Being the text of the ministerial press briefing by
Dr. Kayode Fayemi, CON
Minister of Mines and Steel Development
Federal Republic of Nigeria
At the session organised to present:
The Nigerian Mining Sector
Year 2016 in Review and Projections for Year 2017
VIP Kolkata Call Girl Jatin Das Park 👉 8250192130 Available With Room
ON THE ROAD TO SHARED MINING PROSPERITY …The Journey So Far
1. FEDERAL REPUBLIC OF NIGERIA
MINISTRY OF MINES AND STEEL DEVELOPMENT
OFFICE OF THE MINISTER
Page 1 of 13
ON THE ROAD TO SHARED MINING PROSPERITY
…The Journey So Far
Being the text of the ministerial press briefing by
Dr. Kayode Fayemi, CON
Minister of Mines and Steel Development
Federal Republic of Nigeria
At the session organised to present:
The Nigerian Mining Sector
Year 2016 in Review and Projections for Year 2017
Abuja, Nigeria | Monday, December 19, 2016
Protocols
The Minister of State, Hon. Abubakar Bawa-Bwari;
The Permanent Secretary, Mr. Mohammed Abass;
Directors and staff of the ministry;
Members of the Press;
Distinguished Ladies and Gentlemen
Introduction
1. Distinguished ladies and gentlemen, I welcome you to today’s media
briefing, which is for the purpose of giving accounts of our stewardship
over the past 12 months, and sharing highlights of our plans and
projections for the Nigerian Mining sector in the year 2017, within the
context of our long term vision.
2. About this time last year, on Monday, December 21, 2015 to be precise, I
had the duty of presenting our inaugural ministerial briefing, a little over a
month after His Excellency President Muhammadu Buhari inaugurated
me and my brother minister, Hon. Abubakar Bawa-Bwari into his cabinet,
and assigned us as Minister and Minister of State, respectively, to this
ministry.
3. Mr. President gave us the mandate to reposition the Mining Sector, to
contribute optimally to the achievement of this administration’s strategic
goal of diversifying our economy’s revenue base, creating jobs, and
broadening the range of economic opportunities available to Nigerians.
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4. The inaugural ministerial briefing came after initial consultations, and
diagnostics of the challenges facing the Nigerian Mining sector. We shared
our understanding of the issues with you, our strategy for addressing
them, and the principles that would guide our interventions. These
challenges include:
Insufficient Funding
Lack of Geological Data
Weak Institutional Capacity
Limited Supporting Infrastructure
Limited Cooperative Federalism
Low Productivity
Illegal Mining and Community Challenges
Weak Ease of Doing Business and Perception Issues
Protracted Litigations on Legacy Assets
5. We have elaborated on these challenges in a number of prior briefings and
public paper presentations, so I will not go into too many details on them
now. I am certain everyone associated with this industry is already quite
familiar with the perennial issues that had before now stunted the growth
of our mining sector, and made our jurisdiction unattractive to global
mining majors.
6. We don’t dwell on talking about the challenges because we appreciate that
Nigerians are tired of hearing explanations of what went wrong in the
past.are eager to know what the future holds for those interested in the
sector. We appreciate the enormity of the expectations Nigerians have of
us, and understand Nigerians desire immediate solutions to all these
challenges – more so as our missteps inin the errors of the past haves put
our economy in dire straits and is negatively impacting us all.
7. We would therefore focus this briefing on providing feedback on the key
reforms we have commenced, and our outlook for the future as we chart a
path out of the woods, into a glorious future for mining in Nigeria. Before
we outline our major achievements in addressing the Nigerian Mining
sector’s challenges so far, let us consider the context of the macro-
economic environment within which the sector has fared in the past year.
Review of Year 2016
8. As we all know, 2016 has been a challenging year for the global economy –
one of the toughest since the world emerged from the great recession
about 7 years ago. Much of the world has struggled to achieve growth seen
in prior years, with slowing growth in China and India; continued
depression in commodity price levels; escalating conflict and tensions in
the Middle East; as well as the rise of populism and anti-globalization
sentiment in the West, with its uncertain effect on the future of markets,
e.t.c.
