As FG Sustains Push for Economic Diversification

0

The Ministry of Mines and Steel Development under the leadership of Mr. Olamilekan Adegbite, is methodically creating an enabling environment for massive investment in the gold sub-sector as part of efforts to support the government’s drive to diversify its revenue base and create job opportunities, writes Peter Uzoho

About a year ago, President Muhammadu Buhari appointed Mr. Olamilekan Adegbite as the Minister of Mines and Steel Development. Upon assumption of office and realising the importance of his call to serve in the ministry, one of the visions the minister had was to develop a gold ecosystem in the country that would make it a hub of the precious metal in the West African subregion.

This, Adegbite went about in a methodical manner and worked out a number of frameworks that would catalyse the development of the upstream, midstream and downstream sub-sectors of the gold sector for full beneficiation.

Strides in Upstream

One of the major steps taken by the minister to develop the upstream segment of the Nigerian gold sector which primarily deals with exploration and production of the resource was his interventionist support to a Canadian company, Thor Exploration. The company had been granted licence to mine gold in Nigeria through the Segilola Gold project.

Just before the lockdown and restrictions resulting from the ravaging Coronavirus pandemic, the minister was at the stone-laying ceremony of the Segilola Gold project, in Osun State, a project of Thor Exploration. The project comprises a proposed open pit gold mining project based on an indicated mineral resource defined by a comprehensive drilling programme.

The project will process 650,000 tons of ore, with a target production of approximately 80,000 ounces per year from 2021. His active support to ensure the success of the project was based on his conviction that it would help diversify the nation’s economy and create thousands of direct and indirect jobs.

In his remarks at the stone-laying ceremony, the minister noted that the government was willing to give waivers on equipment and taxes to major investors willing to invest in the sector.

Downstream and Midstream

Not resting on his oars, Adegbite has also been working tirelessly to ensure that the two companies that were granted licences to refine gold in Nigeria to London bullion standard –Dukia Gold and Kian Smith, come on stream. According to the plan, these two companies would procure gold from the Segilola Gold project by Thor Exploration, and would also procure from artisanal and small scale miners and then refine them to meet international standards. After refining, some of these golds would be traded on the bullion trading platform where the Central Bank of Nigeria (CBN) and investors both local and international would be the off-takers.

Also on the downstream sub-sector, the ministry under the leadership of Adegbite has created several buying centers where gold can be traded. Just recently, the federal government was at the launch of the Dukia, Heritage Bank buying centers, a private sector initiative. At the launch of the Dukia, Heritage Bank buying centers, the minister noted that it would help solidify the gold ecosystem.

According to him, “This is one of the measures put in place by the government to foster growth and bring about the optimisation of Nigeria’s mineral value chain. This initiative will bring about efficiency and transparency to physical trading and transactions of mineral commodities, resulting in accurate mineral data aggregation and reporting.”

He added that “buying centers with minimum guaranteed price thresholds also ensures that artisanal miners receive the right pricing for their goods relative to illegal off-takers, thus breaking the status quo of illegal mining and increasing the royalty revenue accrual to the federal government. At present, there are over 400 licensed mineral buying centers nationwide involved in the purchase of precious and metallic minerals such as gold, lead zinc, tin, columbite etc”

Training/Capacity Building

Realising the need to boost capacity and skills in the gold sector, the ministry is about to embark on an extensive training, bringing in renowned gemstone makers who would teach Nigerians how to make gemstones and jewelries to international standard. This would spur a huge cottage industry in gemstone production, creating jobs and saving the foreign exchange the country spends on importing jewelries.

The initiative is poised to make Nigeria an exporter of jewelries and gemstones, and lead to foreign exchange earnings for the country. About a month ago, precisely on July, 16, 2020, the first batch of artisanally-mined gold bars to be purchased by the CBN was unveiled at a reception ceremony organised for the president.

This milestone is the culmination of 24 months of intense efforts by the ministry through the Solid Minerals Development Fund, Kebbi and Osun State Governments, Ministry of Mines and Steel Development, and the Ministry of Finance, Budget, and National Planning, under a Steering Committee led by the Chief of Staff to the President, Prof. Ibrahim Gambari. For the first time in history, in June 2020, Nigeria produced artisanally-mined gold that has been processed and refined according to the London Bullion Market Association (LBMA) standards required for the use of gold as a reserve instrument by the CBN.

This means that the CBN will be purchasing gold that has been mined, processed and refined under the Presidential Artisanal Gold Mining Development Initiative (PAGMI), for use as part of Nigeria’s external reserves.

