Exclusive: Why Nigeria Is The Best Destination For Foreign Investors – Mines And Steel Minister, Adegbite
Experience, they say, is the best teacher. And Nigeria’s current Minister of Mines and Steel Development, Arch. Olamilekan Adegbite, has a treasure trove of it in in development. Before his appointment as a Federal Minister under President Muhammadu Buhari’s government, Adegbite, with over 35 years’ experience in architecture and construction, was formerly the Commissioner for Works and Infrastructure in Ogun State in South West of Nigeria between 2011 and 2019.
Since his appointment as Nigeria’s Minister of Mines and Steel Development in 2019, Adegbite, has successfully driven major changes and improvements in the sector, while helping to shape government policies in reforming the sector and attracting more foreign investments.
In this interview with Africa Interviews in London recently, the Minister talks about these vital changes, including the Ministry’s downstream mineral policy aimed at further boosting the nation’s economic diversification in a sustainable manner, and why the Nigerian government is committed to promoting investments and development in the sector in the country. Excerpts:
Africa Interviews: How has it been trying to drive development within the ministry, in terms of attracting investors, pushing the sectorial agenda of the Federal Government?
Adegbite:The beauty of my coming to the ministry is the fact that;when I came onin the second term of President Muhammadu Buhari, the President had actually started out reforms in the sector, and not just saying it, but actually supporting the initiative with funding. When I came in 2019, I met the roadmap that was crafted in 2016. So, driving the change, doing what is necessary was like, the staff and the people at work were already primed to go. With a few adjustments here and there, it was just smooth sailing, and weare getting good results.
Africa Interviews: Under your leadership, the ministry has recorded several gains in developing Nigerians mines and steel sector. What are the most significant ones for you so far?
Adegbite:As soon as I got in, I realized that there was a gap in the processing of the minerals. People would mine and then of course, send these minerals abroad.And even Nigerian companies, industries and factories were actually reimporting some of these semi-processed or even finished products into Nigeria. So, we were treading the path of crude oil. In Nigeria, we export crude oil and then import petrol, kerosene, diesel, aviation fuel and stuff. So, I knew that we needed to address this quickly.
We started as early as 2019 when I came in. We started out to have this policy – the downstream mineral policy, which was essential to say that; we do not want people exporting raw materialsout of Nigeria anymore. There must be some value additions, some beneficiations done locally to retain the job, to retain the value, and of course, to create wealth for our people. As of August 2021, it became official and this has been very beneficial. So, it is one of our greatest achievements.
Africa Interviews: Can you expatiate further on the downstream mineral policy and how it can further boost the sector’s growth and national development?
Adegbite: Everybody that has heard this has hailed it as a good policy. Take for instance, crude oil. If you break down crude oil, the catalytic part, there are over 200 products that come from that come from that. But as Nigerians, we export the crude oil and get only our five products back. What happens to the 195 remaining products? That is why those industries do not take off. The plastic industry comes from petroleum. If we actually do it in Nigeria, the plastic industry would take its own from there. Chemicals, everything that comes from crude oil, we lose it to other people. It is not that we don’t do plastics, but we now have to import what we have given out to somebody free.
We are still at the early stage.There are possibilities for it to become really big. So, it is a very good policy. It is creating jobs, creating wealth for our people, and of course, becoming all inclusive.
Africa Interviews: What would you say to foreign investors interested in investing inthesector in Nigeria, but are skeptical about the conduciveness of the country’s business environment and also in terms of regulatory policies?
Adegbite: Our regulatory policies are the best you can find anywhere. There are so many incentives to support businesses and all that, so regulatory policy is very good. And there is no better proof like when somebody says: you want my money? Let me see what you do with your own money first. This is exactly what the Federal Government has done in Nigeria.
Post-COVID, we were given a sum of money, which we now usedto further deepen our downstream policy. We have six regional projects in Nigeria today, which is actually an offshoot of our downstream policy. We now process Kaolin from Bauchi which is in the North East, we have a gold souk in Kano where we convert gold into jewelry and stuffs like that. We have a gold smelting plant in Kogi which is the North Central. In the South-West, we have gemstone market where we have trained people who do cutting and faceting, so they don’t just export raw gemstones anymore . That is in the south west. In the South-South, we have a Barite processing plant in Ogoja, Cross River, where we have the largest deposit of Barite. Nigerian used to import about three million dollars’ worth of barite every year from Morocco. But now Nigeria has barite, but the problem was that we were not processing it. Nigerians were exporting the raw barite. But now we are processing the barite to API standard- American Petroleum Institute standard: Made in Nigeria, as we brand it. Now, nobody has to import barite in Nigeria anymore. That process took about two years to develop and bring to API standard. Because we went along with the industry players, the IOC, everybody that was in the barite business; we went through that process and everybody was satisfied, including the regulator – the content monitoring board. Now, if you need to buy barite, you buy local – that’s in the South-South. In the South East, which is the sixth one, we put a Lead processing plant there, in Ebonyi. Ebonyi has the largest deposit of Lead.
So, this is what we have done post-COVID, by demonstrating and putting our own money where our mouth is, is telling business people that Nigeria is indeed open for business and then they can come in as well. It is a test of concept- you want me to come and put money there, why don’t you put your own money first? That is exactly what we have done. And of course, it is proving very good for us.
