitement generated by the establishment of the MIST is fast fading. More than a year after the launch, the mining sector has not gathered enough steam to drive the Federal Government’s economic diversification agenda.

There has been growing apprehension in the industry that the country is not keeping faith with the implementation the roadmap’s strategic actions. Many argue that the road ought to have been implemented given the government’s desire to diversifying the economy.

Describing the development as discouraging, Azobu said: “It is one thing to have a roadmap and another thing to implement it. That is why I am saying that there could be a bit more work; there could be more action. It could be faster. And like all public sector-driven enterprises, once you get into another round of elections, the general belief is that things will slow down.”

In times past, general elections were usually preceded by lull in government activities and there is nothing to suggest that the 2019 elections will be an exemption as subtle politicking has started even with the elections almost two years away.

Some experts and stakeholders are urging the mining implementation team to ensure the implementation of the roadmap.  Many of them say the team should take the roadmap’s objectives determine who is responsible for what.

Allegations are raging that the unprofessional management of the roadmap’s implementation, thus foreclosing the tracking of its achievements’ objectives. Azobu said: “It’s not peculiar to mining, its everywhere. It is always implementation of policies. If you talk about policies, we have very good policies. We’ve got policies, we’ve got regulations.

“The regulatory and legal framework is actually tight, but move beyond policies, move beyond thoughts to execution and find a very good communication strategy that showcases that something is happening such that even if it is going to take a long time, we can actually track progress.”

Describing the government’s on-going efforts at opening up the mining sector as “commendable,” the expert said he hopes to see at least some story-telling projects in the sector.

“We know how the story of cement changed from the production side, but we don’t tell the story from the mining side. If there was no limestone and gypsum, which are inputs to cement production, it could not have happened,” he pointed out.

Azobu said the same way the cement space was opened up from the downstream side by exploring the value chain, he expects to see a steel industry that is not heavily dependent on the importation of billets; a steel industry that is not dependent on use of scraps that are here and there.

Observers describe as unfortunate that a country having the Ajaokuta Steel Company Limited (ASC) in Kogi State, spend an estimated $3.3 billion annually on the importation of steel products.

ASC is arguably Africa’s largest integrated steel complex. The ASC, which is believed to hold the key to Nigeria’s industrialisation, has remained comatose for decades. The National Iron Ore Mining Company (NIOMCO) in Itakpe, Kogi State has not fared any better.

Rather than meet the nation’s steel needs, NIOMCO and ASC have been subjected to litigation between the Federal Government and their former managers.

The management of Global Steel Holdings Limited (GSHL) has faulted Dr. Fayemi’s statement, which it noted could mislead stakeholders.

A rebuttal signed by Global Steel Holdings Limited (GSHL’s) Director, S.O. Nwabuokei, urged the minister to set the records straight, stating: “Although, the company expects to be party to the resolution so referred to, we are not aware that the Ajaokuta Steel Company issue has been resolved.

Nwabuokei, who was a former Joint Managing Director/Chief Executive Officer of Delta Steel Company Plc, however, said that GSHL was aware that the delay in resolving the matter was not caused by the company.

According to him, the company has been open to and cooperated in all the requisite terms precedent to an amicable resolution of the matter.

Nwabuokei said: “We put in all our efforts to conclude the Due Diligence process in the National Ore Mining Company, Itakpe (NIOMCO) with the conviction that the next phases of compliance with the terms of the International Court of Arbitration would be speedily determined. We regret that this has not been the case.”

Even if the ownership of ASC has been reverted to Nigeria as claimed by the minister, the Federal Government has not decided on how to attract core investors with the financial and technical capacity to run the steel complex.

Yet, the colossal waste, which the multi-billion naira ASC has become, is not the only sore point in the country’s drive for industrialisation.

At the last count, the country has over 44 mineral deposits across the 36 states, including the Federal Capital Territory (FCT), Abuja.

But, despite the God-given endowments, the government has not done much to leverage on the resources to boost its revenue and improve on the lives of the people.

The lack of sense of urgency in matching intensions with actions, particularly in the implementation of the mining sector roadmap has continued to hold the sector down.

Already, there are fears that Nigeria’s target of growing the mining sector’s GDP contribution from the current 0.5 to three per cent by 2025 may not be realised, unless the authorities put some speed in the implementation of the roadmap.

A Lagos-based lawyer, Obiora Akabogu, lamented that Nigeria has not been moving fast enough in the area of diversifying the economy by riding on the back of a vibrant mining sector.

