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MINISTRY OF SOLID MINERALS DEVELOPMENT
FEDERAL REPUBLIC OF NIGERIA
UNLOCKING OPPORTUNIES
IN THE IRON AND STEEL SECTOR IN NIGERIA
Dr. Kayode FAYEMI
Minister of Solid Minerals Development
May, 2016
A presentation at the Stanbic IBTC Bank Plc’s
Iron & Steel Workshop
1. About the Ministry of Solid Minerals Development.
2. An Overview of Nigeria’s Iron Ore and Steel Sector
3. Our Strategy for Unlocking the Sector’s Full
Potential
Today’s presentation will focus on 3 key
issues:
ABOUT THE
MINISTRY OF SOLID MINERALS DEVELOPMENT
About the Ministry of Solid Minerals Development.
OUR MANDATE :-
 The Ministry of Solid Minerals Development supervises the orderly 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 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 and significant contribution to the
GDP of Nigeria.
About the Ministry of Solid Minerals Development.
REDUCE ECONOMY’S
HISTORICAL OIL DEPENDENCY
SOLVE THE YOUTH BULGE 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 ~0.3%
or about N400 billion of GDP; other
key sectors include agribusiness at
22% and manufacturing 6.8%
• Vital that policy choices incentize
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
• Critical that we 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, Ministry of Solid Minerals Development
In the past 12 months, the Ministry’s role has taken on added significance as
Nigeria works to rapidly deliver on the President’s diversification promise:
An Overview of Nigeria’s Iron Ore and Steel Sector .
 Steel is the world’s most important engineering material and it is crucial to any
country’s industrialisation objectives.
In Nigeria most steel operations are focused on using imported scrap metal, and
hot/cold rolled steel and wire coils to produce finished products such as steel
roofing sheets, nails, pipes and reinforced steel bars.
Nigeria imports an estimated $3.3 billion of processed steel and associated
Derivatives representing 80% of the $4.2 billion total metal products imported per
year (~25MT/annum).
Despite the country's relatively robust iron ore reserves, there are only ~30 steel
rolling mills in the country with combined installed capacity of
6.5MT/annum; only 18 are operational, producing about 2.8 MT/annum using
100% scrap metal.
An Overview of Nigeria’s Iron Ore and Steel sector
An estimated $3.3 billion of much needed forex
is spent on steel imports annually.
 The steel sector is weak due to factors such as poor infrastructure for extracting,
processing and transporting bulk material e.g. freight rail transport, access roads
to mines, electrical power.
That said, the FGN is of the view that the Nigerian steel industry can be
attractive to investors due to the large untapped demand potential similar to
cement in 1990s.
The current market size of ~$3.3 billion/annum has potential to grow to $15.1
billion/annum with increased industrialization.
The growth can of course be driven off domestic feedstock i.e. the 12th largest
iron ore deposits globally (2nd in Africa) with over 2 billion tonnes of iron ore
reserves.
An Overview of Nigeria’s Iron Ore and Steel sector
An Overview of Nigeria’s Iron Ore and Steel sector
Source: USGS, 2012
Nigeria is the 12-richest country in the
world in terms of iron ore deposits
Steel production in Nigeria is via
melting of metal scrap
Nigeria’s reserves remain
underexploited
▪ Most reserves of iron ore are in Kogi,
others in Zamfara, Yobe, Niger states
▪ The only iron ore mine is in
Itakpe; government owned -
currently encumbered
▪ Demand largely met by imports
using scraps and cold rolled
steel bars
Iron ore reserves
Billion tonnes
Iron ore production
Mtpa Steel production ()
Mtpa
Mexico 0.4
South Africa 0.7
Mauritania 0.7
Nigeria 2.0
Guinea 4.5
India 4.5
China 7.2
Russia 14.0
Brazil 16.0
Australia 17.0 1
2
3
4
5
6
12
15
16
17 14.0
59.0
11.0
230.0
1,070.0
101.0
370.0
433.0
16.7
67.0
627.0
67.0
33.0
An Overview of Nigeria’s Iron Ore and Steel sector
Consumption of
steel per capita
per annum
Kg/yr
Nigeria currently lags behind global benchmarks on steel
consumption per capita with potential to grow
Egypt
Brazil
Russia
China
South Korea 1119
South Africa
Other Africa Average
India
World average
Nigeria
▪ South Korea’s demand for steel is largely fuelled
by increased industrial activity
▪ Between 1965 and 1970, dramatic increase in
demand for intermediate and capital goods (20kg
to 175kg per capita per year)
– Steel beams, flat sheets, rods, coils, bars
– Rise in real estate development, construction
of roads and bridges, fabrication, etc.
