Opportunities in Nigerias Mining Sector

My presentation will focus on 3 key issues:

• Introduction to the Ministry of Mines and Steel Development

• An overview of opportunities in Nigeria’s Mining Sector.

• A brief discussion of our strategy for unlocking the sector’s

full potential

•About the Ministry of Mines and Steel Development

•Overview of Opportunities in Nigeria’s Mining Sector

• Strategy for Refocusing and Accelerating Steel Sector Growth

OUR MANDATE:

Mining in Nigeria is under the policy and regulatory

jurisdiction of the Ministry of Mines and Steel

Development. The Ministry supervises the growth

and development of the nation’s minerals and

metals Sector.

VISION:

To transform Nigeria’s solid minerals and metals

sector into a strategic catalyst for domestic growth

and sustainable development, and to achieve a

high level of global relevance.

MISSION:

To exploit the nation’s mineral endowments in an

environmentally sustainable manner, and establish

a vibrant minerals and metals industry for wealth

creation, poverty reduction, promotion of economic

growth, sustainable development and significant

contribution to the GDP of Nigeria.

Minerals and Metals Complex,

Abuja, Nigeria

REDUCE ECONOMY’S

HISTORICAL OIL DEPENDENCY

SOLVE THE YOUTH POPULATION

AND JOBS CHALLENGE

DELIVERING ON THE PROMISE

OF DIVERSIFICATION

• Nigeria’s economy, and

government expenditures is

heavily dependent on earnings

from the oil and gas sector

export earnings (~$76 billion in

2014)

• Mining and related services is

about US$ 1.7 billion or about

~0.3% of GDP; other key

sectors include agribusiness at

22% and manufacturing 6.8%

• Vital that policy choices

incentivize investors to help

build up mining

• About 70% of Nigeria’s

population is under 35 years of

age.

• Unemployment levels are high,

in some cases approaching

30% - 50% in certain age and

education categories.

• It is critical that we create 2

million jobs per annum to

help absorb such talent over

the coming decade; mining can

be an important part of the

solution

“Our government came into

office at a time when many

people had abandoned the

country’s manufacturing,

agricultural and mining

sectors. We are doing our

utmost best to encourage

diversification into these

sectors which can employ a

lot of people...”

President Muhammadu

Buhari, Oct. 5, 2015

Source: Lit search, Investor interviews, FMMSD

In the past 12 months, the Ministry’s role has taken on added

significance as our government works to rapidly deliver on the

President’s economic diversification promise:

•About the Ministry of Solid Minerals Development

•Overview of Opportunities in the Nigeria Mining Sector


Today, Nigeria is Africa’s top mining investment destination, driven

by activity related to multiple mineral assets:

1M

2,750M

Note: For total and proven reserves the lower and the upper estimates have been shown, Production data latest available for 2012 from USGS

Source: Lit search, Ministry of Mines and Steel Development

Opportunities for investors abound, driven by rising endowment levels of

key assets:

Limestone

In metric tonnes

639M

In metric tonnesIn metric tonnes In ounces

Total Reserve Proven Reserves Production

In barrels In metric tonnes In metric tonnes

BaritesBitumen

Coal Lead/Zinc Iron Ore Gold

While multiple opportunities abound, Nigeria is witnessing strong

interest in a number of mineral ores and assets…

The recent announcement in ‘The Australian’ of a significant

Nickel find in Kaduna State, Nigeria, is an illustration of the

emerging dynamics in the Nigerian mining space

Notes: EDI = Exploration Development Incentive, EPBS = Enhanced Project By-law Scheme; higher mining production index indicates

better performance. Policy perception index is the outcome of surveys of investors working in the market. Nigeria’s scores reflect the

absence of global mining majors and juniors. Source: Fraser institute annual- Survey of Mining Companies, 2014; Literature Search.

Australia Chile South Africa USA Nigeria

30%

2.75-15%

2.5-5%

2.5-5%

5.35-7.5%

20%

0-14%

0-14%

0-20%

0-14%

28%

0.5-7%

0.5-7%

0.5-7%

0.5-7%

40%

8-12.5%

4-10%

4-10%

4-10%

20-30%

3-5%

3-5%

3-5%

3-5%

Corporate Income Tax & Royalties

Tax

Coal

Gold

Copper

Iron ore

Nigeria is open for business, and investors coming to Nigeria will

operate in a functional regulatory environment that has already

issued hundreds of mineral licenses:

EDI

encourages

shareholder

investment

in small

exploration

companies

by offering

tax credits

Companies

under

stability tax

agreements

charged flat

tax rate (4-

5%), lower

than

progressive

tax rate paid

by others

CAPEX by

mining

companies

can be fully

deducted

against tax.

Tax structure

permits

depletion

deduction

which can

lower federal

income tax

rate by ~3%

Tax holiday for

an initial period

of 3 years from

commencement

of operations





Investors will find Nigeria’s fiscal incentives regime highly

competitive when compared to what obtains in other mining

jurisdictions

Financial Incentives

5% import

duty for

importing

mining

equipment.

