Hon. Abubakar Bawa Bwari is the Minister of Mines and Steel Development. Bwari had his first degree in geography and a master’s degree in urban and regional planning from Ahmadu Bello University, Zaria. He came to the ministry with a rich legislative background having been the Chief Whip of the House of Representatives for many years. Bwari paired with the former Minister and now the Executive Governor of Ekiti State, Dr. Kayode Fayemi, in piloting the affairs of the ministry in the past three years. He speaks to Kingsley Nwezeh on wide-ranging issues in the solid minerals sector including mining reforms, gold mining, mining licences, illegal mining, the lingering Ajaokuta Steel Complex, and efforts to attract Foreign Direct Investment and turn Nigeria into a mining destination. Excerpts:
You had the mandate to generate revenue and create jobs. What have you done to turn the Ministry of Mines and Steel Development around since your assumption of office?
Thank you. When we were given the mandate to come here as ministers, Dr Kayode Fayemi and myself, our appointment was in line with the president’s directive to diversify our economy. This sector happens to be one of the sectors government was focusing on. When we came we realised that attention has not been given to this sector considering its importance to the creation of jobs and revenue generation.
And the morale of workers here was very low. The infrastructure, the equipment to enhance working conditions, was not there because the ministry was being poorly funded. This ministry is mainly about generation of data. Without data, you cannot do mining. And because there was no funding, you could not get data. So data generation was poor, most of laboratories were in comatose condition. Our agencies were dormant, not doing much. So when we came in we decided to bring all the stakeholders together. The academia, Miners Association of Nigeria and investors who were playing active role in mining and some other stakeholders to discuss the way forward and what we did culminated in the production of a road map.
A roadmap? What is the nature of the roadmap?
The road map we developed was in line with the mandate we were given. And the mandate was to create jobs, generate revenue and ensure that mining was done to the best standard practice. So there was improved funding because of what was coming in here. The budget for this ministry in 2015 was N1billion and they could hardly access N300 million.
So over time, based on our efforts, there was improvement in budgetary allocation. Mr. President approved N30 billion for us from the natural resources fund. World Bank also approved $150 million for us to develop the sector.
How did you apply it?
With that a lot of activities started picking up in the sector. With that we were able to fund our mine officers all over the country, provide logistics. We are now able to monitor mining activities all over the country and suddenly things began to improve and we started the collection of royalty and so on. With that, we could also monitor the activities of Illegal miners, set up surveillance task forces with all the security agencies involved. We were able to revive Mineral Resources Management Committees that helped in addressing issues of compensation, land disputes and related issues within the local and mining communities.
So when we came in we realised that Nigeria had minerals, that minerals were all over the states and that in every local government you could identify one mineral or the other. We realised that the potentials were there and that possibilities to achieve our objectives were there.
How did you go about data generation?
With improved funding, we started exploration projects. We also realised that there cannot be mining without data. Today, we have improved data as a result of improved funding.
Based on that, a lot of activities have been generated in mining. A lot is happening in the mining sector. Revenue has been improving steadily even under recession it kept growing and when you look at the statistics in the last three years, mining revenue has been growing.
Sir, can you be specific?
Our revenue improved from N2.07 billion in 2015 to N3.92 billion in 2017 and N2.97 billon as at October 2018.
How much have you done to attract foreign investors to this sector?
We had interactions with investors, especially foreign investors at international mining conferences in South Africa, Canada, United Kingdom and China among others. Before now, Nigeria was given little attention in terms of mining and this had to do with perception. Nigeria is perceived as oil and gas destination and not a mining destination. Ours was to change the perception and that has improved and today Nigeria is on the lips of most investors.
How have you changed the perception?
We had the opportunity for the first time to sit at the London Stock Exchange to address them on the investment opportunities in Nigeria. We told them that we have the endowment. We told them about the investment opportunities here and incentives available to prospective investors. From their questions and answers, you could see that the problem is the problem of perception.
They also mentioned security challenges and we were lucky that a lot of them there had one experience or the other in some other African mining destinations and they know that if you can do business in Afghanistan, DR Congo and others then you can do business in Nigeria.
So our emphasis was that the endowment is there and the political will is there and that we have made mining sufficiently attractive for investors.
What are the incentives available to prospective investors?
You can own your business 100 percent. You can bring in your mining equipment without customs charges. You can enjoy three years tax holiday and there is significant improvement in the interaction between federal state governments and the mining communities to enable the investors to have a friendly investment atmosphere. So this has been the message we have been taking to the world and I must tell you that we are encouraged with the responses we are getting.
One thing that is very important to realise is that mining in Nigeria began a long time ago, solid minerals used to be our source of revenue before the discovery of oil changed everything. Everybody went into oil and gas. With the indigenisation policy of 1977, a lot of mining investors left for other mining jurisdictions that were more friendly and mining was left in the hands of Nigerians.
Unfortunately, we did not have the technical and managerial skill to pursue mining.
How do you tackle the issue of funding for miners?
Funding was also a problem. Nigerian banks don’t fund mining. As I am talking to you now, this is one major challenge the mining sector is facing. Nigerian banks don’t fund mining because the gestation period is Long. If they were to fund mining at the current interest rate they are charging, it would be very difficult for any miner to go for a bank loan.
What is government doing to ease that situation?