▪ Increased steel demand owing to increased
industrialization
– Building construction; power
– Automotive construction; Agriculture
– Road and bridge building; Military
– Refinery investments
– Machinery for rubber and plastics, textiles,
etc.
South Korea leads the world due to high
industrialization levels
Nigeria can expect an increase in demand for
steel in the coming decade driven by
industrialization
An Overview of Nigeria’s Iron Ore and Steel sector
Nigeria’s domestically focused iron ore and steel strategy is driven by our ability to
serve domestic demand, as well as the challenges in export markets today. Few
global steel investors have the capacity to expand into Nigeria:
• China: ~60 million tons of steel capacity was mothballed in
2015 as part of a plan to reduce production capacity; that has
had a knock on effect on global commodities market
• Britain/Tata Steel: Decision by Tata to sell / shut down its UK
branch has also signaled the end of British steel production
which declined from 18M tons/annum to 8M tons/annum
between 1988 - 2015 ; other European steel makers are also
challenged
• Private Companies: Many steel producers and suppliers from
Vale to Rio Tinto to BHP are struggling due to the down turn in
commodity prices and excess capacity in markets; we
anticipate continued cost cutting to rebalance the market
An Overview of Nigeria’s Iron Ore and Steel sector
WHY IRON AND STEEL INDUSTRY IN NIGERIA ?
Estimated amount of iron & steel requirements met by the local market,
(%). (V20:2020, NTWG, Mineral & Metal Development)
Our optimism is also informed by the fact that current local producers are meeting
less than 25% of estimated demand
An Overview of Nigeria’s Iron Ore and Steel sector
“
Nigeria’s current “core infrastructure” stock
(roads, rail, ports, airports, power, water, ICT) gap
based on international benchmarks is estimated to be USD80 billion.
To fund the infrastructure needs of its growing economy over the next 30
years, Nigeria would need to spend about USD 3 trillion. This investment
would allow Nigeria to close its current infrastructure gap and sustain an
ideal infrastructure stock level of 70% of GDP as it builds and maintains
infrastructure assets across all its seven key sectors.
”
Excerpt from a recent report by the National Integrated Infrastructure Master Plan
Iron Ore and Steel would account for the bulk of the material inputs
needed to industrialise Nigeria.
An Overview of Nigeria’s Iron Ore and Steel sector
That demand can be easily met as key precursor materials required by the steel
industry is also in abundance in Nigeria
Iron Ore Availability
• Conservative estimates of
over 2 billion tons of iron
ore resources are
projected to occur in
several locations.
• High grades of 50% Fe
discovered recently.
• Reserves likely to be
adjusted upwards as new
wave of exploration and
mapping starts to build on
insight developed pre-
1960.
An Overview of Nigeria’s Iron Ore and Steel sector
■ Coal
 Over 1 trillion tonnes of
coal resources occur in
over thirteen (13) states
of the federation
Yobe
Borno
Taraba
Bauchi
Kogi
Kwara
Benue
Edo
Adamawa
Delta
Plateau
Nasarawa
Ondo
Imo
Enugu
Anambra
Map of Nigeria showing Coal & Lignite
bearing States
Coal Mines in Kogi and Gombe States
Other key raw materials e.g. coal, manganese and limestone are in abundant supply
in Nigeria
An Overview of Nigeria’s Iron Ore and Steel sector
Limestone/Dolomite
Large resources discovered in
several locations around the
country
Manganese
Several areas discovered including
Kaduna, Kebbi and Niger States. Limestone Extraction
Other key raw materials e.g. coal, manganese and limestone are in abundant supply
in Nigeria
An Overview of Nigeria’s Iron Ore and Steel sector
The ownership structure and industry dynamics in Nigeria today is a barrier to
growth. That will change as we systematically move to resolve legal issues and
refine the industry structure through privatization and joint ventures.