Additional

import

processing

charge

6% import

duty for

importing

mining

equipment

0% import

duty rate for

importing

mining

equipment

0% import

duty rate for

importing

mining

equipment

Exemption

from customs

and import

duties on

mining

equipment*


Customs Duties

Nigeria’s Customs’ rules are also comparable to top tier mining

markets and destinations:




Lease Duration & Ownership Requirements


Access to mineral leases as well as the legal framework for

exploiting such leases are more attractive in Nigeria than other

markets:

21 years.

Acquisition of

15% or more

interest in any

Australian

mining

company.

Acquisition of

interest in an

operational

mine

Indefinite.

Non-

discriminatio

n between

domestic

and foreign-

owned

entities

30 years

26% stake

by a local

directly or

via holding

company

20 years.

N/A

25 years

Companies

could be wholly

owned by

foreign

investors.




•About the Ministry of Mines and Steel Development

•Overview of Opportunities in the Nigerian Mining Sector


Given that

attractiveness, Nigeria

has now shifted attention

to working with investors

to implement a focused

strategy to expand

Nigeria’s mining value

chain and investments.

Aspiration

Build a world class minerals and mining ecosystem designed to

serve a targeted domestic and export market for minerals and

metals.

Our Growth Strategy

We are focusing on

rebuilding our minerals

and mining sector in 3

phases:

• Phase 1: In the immediate term, we

are achieving import substitution by

winning over domestic users of

industrial minerals;

• Phase 2: Our focus is on further

expanding our domestic ore and

mineral asset processing capacity;

• Phase 3: We will return stronger to

the global ore and mineral markets at

a market competitive price point.

Our goal: Nigeria is building a minerals and mining sector

initially focused on using our industrial mineral endowments to

support industrialization; private investors and companies will be

facilitated to lead this charge.

Initiatives: We are investing in a range of initiatives including

infrastructure investments, technical and engineering capacity,

regulatory reforms, re-organisation and capacity building of the

Ministry, and expansion of access to financing to drive sector

transformation.

Results Delivery: With the unveiling of the Ministry’s Roadmap,

we will shortly inaugurate a specialised team (the Mining

Investment Strategy Team, MIST) to oversee Results Delivery.

Deepening a Business Friendly Enabling Environment: We

are improving our business environment and building investor

confidence in Nigeria as a mining jurisdiction by addressing key

issues such as:

Geo-scientific Value Add: We are building a compelling geo-scientific picture of

what mineral endowments we have, as a first step to conclusively establishing

modern reserves and facilitating bankable geological data for investors.

Security: Our government has a renewed commitment to the improvement of

security across: mine site security, logistics related security, general terrorism,

etc.

Strengthening Regulatory Enforcement and Clarity: We are improving clarity

around our governing laws and regulatory framework, while improving the

capacity of the ministry to enforce a just and predictable mining environment. We

are also creating a super Regulatory Agency that harmonises current Mining

Cadastre, Mines Inspectorate, and Mines Environmental Compliance functions.

Other priority reforms include: Improving Access to Financing for players

across the mining value chain; providing supporting infrastructure; encouraging

equal opportunities and gender mainstreaming; as well as ensuring best

practices and environmental justice in mining operations.

Upstream

Production

Downstream

Processing

Midstream

LogisticsOther Enabler Services

• Open market, with

high need for new

entrants

• No large scale

miners outside of

limestone; mostly

ASMs and juniors

• Opportunities for

mining include

coal, iron ore, gold,

granite, kaolin and

barite

• Key parties include

MCO who issues

licenses, and

NGSA who

provides geology

data


high need for new

entrants

• Sector still informal,

with a number of

new entrants

• Opportunities

include drill rig

providers, bulk

transport, and

dedicated railway /

cargo lines


NIPC who provides

“one stop” shop

investor support

and Ministry of

Transport


need for new

entrants and

brownfield players

• Legacy assets

require technology,

capital and process

upgrades

• Opportunities

include expansion

of downstream

processing plants


the Minister’s

office, NIPC, BPE

and private joint

venture partners

• Open market with

some new entrants

already

• Sector formalizing but

needs infusion of

capital, talent and

experience

• Opportunities

include financial

services, training

companies and

professional services


relevant professional

institutions e.g.

Nigerian Geological

Survey

Implementing our strategy will result in new opportunities for

global investors:

• Australian banks have extensive mining finance expertise and it

is vital that such lessons and tools be brought to bear here; we urge

your mining finance teams to engage more closely with potential

clients

• Australian operators have unrivalled mining and construction

expertise; we have engaged with a number to date but want more

players to seek out licenses in Nigeria, or partner as they see fit to

play in this market

• Australian service providers can help build up the ecosystem of

suppliers from geologists to drill rigs to training services to EIS

reviewers; Nigeria will welcome you with open arms

• Other Australian companies operating in the mining ecosystem

who can help us keep costs low, improve mine efficiency from Day 1

and grow profits sustainably are also welcome

Nigeria hereby welcomes Australian and New Zealand companies to

visit and invest in Nigeria; we want to partner with you to create

shared prosperity:

To learn more, please join us at the Mining in Nigeria Investment

Seminar:

Welcome to Mining for Shared Prosperity.

Thank you.

Dr. J. ’Kayode Fayemi

Minister of Mines and Steel Development

Federal Republic of Nigeria

September, 2016

Date post:	22-Jan-2018
Category:	Government & Nonprofit
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Opportunities in Nigerias Mining Sector

Government & Nonprofit