Nigeria seeks $7 billion to kick-start mines, steel industry

Bloomberg

Nigeria is looking for investments of $7 billion in mining and steel over the next decade as it seeks to develop gold and iron ore extraction industries to diversify its oil-dependent economy.
One of the government’s priorities is to meet its annual steel demand of 6.8 million metric tons, from a current output of a third of that, produced mainly from scrap iron, Solid Minerals Development Minister Kayode Fayemi said.
“About $5 billion will kick-start the mining sector,” Fayemi, 50, said in an interview in his Abuja office on Aug. 10. “In two to five years, we want to have started production of iron ore, lead, zinc, bitumen, nickel, coal and gold at a serious scale.” Companies considering investments in Nigeria’s mining industry include Lagos-based Multiverse Mining & Exploration Plc and Kogi Iron Ltd., based in West Perth, Australia, he said.
Boosting mining output, along with developing agriculture and infrastructure, is part of plans to broaden the economy of Africa’s second-largest oil producer. Crude accounts for around 70 percent of the OPEC member’s revenue and for 13 percent of gross domestic product, according to Finance Minister Kemi Adeosun. Slumping global oil prices, from over $100 a barrel of Brent crude in 2014 to under $50 a barrel currently, and reduced output due to militants attacks on pipelines in Nigeria’s Niger River delta, have squeezed state finances and caused a chronic dollar
shortage.
Fayemi will this month present a mining plan to President Muhammadu Buhari and later a bill proposing the creation of a regulator for the sector.
“Currently, the ministry does everything: licensing, monitoring, inspection, and it shouldn’t be like that,” Fayemi said. Prospective investors have expressed concern about an uncertain regulatory environment, he said. An autonomous agency would be better positioned to focus on performance and efficiency of the sector, according to the minister. The new legislation will include incentives such as allowing full foreign ownership of mining projects in order to attract investments.
“There is competition for funds, and investors will go where they can get the best deal. So if having full foreign ownership can attract them, then that’s a good move by Nigeria,” Pabina Yinkere, Lagos-based head of research at Vetiva Capital management Ltd., said. “However mining for Nigeria is a long-term plan, that shouldn’t be looked at as delivering fruits in three to five years.”