As miners groan under lack of access to finance, Federal Government’s effort to diversify the economy through the mining sector is being threatened by poor support by the banks.
Abubakar Bwari, the Minister of State for Mines and Steel Development stated this at the Breakfast Dialogue Meeting with Chief Executives of Nigerian Banks and the UNDP Country Director for Nigeria, Samuel Bwalya, with theme, ‘Financial Institutions as Critical Stakeholders in the Development of Mining in Nigeria’ held at the weekend in Lagos.
Abubakar said a key constraint identified in the mining roadmap was the underdeveloped financing and business environment for the mining sector, which had made it “difficult to catalyze investments in the sector”.
He also pointed out that lack of bankable data for exploration and the lack of systematic understanding of mining’s potential and as a result, few banks have dedicated minerals and mining desks and teams.
“Access to credit either from banks or capital markets has also been low to meet the sector’s financing needs. Institutional investors are also wary of investing in projects along the life cycle.
“The absence of a formal financing system is affecting the mining sector’s potentials to contribute to national development. We need a shift in mindset among the financial institutions about the mining sector in general.
“Since we are here to unlock opportunities in the development minerals sub-sector, the first challenge we must tackle is for the financial institutions to recognize the value chain potentials of the development minerals sub-sector.
“This brings me to today’s breakfast meeting theme to uncover investment challenges in the Development Minerals sub-sector. Without the financial sector, we simply cannot develop the sector to meet its true potential as the small and artisanal miners of development minerals who are looking to expand their operations do not have access to financing for capital equipment and operations,” he said.
The Minister, therefore, called for cooperation and synergy with the financial sector to boost the activities of miners in the sector in order to harness the full potential of the untapped huge mineral deposits of commercial quantity and value.
“Collectively we must address access to finance constraints faced by miners of development minerals and other minerals in general. Against this background, my ministry is keen to see the financing environment transformed to support the growth and development of the mining sector.
“This is in line with the ministry’s objective for mining to have a multiplier effect on the economy beyond direct royalty and tax receipts. This will be through the facilitation of mineral economic linkages, investment, and diversification,” he stated.
Meanwhile, the Ministry says it has commenced probe on mining activities in nine states including Edo, Cross River, Oyo, Ebonyi, Nasarawa, Benue, kogi, Kaduna, Zamfara and the Federal Capital Territory, FCT, to ascertain level of compliance by operators in those states with mining laws and regulations.
Making this known, Sallim Salaam, the Director, Mines Environmental Compliance Department of the ministry explained that the exercise was to closely monitor and know about the activities of mineral title holders, and also to prevent possible hazards that their operations might cause to the environment and the people living in those host communities.
Salaam said, “We want to ensure that they comply with all environmental requirements with regard to fulfilment of Environmental Protection Rehabilitation Programme, EPRP.
“The idea of this programme is to also ensure that all title holders reclaim all sites mined and to revert to the status-quo as required by the law.”