Africa Interviews: So, what are the attractions forforeign investors who want to come and invest in the mining and steel sector in Nigeria?
Adegbite:Nigeria is the best when it comes to the mining sector. Number one; it’s green, because it is fresh. Most of our minerals are untapped and they are very close to the surface, so cost of production is the lowest you can get in any part of the world.The cost of production is low. Nigeria has got a lot of incentives now for (business) people; we have a three-year tax holiday which is expandable to five years, if you are qualify for it. We have 100 percent ownership, which is not allowed in any other country.
So, you as a foreigner coming into Nigeria, you can own your business 100 percent, all we ask for is our royalty that is due to Government. Today in the world, our royalty is the best, it’s the lowest, because we charge only three to five percent royalty. In some countries, they charge up to 19 – 20 percent on royalties. But in Nigeria, the highest royalty you would pay – because it varies from minerals to minerals, for gold is three percent, for some other minerals, it is five percent. This is the highest. So, this is the best time to get in the ground flow in Nigeria. It is a place where you can maximize your returns on mining.
Africa Interviews: Investors are sometimes skeptical of policy somersaults from governments, especially when there is a change of leadership, and how it would affect their investments. What would you say to that?
Adegbite:The most important thing for continuity and sustainability in Government is to carry along the civil service, because they are always there. Typically, it’s a 35-year career (in civil service). For political appointees, you have four to eight years and then you move on. So, what is the most important is that these people are involved. But not just that, before any policy is formulated, you must carry all the stakeholders along, your public as well, your investors and all that.
That is why I told you, in the case of Barite, it took us two years to develop. For the downstream policy, it took us two years to develop. Yes we spoke to our stakeholders, this is what we want to do – these and these are the reasons and there are so many forums, we call people together, people will come together and then we would discuss and see how we can incorporate ideas. So, these are well-thought-out policies that have taken a while to develop. Sincerely, these are good policies that are good for the country, and I don’t see any administration coming to Nigeria that would want something that would adversely affect the country. Because, these are well thought out like I said, carrying the industry along, carrying the investors along, the stakeholders, the civil service which are going to implement. Everybody is in the know and everybody is happy with this. So, it would be difficult for any administration to come to say they want to do a summersault on these. It would be resisted by the industry generally. Besides, I do not see any administration coming in, that would want to do something that would negatively affect the country.
Africa Interviews: The Global steel market size is estimated to be worth several billions of dollars. Nigerian is yet to scratch the surface due to unending controversies surrounding the Ajaokuta steel company for many decades, before the current administration. What progress has been made in efforts to revive the company so far?
Adegbite: President Muhammadu Buhari in one of his mandates, had said we must revive Ajaokuta and all that. In 2019, we were about to start the technical audit which was the prelude of what needed to be done. There was going to be a technical audit, the Russians were going to send in experts and look at it, what needed to be changed and all that. Then the COVID pandemic stated in 2020. By this time, we have realized that we should change tact.
We have invited some bids for Ajaokuta, we asked for their plans and how they can make Ajaokuta become profitable. We have about eight entities – five foreign, three locals, even the local ones had some foreign partners with them. But five pure foreign interests have submitted different proposals. We have learnt lessons from the past, from concessioning. We’ve burnt our fingers on that. So, this time we are looking for people who are going to actually have a skin in the game. You must bring some equity in to game, your money must be involved. So that is what we are looking at now.
We have appointed a transactional adviser who has started work in earnest and they are considering these eight proposals and they are all going to be assessed. After the assessment, they are going to rank them and give it back to us. This is what I would need to take back to the Federal Executive Council for ratification. The President sits as the Chairman of the Council. We would take a decision based on the advice of the transactional adviser, and an informed decision would be taken. We hope to complete this process before we leave office. But we want to start a process towards that end, and that is what we are doing.
Having said that, we have encouraged private sector investment in steel production in Nigeria. I am happy to tell you that September 2022, a company – African Industries – stated steel production in Southern Kaduna. Basically, there is iron ore deposits at that site, so they just brought their steel plant there. This is a $600 million investment, that has been on for the last maybe three to four years, but now they have started mining iron ore already, stockpiling towards starting their plant to begin producing liquid steel.
While the Government plant has not really taken off yet, due to the technicalitiesalong the way, we have encouraged private investors to do the same. Another one is coming up with a steel plant in Kwara State, which we have just given licensed to.So, we are encouraging individuals to go ahead, because Nigeria has very large deposit of Iron ore; and that’s basically what you need for steel production. So, Nigeria is actually in the steel business. We are solving the Ajaokuta issue.
Africa Interviews: What are the major steps you have taken so far to address illegal mining, especially considering its environmental impact on people and communities?
Adegbite: Illegal mining is a menace in Nigeria, and then it transcends the responsibility of the ministry. So we are working with all the security agencies, and we have recorded some few successes. We have arrested some persons that have been into illegal mining in different locations in Nigeria. It is an ongoing process. Nigeria is a vast country. It is always difficult to cover the whole place at the same time. But we are getting by, because we sensitize the natives, the local people to let them know that it is for their own benefit, that they should not allow these illegal miners because they would desecrate the environment and then they would run away.