Akabogu, who public affairs analyst, described the slow pace of implementation of the roadmap as “suicidal.”

While blaming the snail speed implementation on lack of requisite political will to translate policy statements into concrete actions, Akabogu suggested certain things that could be done through executive fiat to fast-track the implantation process.

He said that the Presidency could forward a bill to the National Assembly for modification or necessary amendment of the nation’s extant mining laws with a view to removing the hindrances to the maximisation of the industry’s huge but largely untapped potential.

But it is doubtful if industry operators and stakeholders are impressed by the avalanche of policy pronouncements for the sector.

They described the N30 billion approved by the Federal Government as Mining Intervention Fund (MIF) as grossly insufficient.

Yet, a significant proportion of the fund was supposed to be used in geo data gathering, which has been identified as a major barrier to investments in the sector.

 

South Africa digs in

 

South Africa has been smiling to the bank with proceeds from the mining industry when Nigeria’s mineral resources suffer inattention.

This was sequel to the Rainbow nation’s mining industry’s return to profitability after the first substantial increase in revenues in five years, supported by spot price increases for bulk commodities.

This was highlight from PwC’s ninth edition of SA Mine, a series of publications that highlights trends in the South African mining industry released by the audit and advisory firm, last week.

PwC Africa Energy Utilities & Resources Leader, Michal Kotzé, said the current year saw prices recover for most commodities with the exception of platinum. This was after the price lows of December 2015 and January 2016.

The report, made available to The Nation, said that South Africa’s mining revenue increased by 13 per cent to R43 billion from the prior year.

“It is notable that this is the first substantial increase in more than five years,” PwC Assurance Partner Andries Rossouw said.

While Nigeria is said to be losing a whopping N8 trillion annually in unexploited gold alone, South Africa’s gold companies’ earnings jumped by 17 per cent (about R23 billion) due to improvements in gold prices and a weaker rand for most of the reporting period.

The SA Mine report said that coal maintained its strong position as the leading South African mining commodity revenue generator. Despite its percentage of revenue generated remaining unchanged at 27 per cent, it increased total revenue to R119 billion from the prior year’s R105 billion.

The report attributed the return to profitability partly to the adoption of emerging technologies in the mining industry.

According to the report, “technological advancements have spurred innovation and new ideas in the mining industry. A number of mining companies have adopted emerging technologies.

It went further: “The use of remotely-piloted as well as autonomous drones to survey opencast mines is a common example of the adoption of emerging technology. Mines are also using autonomous drilling, proximity devices, collision awareness systems for mine vehicles and trucks, cloud and mobility solutions.”

The report also considered the regulatory changes in the country It noted that despite the various challenges, the government has taken a number of steps to make mining more attractive for investments with clear regulatory policies and operationalising the existing ones.

“There are still a number of challenges in the sector ranging from insufficient infrastructure as well as regulatory conflicts. The sector realises it needs to align itself with world trends and norms, especially around the future demand for various minerals,” the report said.

More than a year after the launch of the 2016 roadmap, insufficient infrastructure and regulatory conflicts have not been addressed.

 

The Australian model

 

The minister recommended Australia’s mining sector model, which, according to him, accounts for 8.5 per cent of the country’s GDP, compared to Nigeria’s 0.3 per cent. The mining industry in Australia, which is said to be one of the world’s leading mineral nations, provides over 750,000 jobs to her citizens.

The Australian government, working with other companies, developed its mining sector. It initiated a number of reforms to encourage flexibility and productivity.

The country’s tax reforms, he said, allowed new industries, thus helping it to remain competitive in a fast growing global economy.

Although, Nigeria has great similarities with Australia in terms of natural resources, healthy and fertile land, the growth of Australia’s economy has taken place through the transformation of its natural resources.

Australian’s mining boom, which began 10 years ago, was triggered by an extraordinary rise in world commodity prices, arising from a strong demand for raw commodities in fast growing Asian economies, notably China and India

Will the experience of South Africa, Australia and other mining hubs across the globe galvanise Nigeria into putting some action to her roadmap for the development of the mining sector? Will the authorities keep faith with the economic diversification agenda by translating policy pronouncements into concrete and practical actions?

As these questions remain conjectures, what is clear is that doing so has become imperative in view of the shift in thinking among policy makers and Nigerians towards other sources of revenue besides oil and gas. And the consensus is that the mining sector is well-positioned to achieve this objective, if it is fully harnessed.

 

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Author: CHIKODI OKEREOCHA