Government on its own is funding mining at the artisanal level. Out of the N30 billion natural resources fund released to the ministry, five billion was allocated to artisanal miners. Eighty percent of mining in Nigeria is done by artisanal miners or small scale miners. At the interest rate of 5 percent, no artisanal miners can get a loan. So from the money allocated to them they can access N10 to N100 million as long as you can meet the conditions and the conditions are not difficult, just get a collateral.
They access the loan through the Bank of Industry. Bank of Industry is the bank administering the loan.
At a time you revoked mining licences. What is the position now?
We realised that a lot of licences were dormant. What we did was to revoke them. They were almost 3000? What we did was to reallocate them to those who are willing and have improved revenue. When we came we realised that this is a sector that can generate the much needed revenue and create job opportunities for Nigerians.
What were the measures you adopted in this regard?
We needed to do what was possible to harness those potentials. We started by organising artisanal miners into cooperatives. We didn’t realise that mineral that was most mined by these artisanal miners was gold because Nigeria’s potential in gold is not in doubt. The whole of North-west down to North-central, down to South-west is called the gold shelf. We have huge deposits of gold in quality and quantity. With this in mind, we decided to create a gold purchase programme.
The gold purchase programme was launched by Mr. President with the pilot programme in Kebbi. What we are trying to do here is to address the old gold chain from exploitation, processing and marketing. Instead of just taking it outside, our intention is to add value by refining it here in Nigeria so we can have good gold bars. So in our gold purchase programme, the artisanal miners will be given incentives- funding, concessional license. They will not go through this licensing process. They will mine the gold .
There will be off-takers who sell it to people, who will refine this gold. We have launched a refinery project in Ogun State. They will refine it and sell it to the Central Bank as part of their gold reserve. Central Bank has already written that they will be ready to buy the gold from the refinery as long as it meets the 99.9 percent of the standard required.
Yes. That’s the purity level required of a refined gold. So that’s one very important project that we are pursuing. After putting all these policies on ground, mining infrastructure in place, we now have small scale mining companies operating in Nigeria.
For example, we have Segilola/Thor Explorations Ltd, a company based in Ilesha, Osun State that discovered high quality gold. This company is listed in Toronto Stock Exchange. We have Symbol Mining/Imperial Joint Ventures Ltd. It is a Canadian Company. It is mining led zinc in Bauchi. It will interest you to know that our lead zinc is of the highest grade. Ours is 22 percent compared to the global average of six percent. One other mineral that is attracting attention in Nigeria is tin. Our tin is called sweetener because you have to dilute it to be like other tins.
Because of its grade?
Yes. Because of its grade. So a lot of minerals are being exported from Nigeria. What we are trying to encourage is value addition such that investors will come in with plants and process it. We don’t want it to be carried in its raw form. It goes a long way when it’s done that way. You can find copper, silver and gold and they only pay royalty when they are moving it outside, but there are other associated minerals that can be found when processing it.
In our road map, what we tried to do was to look at these minerals and pick the ones to focus on. We focused on gold, tin, iron ore, limestone and led zinc. These are minerals that we realise are very important to us, minerals that have attracted world’s market attention.
And we believe that we can exploit these minerals and attract foreign direct investment and Nigeria would have saved a lot from import substitutions and solve the problem of our foreign exchange. For example, we are self-sufficient today in cement production because of our endowment in limestone. We have the iron ore that can meet our steel needs. We have the component minerals that can address a lot of our problems especially industries that deal in pharmaceuticals, paint and water treatment because you can get lime from carbonate that can be used in treating our municipal water needs.
We also realised that with the phosphate that we can also meet our fertilizer needs that will help in our agricultural development. When you look at the potentials we have, our riches, our minerals, you would be wondering why we are where we are. We have no reason to be poor.
What has government done to reactivate Ajaokuta Steel Complex?
Ajaokuta was established to meet our industrial needs. We cannot be industrialised without steel. But because of some government policies before now, the objectives have not been realised. A lot of mistakes were made in the past but this government is bent on correcting those mistakes. We are on a salvage mission. When we went to Ajaokuta, we were sad because this is the project that would have made Nigeria an industrialised nation. It is a collective national shame that such a project will remain moribund.
How did you disentangle some issues around the project?
What we did was to resolve the legal issues around Ajaokuta Those issues were resolved and Ajaokuta is wholly owned by the Federal Government. While Itakpe is supposed to feed Ajaokuta steel, it is still under the ownership of Global Infrastructures and we are waiting for their contracts to run out based on the modified concession agreement that we reached.
We realised that 95 per cent of Ajaokuta, the rolling mills, the liquid steel cannot be produced because they have not started using the blast furnace. And for us to use the blast furnace, certain things have to be in place. When you switch on the blast furnace, you cannot switch if off till after 7 years. So the right raw materials must be there and the external infrastructure must be in place. The external infrastructure has to do with the railway, river port and the dredging of the River Niger.
What this government has done is to put the external infrastructure in place. Today, we have put up a rail line from Itakpe-Ajaokuta to Warri Port. The dredging of the River Niger has been done. The Baro Port is completed and is about to be commissioned.
The Lokoja and Warri Ports are being worked on and the Onne seaport is there. These are some of the the things that will make Ajaokuta 100 per cent functional
Today, if we are able to produce liquid steel, we will meet the steel requirements of this country. As at today, we spend more than N4 trillion importing steel in this country.
If fully sorted out, it will go a long way in solving our foreign exchange. We need to produce liquid steel so we can produce our cars, power lines, rail lines, coaches, meet construction needs, anything to do with steel and with that Nigeria will be on the right part to industrialisation.