The Minister of Solid Minerals Development, Dr. Kayode Fayemi, has disclosed that he is currently negotiating a $500 million investment fund with the Nigerian Sovereign Investment Authority (NSIA), managers of Nigeria’s Sovereign Wealth Fund, to support a long term development plan for the country’s mining sector.
In an exclusive interview at the weekend in Abuja, Fayemi said the Federal Executive Council (FEC) in August approved a new roadmap for the development of the mining sector, adding that with a proactive execution of the roadmap, the sector was expected to contribute up to $27 billion to Nigeria’s Gross Domestic Products (GDP) ratio by 2025.
He said it was based on the targets of the roadmap that the discussion with the NSIA was initiated, an approval by President Muhammadu Buhari for the sector to access funds in the Natural Resource Fund obtained, and other funding supports gotten.
The minister stated that as part of the other funding supports for the development of the mining industry, the World Bank has indicated its willingness to provide funding to help the sector’s transactional activities.
“Yes, it is hugely capital intensive and if we are going to make a significant headway in the manner that the president has often spoken about, we need to put a lot more weight on access to finance by serious players in the sector and we have gone about this in a multipronged manner,” said Fayemi.
He stated: “The first is that for the first time, the president is granting us access to benefit from the Natural Resource Fund which is 1.6 per cent of the Federation Account, similar to the Ecological Fund, UBEC Fund and it is there primarily for the use of agriculture, mining and water resources.
“I don’t know how much is there now but it is automatically deducted and it is not small money. Depending on what we approach the federal executive council to release to us from there based on our work, we have decided that it should go for exploration because that is the most capital-intensive part of mining.
“We are also in discussion with the Nigerian Sovereign Investment Authority to put together a mining investment fund. About $500 million, and it is looking good even though we are in discussion and have not finalised yet. They are getting a lot of interest from private capital, equity funds venture capital and I believe this will complement whatever will come from the Natural Resource Fund.”
He added that: “Outside of that, we are also talking with the World Bank to support actual transaction activities – those who are already in exploration and just about to move into production but don’t have enough funds, and this will be like a support fund for such activity across the sector.”
“We believe because we are starting from below zero, the major miners will come in once they see that things are beginning to be discovered, they will begin to refocus their interest on Nigeria,” he added.
The Natural Resource Fund, which was reportedly set up by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) in 2001 for the development of alternative natural resources outside oil and gas, is domiciled in the Central Bank of Nigeria (CBN).
Fayemi said the roadmap would first focus on re-establishing an accurate geological survey of Nigeria’s mineral potentials to enable for bankable investment decisions, reform the sector’s regulatory and licensing regimes, then push for in-country mining and processing of solid minerals to meet local demands, before launching out to the global market as a standard mineral mining and processing country.