Ownership Category Entity Name April 2016 Status
FGN Controlled
/ Owned
• Steel plant and/or
mills
• Ajaokuta Steel Company
Limited
• Nigerian Iron Ore and
Mining Company
• Not producing; assets
subject to arbitration /
quasi-legal proceeding
Privatized Steel Plant and Rolling
Mills
• Delta Steel Company
(DSC)
• Inland Rolling Mill
(Oshogbo, Jos and
Katsina)
• Partial production
Privately
Owned /
Controlled
• Steel Rolling Mills
• Foundry
• Cold Rolled Steel
Mill
• Multiple private mills e.g.
in Ogun State; Bua
Group
• Use 100% scrap metal
• Foundry at low capacity
utilization
• Uses imported hot
rolled coils as feed
stock
Our Strategy for Unlocking the
Sector’s Full Potential
Our Strategy for Unlocking the Sector’s Full Potential
 Aspiration: Build a world class minerals and mining ecosystem designed to serve a
targeted domestic and export market for minerals and ores.
 Where to Play: Nigeria will focus on rebuilding its minerals and mining and related
processing industry in 3 phases.
o Phase 1: Win over domestic users of industrial minerals that are currently
importing
o Phase 2: Focus on expanding domestic ore and mineral asset processing industry.
o Phase 3: Return to global ore and mineral markets at a market competitive price
point.
 How to Win: Nigeria will seek to build a minerals and mining sector initially focused on
using its industrial mineral endowment to support its industrialization; private investors
will be facilitated to lead this charge
 Initiatives: Nigeria will invest in a range of initiatives including infrastructure
investments, technical and engineering capacity, regulatory reform, reorganization of
the Ministry itself, and expansion of access to financing to drive sector transformation
 Results: Ministry will shortly launch a Mining Implementation Strategy Team to own
the implementation of the Roadmap over the coming decade.
To turnaround the broad mining and metals sector, at the end of March
2016, we completed a roadmap anchored on a set of key ideas:
Our Strategy for Unlocking the Sector’s Full Potential
Prod-
uction
Trade
Aspirations Assumptions
2
Based on plans for Iron Ore mining
operation in NIOMCO Itakpe and other
deposits
3
Midstream and downstream parts of the
industry (e.g., Ajaokuta Steel, DSC and
private companies) are developed in
tandem with the iron ore mining and steel
demand
Nigeria will constantly increase its
consumption of steel per capita from
current levels of 12kg per year to ~60kg
per year in 2020.
1
Within the iron ore and steel sectors, Nigeria’s objective is to be self-sufficient with end-to-end
integration from iron ore mining to crude steel production and forming and; to strengthen the steel
sector by developing functional linkages to the real economy.
202020172012
2012
N/A
20202017
Production of finished steel
products
Mtpa
Export of finished steel products
Mtpa
4.5
Our Strategy for Unlocking the Sector’s Full Potential
1 Support the development of an institutionalised coal/gas-to power plan for local
players to guaranty affordable energy.
2 Identify and foster locations for steel development sites/clusters
3 Support the provision of concessional loans to current downstream players to encourage
backwards integration
4 Support incentive to local sourcing of raw materials wherever possible (iron ore, coal,
limestone, scrap) using specific levers such as tailored import tariffs or subsidized prices
5 Develop and support a skill building program or encourage the transfer of knowledge by
attracting global experts
6 Ensure logistics corridors with iron ore mines
7 Offer favourable tax holiday and zero duties and levies on iron and steel.
.
Nigeria intends to drive industry growth via a series of targeted midstream actions:
Our Strategy for Unlocking the Sector’s Full Potential
Similarly, we intend driving industry growth via a series of targeted downstream actions:
1 Promote backwards integration capabilities for current processing players through
necessary incentives
2 Develop and enforce specific finished steel quality limits (e.g. dimensional accuracy,
brittleness, etc)
3 Incentivize local production of crude steel.
4 Ensure continued free trade agreements within the ECOWAS region
5 Develop and enforce crude steel quality limits through necessary regulation.
6 Design and advocate local content development in the sector through industry protection
7 Facilitate the acquisition of mineral titles for Steel raw materials by Steel plant owners.
Our Strategy for Unlocking the Sector’s Full Potential
Likewise, Nigeria intends driving industry growth via a series of targeted upstream actions:
1 Encourage and expedite the development of a robust fact base on Nigerian mineral
reserves
2 Modernize and publicize the Nigerian mining code for transparency into terms of mining
operations and ensuring commitments to the sector are specific and binding..