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9. Both the IMF and the World Bank have revised their projections of global
growth for 2016 and 2017 downwards, from those issued at the start of the
year. Consequently, earnings for many African countries have been
significantly affected by the fall in commodity prices and many of them
are, as a result, experiencing a recession for the first time in a long time –
Nigeria not being an exception.
10. In August this year, the National Bureau of Statistics (NBS) announced
that Quarter 2, 2016 Gross Domestic Product (GDP) declined by -2.06%,
signaling a recession. GDP further contracted by -2.24% (year-on-year) in
real terms in the third quarter, exacerbated by the steep decline in oil and
gas production due to acts of vandalism and sabotage of oil export
facilities.
11. According to the NBS however, growth in the non-oil sector of the
economy returned to positive territory in Quarter 3, largely due to
improved performance of Agriculture and Mining – the two frontiers of
this administration’s economic diversification agenda. Mining sector
growth averaged 7% in the same quarter.
12. I use this opportunity to assure that this administration’s Economic
Management Team is making every effort to lead us out of the recession. I
alsoLet me use this opportunity to draw your attention to the fact that the
growth that we are witnessing in the non-oil sectors of the economy, in
spite of the general contraction, is a result of this administration’s
deliberate efforts in line with our diversification agenda.
13. It would however be immodest of us to take the credit for the green shoots
of growth we are beginning to see in the industry. Much of what has been
achieved has been a result of the collective efforts of all stakeholders, based
on our shared vision for the sector which we have articulated in a
roadmap. Our ministry considers all stakeholders as partners with a
common goal, which is why we spend time engaging with our publics,
providing feedback, sharing our vision, and eliciting more concerted
participation – this is why we are here today.
14. This partnership approach is what guided the scripting of our “Roadmap
for the Growth and Development of the Nigerian Mining Sector”. The
document was produced through a robust process of consultations and
stakeholders’ engagements. A multi-stakeholder committee submitted the
draft roadmap on March 31, 2016, which was subsequently shared with
state governors, the National Economic Council, and other key
stakeholders as part of an extensive feedback/validation process, which
also included a two-day workshop with state governments, and other
stakeholders held in Kaduna state between May 25 and 27, 2016. A
number of ideas that emanated from the stakeholder engagements and
submissions from States and sector operators were incorporated into the
Roadmap, which has been subsequently approved by the Federal Executive
Council of the Federation on August 31, 2016.
15. Armed with the roadmap, in 2016, we laid the foundations for the take-off
of the full effective implementation of its provisions in the years ahead.
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Some of the modest achievements which accounts for the growth being
recorded are as follows:
15.
Insufficient Funding
The 2016 Capital budget for the ministry and its agencies increased from
N1bn in the previous year to N7.3bn. This has been expended on
strengthening the Mines Inspectorate, Geological data generation and
IT infrastructure. We expect an improvement in budgetary allocation to
the ministry in the 2017 budget.
We sought for N30bn (approx. $100m) intervention fund from the
Federal Government, partly to focus on exploration, formalization of
artisanal miners, and providing access to funding for genuine
miners.help provide cheap loans and grants to industry participants as
well as for directly investing in foundation infrastructure. For the first
time since 2004, we got approval for this amount by securing access to
the revolving mining sector component of the Natural Resources
Development Fund.
We are working with the Nigerian Sovereign Investment Authority, the
Nigerian Stock Exchange and others to assemble a $600M investment
fund for the sector , which we hope to to conclude and operationalise
within a reasonable timeby the second quarter of 2017.
We have secured support from the World Bank for the funding$150mn
of for the Mineral Sector Support for Economic Diversification (MSSED
or MinDiver) program, a critical component of which is to provide
technical assistance for the restructuring and operationalisation of the
Solid Minerals DevelopmentMining Investment Fund, which would
make finance available to ASM operators through development finance,
micro-finance and leasing institutions. The fund will also help to bring
back on stream previously abandoned proven mining projects like tin
ore, iron ore, coal, gold and lead-zinc.
We have also commenced capacity building on Mining Finance within
banks and financial institutions, in order to build their knowledge assets
in the sector, for them to better evaluate and finance bankable feasibility
studies and business plans by enterprising miners.
