Nigeria’s Minister for Mines Asks London Investors to Dig Deep

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Charm, poise and pageantry were all available to Nigeria’s Minister for Mines and Steel Development Mrs Diezani Alison-Madueke this week as she strived to woo foreign investors to the fruits of Nigeria’s fledgling mining sector.
On the special invitation of Mr Xavier Rolet, the chief executive officer the London Stock Exchange, Mrs Alison-Madueke – who holds an MBA from Cambridge University’s Judge Business School and in 2006 became the first female to sit on board of Shell Petroleum, gave investors every possible reason why they should be quick to invest in the sector, which at some point intends to rival the oil industry.
 “Nigeria’s mineral endowment remains relatively untapped. We consider out mineral sector to be virgin at this time. Virgin territory of course has its pros and has its cons. And I think that what you do find is that for those who take the risk it is a very calculated risk and that they get very strong first-mover advantages in the market.”
 If the experiences of foreign oil companies in Nigeria were anything to go by one would have thought the Minister’s briefing would attract few speculators. But the oil sector and companies such as Shell in Nigeria offer an alternative lesson, which is that for those companies quick to plant their flag on an unexplored mining and mineral territory, the rewards can be unlimited. Hence the minister’s strategic economic briefing on the sector on Monday, drew in speculators from far and wide. 
Mrs Alison-Madueke made no bones about the renewed interest in the sector being due to the new incentives, the institutional policy changes and a new enabling environment contained in the Minerals and Mining Act, 2007, which had just been given the stamp of approval by the Ministry of Justice.
Confident of the sector’s ability to woo foreign investors, the Minister told Business World: “Our confidence is very high right now. We have of course as our basis the 2007 Minerals and Mining Act enacted by law. We have just received the regulations from the Minister of Justice office and it is those regulations that will allow us to implement the mandate of the Mining Act. So we are very confident because the Act itself is based on very successful jurisdictions internationally. So were are very confident that these reforms will in fact be sustainable.”
Mrs Alison-Madueke admitted that the delay in getting the Act sanction had “been cause of some consternation.” She said: “Without this approval it is not possible to implement the mandate of the Act. But it has now been released and we shall now proceed quite stringently at this time.” 
She added: “In terms of our service we have concluded a vast amount of the surveys. We have a publication of completed mining projects out now. The continuation of geological mapping is going on, as is chemical sampling in alignment with the British Geological Survey Group. There are proposals going on for further geological surveys.” 
The main reforms are included in the newly-approved 2007 Act and include liberal and transparent access to mining assets, strengthening of geological data generation, institutional and human capacity building, which will hopefully avoid the errors of the oil sector resulting in conflict in the Niger Delta from re-occurring in the mining sector. There is also a reorientation of the government’s role from owner-operator to administrator-regulator.
The Minerals and Mining Act 2007, which forms the bulk of the reforms, is based on the mining jurisdictions and international best practices.  The landmark changes in the Act are that mining titles and rights will be given on a first-come –first-serve basis. Also new are the security of tenure of mining rights, time limits on granting of rights and titles and a policy of “use-it-or-lose in mining administration.   
“Engineer Sheik Goni, director-general of the Mining Cadastre Office in Nigeria, which is tasked with promoting and improving the investment climate for the sector, told delegates that these particular reforms are aimed at weeding out time-wasters and operators who are not serious about mining minerals but prevent others from doing so.
Under a new community development agreement, operators are required prior to the commencement of any development to consider the social and economic needs and benefits to the host community through education, aprentaships, financial support, and health assistance. Environmental and rehabilitation provisions in the Act seek to ensure that operations adhere to environmental protection regulations and that compensation for damages are paid out when required.
The Minister announced a range of incentives for foreign investors. They will be exempt from paying customs and import duties on mining-related machinery brought into the country. Furthermore a personal remittance quota will be set and foreign currency transferred out of Nigerian will be tax-free. The Act allows remittances of foreign capital in the event of a sale or liquidation of mining operations.
Mrs Alison-Madueke also outlined from the Act core institutional changes implemented to smooth the process for investors, the most important being the change in orientation of the chain of command and communication from government-owner-operator to a new structure of administrator regulator, the administrator being the new Mining Cadastre Office.