3 Work with states to build an enabling environment for mineral exploration and exploitation
4 Ensure Gas, Road and Rail infrastructure are extended to mining locations and or provide
incentives for mining related infrastructure and equipment investments.
5 Offer favourable tax incentives to attract reputable mining companies and zero duties and levies
on mining equipment and rigs
6. Support for low-cost and long-term capital.
7. Support restriction on the importation of Iron and Steel to fill the supply gap from the mining and
steel companies till self-sufficiency is attained.
An Overview of Nigeria’s Iron Ore and Steel sector
Successful execution of our growth plan will unlock significant value for Nigeria’s GDP:
Note: 1. We assume a 10% per annum mining sector growth rate. 2. We assume a conservative 2x multiplier effect for Nigeria. Based on global comparable analysis of mining jurisdictions including South Africa, Ghana and Australia. Mining typically has a 1.5x – 4.0x multiplier effect on related and supporting
sectors e.g. chemicals, equipment and services, hence its impact is broader than direct royalty and tax receipts
Source: Facts about mining ins South Africa (South Africa Chamber of Mines, November 2012), The Socio-Economic Impact of Newmont Ghana Gold Limited (Newmont Ghana Gold Limited, June 2011), The economic contribution of large scale gold mining in Peru (World Gold Council, May 2012). South Africa:
IDC and Quantec study, Bain Analysis, Federal Ministry of Solid Minerals
ESTIMATE OF MINING SECTORS’ CONTRIBUTION TO GDP (2015 – 2025) (US$
BILLIONS)
CAGR 2015-
25 10%
Mining Sector’s
Indirect GDP
Multiplier Effect
Ranges
~2.5x for S. Africa
~3.2x for Ghana
~1.7x in Peru
Nigeria Target: 2.0x
THANK YOU
CONTACT DETAILS
FOR ENQUIRIES, PLEASE CONTACT
Dr. Kayode Fayemi, CON
Minister
kfayemi@fmsmd.gov.ng
Ministry of Solid Minerals Development
2, Luanda Crescent, off Adetokunbo Ademola Crescent
Wuse II, Abuja, F.C.T, Nigeria
Director General
Mining Cadastre Office
37 Lobito Crescent, Wuse II, Abuja
www.miningcadastre.gov.ng
Director General
Nigeria Geological Survey Agency
Plot 31, Shetima Ali Munguno Crescent,
Behind Julius Berger Office
Utako District, Abuja
www.ngsa-ng.org
Engr. ALSO Abdullahi
Director, Steel Development
Ministry of Solid Minerals Development
2, Luanda Crescent, off Adetokunbo
Ademola Crescent ,Wuse II, Abuja, F.C.T,
Nigeria

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Unlocking Opportunities In The Iron And Steel Sector In Nigeria

  • 1. MINISTRY OF SOLID MINERALS DEVELOPMENT FEDERAL REPUBLIC OF NIGERIA
  • 2. UNLOCKING OPPORTUNIES IN THE IRON AND STEEL SECTOR IN NIGERIA Dr. Kayode FAYEMI Minister of Solid Minerals Development May, 2016 A presentation at the Stanbic IBTC Bank Plc’s Iron & Steel Workshop
  • 3. 1. About the Ministry of Solid Minerals Development. 2. An Overview of Nigeria’s Iron Ore and Steel Sector 3. Our Strategy for Unlocking the Sector’s Full Potential Today’s presentation will focus on 3 key issues:
  • 4. ABOUT THE MINISTRY OF SOLID MINERALS DEVELOPMENT
  • 5. About the Ministry of Solid Minerals Development. OUR MANDATE :-  The Ministry of Solid Minerals Development supervises the orderly 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 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 and significant contribution to the GDP of Nigeria.