Lack of Geological Data
We have commenced discussions with Fugro, who in 2006 undertook an
aeromagnetic survey of the country, but have not released same to the
government due to non-payment. We are working to retrieve oldthese
data obtained on the various mineral deposits across the country, and
have provisioned for paying the company what is due to themas well as
enter into joint ventures with private exploration companies to generate
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new data from our Greenfield explorations.. We hope that analysis of
this information will help to further buttress our speculations on the
quantity and quality of mineral deposits in the country.
Our Nigerian Geological Survey Agency (NGSA) has undertaken
additional ground investigations nation-wide to upgrade our National
Minerals Database and to further ascertain the assays of our mineral
assets to the level that can easily attract financial investments, and
assure operators of the scope of operations required for further
exploration and/or mining.
NGSA has also signed MoUs and Technical Cooperation Agreements
with the China Geological Surveys, Shandong Mineral Exploration
Agency and the National Office Hydrocarbons and Mines 'ONHYM' of
Morocco. The collaborations are intended to leverage on the expertise
and state-of-the-art technologies of these organizations in assisting
Nigeria generate investor friendly geoscience data.
The Ministry is also working out modalities to engageengaging world
class exploration companies to collaborate with our data generating
Agencies towards providing bankable data to attract big players in the
mining sector.
The Ministry has also initiated discussions with SGS, a world renowned
materials testing company, to strengthen the capacityactivate the NGSA
Laboratory Facilities in Kaduna towards achieving ISO 17025
accreditation within the shortest possible period. The objective is to
significantly reduce the thousands of mineral samples being shipped
abroad for analysis thereby reducing the huge revenue loss and
correspondingly incentivize the mining sector.
Weak Institutional Capacity
There is widespread consensus that our mining code ranks amongst the
best in the world. The challenge has always largely been the effective
enforcement of its provisions.
For the first time in very many years, we implemented a provision in the
Nigerian Minerals and Mining Act, 2007, which allows for the
revocation of non-performing or defaulting mineral titles. This exercise
led to the revocation of a number of titles, and the generation of revenue
to the federation account from titleholders who met the deadline to
regularize their payment statuses. The exercise which made non-
performing mineral titles available for acquisition by serious
operators/investors, also sent a strong signal to the mining community
of our improved capacity to properly regulate the industry, and penalize
those that deprive the country of due revenue.
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We have strengthened the capacity of the MCO to ensure a seamless
process for obtaining exploration licenses, permits, and approvals for
willing and credible investors. In the coming year, we intend to
decentralise the operations by establishing six (6) regional outposts for
the MCO to further fast track the procurement of licenses and titles. The
MCO is also benefitting from current improvement in our IT
infrastructure and our interactive web portal.
We have reviewed the explosives act and stemmed cases of explosives’
proliferation, pilfering and diversion, in partnership with the NSA’s
office. We have also improved collaboration between the ministry and
our security agencies , especially the Nigeria Customs Service, into
addressing illegal exportation and smuggling of minerals; and the
NSCDC, the Nigeria Police and the Military are all helping in
checkmating cases of illegal mining activities.
We improved our capacity to ensure sustainability in our mining sector
by producing the Mining Environmental Regulatory Compliance
Handbook, as well as the guidelines for Environmental Protection and
Rehabilitation Programme to ensure sustainable mining in Nigeria.
We have worked with partners to carry out several capacity building
workshops for different aspects of the industry, including a two-day
policy and capacity building workshop on the mining sector organized in
collaboration with the Australian High CommissionGovernment, with
the aim of building the Nigerian Mining sector’s capacity to deliver
enhanced mineral exploration and mining regulationsimes, and
promote ongoing education and training in mineral policy governance.
We have reinvigorated our Mines Surveillance efforts, with the
deployment of newly trained and empowered officers across the
federation which has led to veritable improvement in security in the
sector. Today, we would also be commissioning 38 new vehicles which
have been procured for our officers in the field for greater efficiency.
Limited Supporting Infrastructure
Infrastructure required for the proper functioning of the minerals and
mining ecosystem such as railroads, competitive financing systems,
mine and asset security and related support services are being
developed in convert with other government entities. For instance, as
part of our efforts to de-risk the sector, we are in discussions with the
Bank of Infrastructure, as part of a consortium, to attract private capital
investments for critical mining infrastructure, listed above which will
help to jumpstart necessary investments. Equally, we are working
collaboratively with the Ministry of Transportation to develop the
Central Rail Corridor and with the Ministry of Power, Works and
Housing on the development of Coal to Power projects.