Commenting on the achievement, Adegbite said: “This milestone is a demonstration of President Muhammadu Buhari’s commitment to diversify Nigeria’s economy and foreign reserves. The Presidential Artisanal Gold Mining Development Initiative (PAGMI) is a comprehensive artisanal and small-scale gold mining development programme, launched in 2019 to foster the formalization and integration of artisanal gold mining activities into Nigeria’s legal, economic, and institutional framework”.

PAGMI has been designed to integrate social, environmental, health and safety, economic, commercial, and technical considerations into its implementation. It is equally designed as a broader strategy to address the structural and institutional factors such as rural poverty, lack of alternative livelihoods, and difficulties in meeting legal and regulatory requirements that tend to push artisanal gold mining operators deeper into the informal economy.

According to the Executive Secretary of Solid Minerals Development Fund (SMDF), Hajia Fatima Shinkafi, “PAGMI is a special intervention programme approved by President Muhammadu Buhari to formalize artisanal mining and the initiative is designed as a quick win to diversify the Nigerian economy and to improve the social economic development of gold producing areas and the country at large”.

She further explained that PAGMI is about poverty alleviation which would improve the lives of about one million household, adding that it is a direct win for some of the poorest communities.

“It is a national programme and not exclusive to the north. Osun is a pilot state for the programme and is not part of the north. The gold from PAGMI is going to the national reserves,” she noted.

Shinkafi stated that the programme was aimed at regulating artisanal gold mining and would help to diversify the economy at a time lower crude prices are putting enormous fiscal pressure on the government.

“PAGMI estimates that the Federal Government of Nigeria could realize an annual average of $150 million in taxes, $25 million in royalties, and $500 million accretion to foreign reserves from the integration of artisanal gold mining activities implemented by PAGMI,” the executive secretary pointed out.

Expressing his satisfaction with the Nigerian mining environment and the minister’s leadership strides in the gold sector, the Chief Executive Officer and President of Thor Exploration Limited, Mr. Segun Lawson, said: “I think the Mining Act in Nigeria is already very enabling for investors. A gold ecosystem will provide a wider range of opportunities for investors. It would also provide a more integrated supply chain”.

He said the Segilola Gold Project is currently in construction and it is projected to start producing in the first half of next year, adding that it would provide over 400 direct jobs, 1,000 indirect jobs and revenue to the country.

According to him, “Most importantly, I think it would demonstrate to the international mining community that a large scale metals mining project can be successfully developed and implemented in Nigeria. This will be very important in opening up the mining sector in Nigeria

“The honourable minister had been extremely driven and dedicated. We have, as a company, found the minister very supportive in helping us successfully navigate through development process. We believe in his vision, which has been key in creating a gold sector in the country”.

Also commenting on the minister’s purposeful leadership in the sector, the Director-General, Mining Cadastre Office, Mr. Obadiah Nkom, said “the minister wants to make Nigeria a gold producing hub in West Africa hence he has made it easier for stakeholders in the sector to apply for mining licenses.

“We have streamlined our operation at the mining cadastre office making it easier for investors to apply for mining licenses online. There are also waivers for those who want to bring in equipment into the mining sector. Indeed the sector has become more business friendly under the tenure of the minister.”

Also, the Managing Director of Dukia Gold & Precious Metals Refining Company Limited, Bose Owolabi, said nothing could be better for the country than the Nigerian Solid Mineral Road Map put together by the Buhari administration and being faithfully and transparently executed by the ministry under Adegbite.

This, Owolabi described as a major booster for investors in solid minerals industry in Nigeria especially for the precious metals sector.

Owolabi added: “The enabling environment created by a consistent policy has empowered the people of Nigeria and of course the business of Dukia Gold & Precious Metals Refining Co., which has seen seven years of an enterprise curve up to launch and implementation in recent weeks.

“As we all know, gold is a very visible and high value precious metal. Nigeria has huge deposits and these are untapped largely. Before now, gold mined in Nigeria was being illegally exported with no value and transparent benefit to the country.

“The right enabling environment, policies and regulatory framework are being put in place by government to ensure compliance and encourage participation of the private sector in the gold value chain, from mines to mint and from mint to market. Dukia Gold is playing a role in the physical actualisation of government policies and objectives.

“Dukia Gold is a good example in ensuring the emergence of a full Ecosystem will guarantee that beneficiation and full refining of Gold and other precious metals is done in Nigeria and that better value is retained in country by mining stakeholders in Nigeria and across West and Central Africa mining communities”.