  • 6. About the Ministry of Solid Minerals Development. REDUCE ECONOMY’S HISTORICAL OIL DEPENDENCY SOLVE THE YOUTH BULGE 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 ~0.3% or about N400 billion of GDP; other key sectors include agribusiness at 22% and manufacturing 6.8% • Vital that policy choices incentize 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 • Critical that we 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, Ministry of Solid Minerals Development In the past 12 months, the Ministry’s role has taken on added significance as Nigeria works to rapidly deliver on the President’s diversification promise:
  • 7. An Overview of Nigeria’s Iron Ore and Steel Sector .
  • 8.  Steel is the world’s most important engineering material and it is crucial to any country’s industrialisation objectives. In Nigeria most steel operations are focused on using imported scrap metal, and hot/cold rolled steel and wire coils to produce finished products such as steel roofing sheets, nails, pipes and reinforced steel bars. Nigeria imports an estimated $3.3 billion of processed steel and associated Derivatives representing 80% of the $4.2 billion total metal products imported per year (~25MT/annum). Despite the country's relatively robust iron ore reserves, there are only ~30 steel rolling mills in the country with combined installed capacity of 6.5MT/annum; only 18 are operational, producing about 2.8 MT/annum using 100% scrap metal. An Overview of Nigeria’s Iron Ore and Steel sector An estimated $3.3 billion of much needed forex is spent on steel imports annually.
  • 9.  The steel sector is weak due to factors such as poor infrastructure for extracting, processing and transporting bulk material e.g. freight rail transport, access roads to mines, electrical power. That said, the FGN is of the view that the Nigerian steel industry can be attractive to investors due to the large untapped demand potential similar to cement in 1990s. The current market size of ~$3.3 billion/annum has potential to grow to $15.1 billion/annum with increased industrialization. The growth can of course be driven off domestic feedstock i.e. the 12th largest iron ore deposits globally (2nd in Africa) with over 2 billion tonnes of iron ore reserves. An Overview of Nigeria’s Iron Ore and Steel sector
  • 10. An Overview of Nigeria’s Iron Ore and Steel sector Source: USGS, 2012 Nigeria is the 12-richest country in the world in terms of iron ore deposits Steel production in Nigeria is via melting of metal scrap Nigeria’s reserves remain underexploited ▪ Most reserves of iron ore are in Kogi, others in Zamfara, Yobe, Niger states ▪ The only iron ore mine is in Itakpe; government owned - currently encumbered ▪ Demand largely met by imports using scraps and cold rolled steel bars Iron ore reserves Billion tonnes Iron ore production Mtpa Steel production () Mtpa Mexico 0.4 South Africa 0.7 Mauritania 0.7 Nigeria 2.0 Guinea 4.5 India 4.5 China 7.2 Russia 14.0 Brazil 16.0 Australia 17.0 1 2 3 4 5 6 12 15 16 17 14.0 59.0 11.0 230.0 1,070.0 101.0 370.0 433.0 16.7 67.0 627.0 67.0 33.0
  • 11. An Overview of Nigeria’s Iron Ore and Steel sector Consumption of steel per capita per annum Kg/yr Nigeria currently lags behind global benchmarks on steel consumption per capita with potential to grow Egypt Brazil Russia China South Korea 1119 South Africa Other Africa Average India World average Nigeria ▪ South Korea’s demand for steel is largely fuelled by increased industrial activity ▪ Between 1965 and 1970, dramatic increase in demand for intermediate and capital goods (20kg to 175kg per capita per year) – Steel beams, flat sheets, rods, coils, bars – Rise in real estate development, construction of roads and bridges, fabrication, etc. ▪ Increased steel demand owing to increased industrialization – Building construction; power – Automotive construction; Agriculture – Road and bridge building; Military – Refinery investments – Machinery for rubber and plastics, textiles, etc. South Korea leads the world due to high industrialization levels Nigeria can expect an increase in demand for steel in the coming decade driven by industrialization
  • 12. An Overview of Nigeria’s Iron Ore and Steel sector Nigeria’s domestically focused iron ore and steel strategy is driven by our ability to serve domestic demand, as well as the challenges in export markets today. Few global steel investors have the capacity to expand into Nigeria: • China: ~60 million tons of steel capacity was mothballed in 2015 as part of a plan to reduce production capacity; that has had a knock on effect on global commodities market • Britain/Tata Steel: Decision by Tata to sell / shut down its UK branch has also signaled the end of British steel production which declined from 18M tons/annum to 8M tons/annum between 1988 - 2015 ; other European steel makers are also challenged • Private Companies: Many steel producers and suppliers from Vale to Rio Tinto to BHP are struggling due to the down turn in commodity prices and excess capacity in markets; we anticipate continued cost cutting to rebalance the market