7. Ministry of Mines and Steel Development
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We have also commenced the development of mining resource corridors
around contiguous States and along key infrastructure like railways, to
help establish cluster industrial zones, which will become the fulcrum
for increased economic opportunities and growth.
We believe that when states are able to determine their comparative
advantage within the mining resource corridors, they can also make
meaningful infrastructural investments to support our modest efforts.
Limited Cooperative Federalism
In order to encourage beneficial participation of state governments in
the mining sector, we have gotten approval for the implementation of
the constitutionally guaranteed 13% derivation for mineral revenue to
states, similar to the derivation that oil-producing states currently enjoy
from the federation accounts.
Furthermore, we have also reviewed our approach to licensing with
regard to state ownership. While in principle, we cannot give states
licenses as separate legal entities, companies in which the states have an
ownership interest can bid for and receive licenses. We are also working
closely to build the capacity of state governments in structuring Special
Purpose Vehicles to participate in Mining in their jurisdictions, without
undermining private sector players and ultimately discourage mining
activity within their states. The relationship of states and mineral host
communities is also being streamlined. A 2-day capacity building
workshop for this purpose is holding in Sokoto State from tomorrow,
which is billed to attract mainly representatives of all the state
governments.
We believe that these administrative mechanisms will help to douse the
tension of subsidiarity between the Federal Government and States,
pending the enactment and institutionalisation of a more enduring
resolution of the FG-SG relationship in regards to natural resource
governance.
Low Productivity
We have improved the productivity of the sector by tripling the
ministry’s contribution to the federation account to about N2Bn in 2016,
up from N700M in 2015.
Increased productivity in our mining space has also led to significant
discovery of mineral deposits, the most noteworthy being the large find
of high-grade nickel a few months ago in Dangoma, Kaduna state by an
Australian mining company operating in Nigeria.
Government has constructed 10 Prototype Mineral Buying Centres
across the country for specific strategic industrial minerals. The centres
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are to serve as standardization centres to enable ASM Cooperatives and
operators receive fair premium for their labour. With renewed
determination to strengthen collaborative efforts with State
governments in natural resource governance, the PMBCs are being
ceded to state governments. Out of the 10, Zamfara, Benue, Ebonyi and
Sokoto states have expressed interest and the centres are been
transferred to them. Later today, we will witness yet another transfer of
one of the centres in Sokoto state to the state government. These
measures would go a long way in improving the productivity of mining
operators who are now empowered to concentrate on the production
aspect of the value chain.
Illegal Mining and Community Challenges
We are working with the state governments and relevant ministries to
formalize and manage our artisanal miners, while also working with
defense and security agencies to curb the actions of illegal mining in the
country.
Under the MinDiver program, we have commenced the modalities for
capacity building in community-based organizations and other
community representatives, helping them participate in key decisions in
mining operations and processes.
We are also providing guidance on suitable benefit sharing mechanisms
(e.g. foundations, trusts and funds) and their applicability in different
mining operations at all levels of engagement on behalf of mining
communities.
Furthermore, we arewill working with our artisanal miners to organize
them into effective cooperatives that will facilitate their access to
financial and commodity markets through grants and the establishment
of mineral buying centers.
Weak Ease of Doing Business and Perception Issues
I am glad to share that we are working with the Federal Government to
ensure the implementation of the statutorily guaranteed 3-year tax
holiday for new investors in the mining sector, starting from the date the
investor begins mining operations. We are also extending the Export
Expansion Grant Scheme to the Mining Sector, as highlighted by Mr.
President in his 2017 Budget Speech delivered last week.
Other provisions of the Minerals and Mining Act 2007 are also
beginning to see determined enforcement. In particular, our offer of
100% foreign ownership of mining projects to willing investors, and the
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Commented [P21]: Please do these issues properly capture the
context around productivity? We need to be sure please.
9. Ministry of Mines and Steel Development
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elimination of import duties on mining equipment brought into the
country. We also continue to work with relevant public institutions to
ensure that 100% repatriation of mining investments or profits are
guaranteed.
Also, the Federal Government is fully focused on making it easier to do
business in Nigeria, and is taking actions to improve our ranking in the
World Bank’s Ease-of-Doing-Business index, while we continue to
address issues towards improvement in the Fraser’s Investment
Attractiveness Index.
