FG Seeks Stricter Rules To Curb Raw Minerals Exports

The Federal Government of Nigeria is set to implement stricter regulations to curb the export of raw minerals and promote the export of processed products. This strategic move aims to generate employment opportunities and enhance the overall value of Nigeria’s exports, according to Dele Alake, the Minister of Solid Minerals, who emphasized the importance of adding local value to mineral resources. Alake stated in an interview, “You can’t take our minerals away without adding value locally. This means establishing factories to produce goods associated with the minerals being extracted.” Nigeria, Africa’s largest crude oil producer, is diversifying its income sources as oil production declines. The country possesses significant mineral resources such as lithium, gold, bitumen, and iron ore deposits. It aspires to follow the example of countries like Indonesia, which successfully increased the value of its commodities through regulations requiring buyers to establish refineries within their borders. Indonesia’s nickel exports, for instance, saw a tenfold increase in five years. Despite past efforts by Nigerian governments to revitalize the mining and quarrying sector, the desired progress has been elusive. A decade ago, the administration of then-President Goodluck Jonathan aimed to elevate the mining industry’s contribution to the gross domestic product to three percent by 2015. However, the sector only accounted for 0.2 percent of the GDP last year, as reported by PwC. Encouraging foreign companies to refine minerals within Nigeria remains challenging due to issues such as unreliable electricity supply and limited domestic demand. Additionally, many minerals are extracted by illegal miners. In northern Nigeria, security concerns persist, with armed gangs involved in mass abductions and killings, leading to the displacement of local communities and facilitating illegal mining activities, as noted by Alake.

SEC, FMMSD seek to raise capital for non-oil sector

The Securities and Exchange Commission (SEC) and the Capital Market Community are to partner with the Federal Ministry of Mines and Steel Development and other stakeholders to promote the use of alternative means of raising capital such as Non-Interest products, tokenization of assets, as well as adopting technologies such as FinTech. This among others was contained in a communiqué issued at the end of a two-day workshop on financing the Nigerian solid minerals sector through the capital market and the critical role of the commodities exchanges. The workshop also emphasised the need for the FMMSD and Federal Ministry of Education to re-prioritize the focus on STEM education at basic, secondary and tertiary institutions.  According to the communiqué, “There is a need for the Capital Market Community to ensure that the market infrastructure that supports the bringing to market of mining ventures is in place, while also protecting investors.  “All stakeholders should be involved in promoting sustainable practices and ESG standards within the mining industry while the FMMSD is to ensure the availability of geoscience data, given that it is essential alongside relevant market data in enabling intermediaries and commodities exchanges to structure products for the mining industry.  The participants also agreed that the FMMSD should collaborate with SEC and other stakeholders to develop capacity in the industry and address the issue of interference in mining activities by the State Government, which is identified as a major challenge faced by mining companies, the FMMSD is to take concrete steps to resolve the conflict in State and Federal laws as well as overlapping oversight. Earlier in a keynote address, the Executive Commissioner Operations of the SEC, Mr. Dayo Obisan said the solid minerals sector possesses immense transformative potential for sustainable economic growth in Nigeria and holds immense potential to contribute significantly to national economic diversification and sustainable development goals.  “With over 44 minerals discovered across the Federation, the mining industry can play a vital role in diversifying our economy away from crude oil dependency. The FMMSD has embarked on various initiatives to increase the sector’s contribution to Nigeria’s GDP from 0.5% to approximately 3% by 2025. To address the financing challenges faced by the mining industry, the SEC Commissioner said stakeholders must recognize the crucial role of the capital market in providing much-needed funding for large-scale mining projects as the capital market offers a wide array of financial instruments and products, attracting long-term investments and diversified sources of funding.  He said by tapping into this market, mining companies can strengthen their financial position and promote transparency, accountability, and good corporate governance practices to attract both domestic and foreign investors, stimulating investment inflows and fostering growth in the sector. He stated that to address these challenges, some practical solutions may include, but not limited to; attracting strategic investors who have established mining operations can bring expertise, technology, resources, and access to international markets. Such partnerships can be in the form of equity capital or debt financing, allowing miners to benefit from immediate cash injections and technology support.