Engineer Sheik Goni, the director-general of the Mining Cadastre Office, said his office wants to bring all the relevant offices regarding the sector to be brought under one roof. “The plan is to ensure that investors do not face hassles in dealing from one office to the other. The thinking is to establish a centralised office where all enquires from potential investors will be addressed and all the necessary documents, forms, map, procedures, database will be available under one roof with an officer who is responsible for all actions,” he told delegates at the London Stock Exchange.
 In her briefing, Minister Alison-Madueke listed 35 mineral types sampling in Nigeria, including tantalite, kaolin, mica, gypsum, diatomite. She listed gold, bitumen, tin ore, coal, columbite, woloframite, limestone, iron ore, lead, and barites as primary minerals resources in Nigeria.  Breakdowns of the reserves, locations and grade of gold, coal, bitumen and iron ore were also stated by the minister.
 The minister’s announcement that all licences would have to be revalidated did raise some eyebrows among delegates at the briefing. She said steps had been taken to weed out past errors where much speculative interest resulted in investors holding licenses without intent to develop and licences being issued that did not meet the requirements of the law. She announced that mineral licences that were issued in 2007 are currently being revalidated to conform to the provisions of the new act.
Answering questions on the same point, Mrs Alison-Madueke said: “Unfortunately as I came in I found that quite a number of the titles that had been issued were missing a couple of items or other when submission was made by the intended operators. This was partly the fault of the Ministry at that time. However those items are now required under the laws of the 2007 Minerals and Mining Act. We therefore had to very unfortunately advertise that all documents required by the Act be submitted for revalidation. This is an area that has caused a lot of consternation because of course it involves time and money. We had to ensure this time that all submissions were really in line with the Act so that we do not have to come back to this at any other time.”
 She said the Ministry has advertised extensively to make operators aware of the new requirements. But for operators unable to meet the time frame for re-submission of documentation, which included Notices of Consent from the landowner, Evidence of Technical and Financial Capability, the deadline was extended. “And I am pleased to say that we got a very good response at the end of the second exercise,” said Mrs Alison-Madueke.
She said: “ However it does mean that by law companies who fail to comply and resubmit the necessary documents will automatically have their titles revoked.”
“This new development,” said the Minister, would be welcome by all those “who are serious and true about speculating in the area. It also means that serious operators now have more areas and more blocks opened up to them as we go forward. This is what we would like to see in the sector over the next few years.”      
Asked what lessons she had learned from Nigeria’s oil sector that could be applied to the mining sector, the Minister said: “They are both extractive sectors, although they are very different in a number of ways. We have of course bitter lessons from community issues and we have therefore enshrined in the community agreement what would protect the communities where the exploration and exportation is taking place. We also have environmental protection measures enshrined in the Act that will go a long way to protecting the communities.”
Mrs Alison-Madueke’s presentation on Monday was followed by two panel discussions aimed at highlighting the country’s investment potential in the mining sector in Nigeria.
Elena Clarici, of the Association of Mining Analysts, Professor Siyan Malomo, of the Nigerian Geological Survey Agency, engineer Sheik Goni, of the Mining Cadastre Office, Nigeria, all spoke of Nigeria’s appeal as a mining investment opportunity.
Dr Laurence Robb, of Savannah Gold Ltd, a small privately owned mining company already operating in Nigeria, spoke of the country’s appeal and the challenges his company faced in two years since it began mining in the country.
He said Nigeria had undergone small amounts of exploration even though it is located on a similar geological belt as other West African countries that were fully exploiting their mineral resources. He welcomed the legislative modernisation strategy, especially the first-mover advantage.
Dr Robb said: “We went into Nigeria on the back of a similar events such as this a few years ago when the Ministry of Mines had a similar road show in London. There were several investors there at the time and we felt that there were some real opportunities there. This was in 2006 early 2007. We had a look at Nigeria and the opportunity of obtaining some licences. I went out there and saw clearly that there were opportunities to be had. We put together an application for licences and we created a company here in London and raised some money. Once we were allocated our licences, as we were in late 2007 early 2008, we started operations.”
He said: “Why Nigeria for gold? There has been exploration in the past, but only in the colonial era. More formal exploration of gold began in the late 1950s. The minister did address why the solid minerals sector went into decline during the latter half of last century. But clearly if you have a look at the geology of the country, particularly the western part of Nigeria, there are real similarities to the rest of West Africa. We are all aware of course that everywhere from Senegal in the west to Cameroon in the east there is a huge mining exploration boom.”