Protracted Litigations on Legacy Assets
We have made progress in resolving the legal issues around our legacy
projects, particularly Ajaokuta. We have signed a Modified Concession
Agreement (MCA) that has allowed for the commencement of the return
of the entity to the Federal Government of Nigeria. We are at this time
concluding an audit process, further to which we would fully take over
the plant. The next stage would be to determine We are being guided by
our consultants to take the most appropriate steps to select a new core
investor with the requisite financial, administrative and technical
capabilities to ensure Ajaokuta is finally put to work after several false
starts in the past. We expect this process to be fully on stream by the
second quarter of 2017.
16. In many of the instances we have outlined, the work only just began in
2016, but would be sustained and scaled up in 2017, to deliver greater
results. Our prospects for doing more depends on our collective
commitment to our shared vision, and the sustenance of our collaboration
with all stakeholders in building a productive and sustainable mining
ecosystem that delivers shared prosperity to all.
17. We must therefore express our profound gratitude to all those that have
worked with us in one way or the other, including Mr. President; the Vice
President; the Senate and House of Representatives Committees on Mines
and Steel, as well as the committees on Appropriation, Privatisation and
Public Accountsing. We also thank ; our sister government ministries,
departments and agencies; development partners, State Governments and
other community stakeholders; members of the roadmap drafting
committee; partner embassies and high commissions; the Nigerian Miners
Association; the Nigerian Mining and Geosciences Society; the immediate
past permanent secretary of the ministry and the incumbent permanent
secretary of the ministry; and all staff of the Ministry of Mines and Steel
Development and its entities; e.t.c.
18. Our partnerships with partner governments and ,
organisationsorganizations and individuals have been consolidated during
the year 2016. We have strengthened our partnership with the
governments of Australia, Canada, China, South Africa, the United
Kingdom and the United States of America, amongst others,as well as with
10. Ministry of Mines and Steel Development
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institutions such as the UNDP, ECOWAS, the Ford Foundation, OSIWA,
amongst others, on areas such as geosciences data generation, knowledge
sharing and capacity building.
19. On a regional level, expectedly, Nigeria continues to take the lead in the
implementation of the Africa Mining Vision (AMV). Two Nigerians have
been elected to the leadership of renowned mining-related regional bodies
including the Director General of the Nigerian Geological Survey Agency,
Mr. Alex Nwegbu, who has been elected as the President of the
Organization of African Geological Surveys (OAGS), and Prof. Gbenga
Okunlola, who was elected President of the Geological Society of Africa
(GSAF). These are platforms that will improve the visibility of Nigeria
within the African mining community as well as ensure that we remain
relevant on issues relating to our national interests in the sector.
Outlook for the Year 2017 and the Years Ahead
20. As we look to the years ahead, starting with the year 2017, I will briefly
share with you highlights of our expectations and projections. Our work
plan and budget for the year 2017 is inexorably guided by the provisions of
the roadmap, particularly the immediate-, short-, medium-, and long-term
targets we have set. While it is important to note that the implementation
of the 2016 budget would be ongoing till May 2017, this administration has
proposed an increased budget estimate for the sector in the 2017 budget
proposal.
21. In 2017, we would continue to work to make our mining sector more
competitive in the global mining space, and relevant to our domestic needs
and strategic sovereign goals. In line with our roadmap, we would focus on
priority areas of competitive advantage to drive growth. These are:
Priority Minerals:
Nigeria’s priority minerals will be those for which data exists around their
continued commercial viability (e.g. proven reserves). Seven such mineral
resources – iron ore, coal, bitumen, limestone, lead/zinc, gold, and barite
– have been identified as key for Nigeria’s domestic industrialisation and
infrastructure requirements. In addition, selective emphasis will be placed
on other mineral assets that are critical to existing downstream projects
(e.g. manganese for the steel industry). For example, before the end of
Quarter 1, 2017, the Bitumen blocks would be available for interested
investors to bid.
Served markets:
Nigeria will initially focus on the domestic market, trading ore and
processed materials to domestic buyers at a quality level comparable to
imported materials to win market share from imports. As global
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commodity markets recover, Nigeria will then seek to serve both domestic
and export markets. Nigeria will also seek to exploit its mineral assets in
such a way as to preserve and extend the life of its holdings for future
generations and manage cash earnings carefully.
Potential Operators/Participants:
Nigeria will focus on building a competitive enabling environment and
sector for all entrants, rather than attempt to pre-select winners and
losers. While an explicit bias will be in place to encourage formalisation of
artisanal miners, the broader goal is to encourage a competitive industry
structure.
Target Customers:
Nigeria’s initial customer focus is to serve companies and end users that
already purchase minerals and process material from offshore sources.
These will include customers in the cement, oil, power and industrial
sectors. For instance, substituting imports of coal with domestically
sourced coal would be an example of such a step.
22. Specific objectives of the roadmap that would guide our work in 2017
include:
The set-up of the Mining Implementation and Strategy Team (MIST) to
drive the effective execution of the roadmap.
The set-up of the Council of Mining and Mineral Resources. The
roadmap is the strategy aimed at strengthening stakeholder
relationships – federal and state governments, industry, and civil
society stakeholders.
Mining Implementation and Strategy Team (MIST) to drive the
execution of the roadmap.
Development of a strategy to use priority minerals domestically and
substitute exports.
Restructuring and reorganization of the MSMD for more efficient
operations, and enforcement of established laws and regulations
governing the mining sector, particularly as it relates to our regulatory
authority and processes..
Expansion of coverage, resolution, and access to geosciences data in
Nigeria, and the development of the full value chain capacity, from
exploration to mines development, to processing and beneficiation..
Commencement of the process of working with national & state
legislatures and governments to address gaps, and resolve conflicts in
mineral resource legislation.
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Harmonizing (financial) incentives for attracting mining majors and
juniors to Nigeria and catalyse investments in infrastructure.
Building the knowledge base in the Nigerian mining ecosystem with
trainings in local technical/managerial skills and capabilities required in
the industry.
Providing trainings and extension services for ASMs to improve their
productivity.
Deepening the financial services expertise and access to funds to drive
sector growth and drive the expansion of supporting infrastructure for
mining.
Establishment of a mega regulatory agency, that would comprise the
existing Mining Cadastre Office; as well as the Mines Inspectorate,
Artisanal & Small Scale Mining; and Mines Environmental Compliance
departments, as contained in the approved roadmap. This new agency
coming onboard would have the full independence and powers to
effectively regulate the industry in a much more transparent and
efficient manner, in keeping with global best practices.
23. Also, 2017 would also see the full commencement of the substantive World
Bank support program– the Mineral Sector Support for Economic
Diversification Project (MinDiver), which will be part of an overall
mechanism through which the initiatives of the Roadmap are expected to
be realized.
24. MinDiver will be financed primarily through a loan from the bank and is
designed to deliver results in three phases: the short-term results (1-2
years post implementation), medium term results (3-5 years) and longer-
term results (5+ years), in line with the roadmap.
25. As such the MinDiver project will seek to develop the downstream sector
and enhance competitiveness (by providing practical technical assistance
based on “proof of concept” investment/transaction) and bring assets to a
higher developed stage within the conventional mining cycle.
26. Pre-program work has begun on the implementation of MinDiver even as
we finalize discussions and negotiations with the Bank. We look forward to
announcing the completion of this stage and the announcement of the
formal kickoff of MinDiver early next year.
27.26.Accordingly, I am pleased to announce today, Monday, December 19,
2016 as the official formal take-off of the implementation of the roadmap.
Also, I am equally delighted to announce the composition of the Mining
Implementation and Strategy Team (MIST), which would be responsible
for coordinating the implementation of the plans and proposals in the
roadmap. Foremost professor of geology, Prof. Gbenga Okunlola will chair
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the MIST, which will be co-coordinated through our Directorate of
Planning, Research and Statistics.
Conclusion
28.27.I must end this briefing by appealing once again for patient
perseverance as we take the right measures, and implement sustainable
reforms that would outlive our tenure of office, and set our mining
industry on the path of sustainable growth.
29.28. I invite you to join us as we continue on this road to rebuilding
this sector, unlocking its full potential, and making it one of the key
sources of our future prosperity.
Thank you for listening.
Dr. Kayode Fayemi, CON
Minister
Abuja, Nigeria | Monday, December 19, 2016