  • 13. An Overview of Nigeria’s Iron Ore and Steel sector WHY IRON AND STEEL INDUSTRY IN NIGERIA ? Estimated amount of iron & steel requirements met by the local market, (%). (V20:2020, NTWG, Mineral & Metal Development) Our optimism is also informed by the fact that current local producers are meeting less than 25% of estimated demand
  • 14. An Overview of Nigeria’s Iron Ore and Steel sector “ Nigeria’s current “core infrastructure” stock (roads, rail, ports, airports, power, water, ICT) gap based on international benchmarks is estimated to be USD80 billion. To fund the infrastructure needs of its growing economy over the next 30 years, Nigeria would need to spend about USD 3 trillion. This investment would allow Nigeria to close its current infrastructure gap and sustain an ideal infrastructure stock level of 70% of GDP as it builds and maintains infrastructure assets across all its seven key sectors. ” Excerpt from a recent report by the National Integrated Infrastructure Master Plan Iron Ore and Steel would account for the bulk of the material inputs needed to industrialise Nigeria.
  • 15. An Overview of Nigeria’s Iron Ore and Steel sector That demand can be easily met as key precursor materials required by the steel industry is also in abundance in Nigeria Iron Ore Availability • Conservative estimates of over 2 billion tons of iron ore resources are projected to occur in several locations. • High grades of 50% Fe discovered recently. • Reserves likely to be adjusted upwards as new wave of exploration and mapping starts to build on insight developed pre- 1960.
  • 16. An Overview of Nigeria’s Iron Ore and Steel sector ■ Coal  Over 1 trillion tonnes of coal resources occur in over thirteen (13) states of the federation Yobe Borno Taraba Bauchi Kogi Kwara Benue Edo Adamawa Delta Plateau Nasarawa Ondo Imo Enugu Anambra Map of Nigeria showing Coal & Lignite bearing States Coal Mines in Kogi and Gombe States Other key raw materials e.g. coal, manganese and limestone are in abundant supply in Nigeria
  • 17. An Overview of Nigeria’s Iron Ore and Steel sector Limestone/Dolomite Large resources discovered in several locations around the country Manganese Several areas discovered including Kaduna, Kebbi and Niger States. Limestone Extraction Other key raw materials e.g. coal, manganese and limestone are in abundant supply in Nigeria
  • 18. An Overview of Nigeria’s Iron Ore and Steel sector The ownership structure and industry dynamics in Nigeria today is a barrier to growth. That will change as we systematically move to resolve legal issues and refine the industry structure through privatization and joint ventures. Ownership Category Entity Name April 2016 Status FGN Controlled / Owned • Steel plant and/or mills • Ajaokuta Steel Company Limited • Nigerian Iron Ore and Mining Company • Not producing; assets subject to arbitration / quasi-legal proceeding Privatized Steel Plant and Rolling Mills • Delta Steel Company (DSC) • Inland Rolling Mill (Oshogbo, Jos and Katsina) • Partial production Privately Owned / Controlled • Steel Rolling Mills • Foundry • Cold Rolled Steel Mill • Multiple private mills e.g. in Ogun State; Bua Group • Use 100% scrap metal • Foundry at low capacity utilization • Uses imported hot rolled coils as feed stock
  • 19. Our Strategy for Unlocking the Sector’s Full Potential
  • 20. Our Strategy for Unlocking the Sector’s Full Potential  Aspiration: Build a world class minerals and mining ecosystem designed to serve a targeted domestic and export market for minerals and ores.  Where to Play: Nigeria will focus on rebuilding its minerals and mining and related processing industry in 3 phases. o Phase 1: Win over domestic users of industrial minerals that are currently importing o Phase 2: Focus on expanding domestic ore and mineral asset processing industry. o Phase 3: Return to global ore and mineral markets at a market competitive price point.  How to Win: Nigeria will seek to build a minerals and mining sector initially focused on using its industrial mineral endowment to support its industrialization; private investors will be facilitated to lead this charge  Initiatives: Nigeria will invest in a range of initiatives including infrastructure investments, technical and engineering capacity, regulatory reform, reorganization of the Ministry itself, and expansion of access to financing to drive sector transformation  Results: Ministry will shortly launch a Mining Implementation Strategy Team to own the implementation of the Roadmap over the coming decade. To turnaround the broad mining and metals sector, at the end of March 2016, we completed a roadmap anchored on a set of key ideas:
  • 21. Our Strategy for Unlocking the Sector’s Full Potential Prod- uction Trade Aspirations Assumptions 2 Based on plans for Iron Ore mining operation in NIOMCO Itakpe and other deposits 3 Midstream and downstream parts of the industry (e.g., Ajaokuta Steel, DSC and private companies) are developed in tandem with the iron ore mining and steel demand Nigeria will constantly increase its consumption of steel per capita from current levels of 12kg per year to ~60kg per year in 2020. 1 Within the iron ore and steel sectors, Nigeria’s objective is to be self-sufficient with end-to-end integration from iron ore mining to crude steel production and forming and; to strengthen the steel sector by developing functional linkages to the real economy. 202020172012 2012 N/A 20202017 Production of finished steel products Mtpa Export of finished steel products Mtpa 4.5
  • 22. Our Strategy for Unlocking the Sector’s Full Potential 1 Support the development of an institutionalised coal/gas-to power plan for local players to guaranty affordable energy. 2 Identify and foster locations for steel development sites/clusters 3 Support the provision of concessional loans to current downstream players to encourage backwards integration 4 Support incentive to local sourcing of raw materials wherever possible (iron ore, coal, limestone, scrap) using specific levers such as tailored import tariffs or subsidized prices 5 Develop and support a skill building program or encourage the transfer of knowledge by attracting global experts 6 Ensure logistics corridors with iron ore mines 7 Offer favourable tax holiday and zero duties and levies on iron and steel. . Nigeria intends to drive industry growth via a series of targeted midstream actions:
  • 23. Our Strategy for Unlocking the Sector’s Full Potential Similarly, we intend driving industry growth via a series of targeted downstream actions: 1 Promote backwards integration capabilities for current processing players through necessary incentives 2 Develop and enforce specific finished steel quality limits (e.g. dimensional accuracy, brittleness, etc) 3 Incentivize local production of crude steel. 4 Ensure continued free trade agreements within the ECOWAS region 5 Develop and enforce crude steel quality limits through necessary regulation. 6 Design and advocate local content development in the sector through industry protection 7 Facilitate the acquisition of mineral titles for Steel raw materials by Steel plant owners.
  • 24. Our Strategy for Unlocking the Sector’s Full Potential Likewise, Nigeria intends driving industry growth via a series of targeted upstream actions: 1 Encourage and expedite the development of a robust fact base on Nigerian mineral reserves 2 Modernize and publicize the Nigerian mining code for transparency into terms of mining operations and ensuring commitments to the sector are specific and binding.. 3 Work with states to build an enabling environment for mineral exploration and exploitation 4 Ensure Gas, Road and Rail infrastructure are extended to mining locations and or provide incentives for mining related infrastructure and equipment investments. 5 Offer favourable tax incentives to attract reputable mining companies and zero duties and levies on mining equipment and rigs 6. Support for low-cost and long-term capital. 7. Support restriction on the importation of Iron and Steel to fill the supply gap from the mining and steel companies till self-sufficiency is attained.
  • 25. An Overview of Nigeria’s Iron Ore and Steel sector Successful execution of our growth plan will unlock significant value for Nigeria’s GDP: Note: 1. We assume a 10% per annum mining sector growth rate. 2. We assume a conservative 2x multiplier effect for Nigeria. Based on global comparable analysis of mining jurisdictions including South Africa, Ghana and Australia. Mining typically has a 1.5x – 4.0x multiplier effect on related and supporting sectors e.g. chemicals, equipment and services, hence its impact is broader than direct royalty and tax receipts Source: Facts about mining ins South Africa (South Africa Chamber of Mines, November 2012), The Socio-Economic Impact of Newmont Ghana Gold Limited (Newmont Ghana Gold Limited, June 2011), The economic contribution of large scale gold mining in Peru (World Gold Council, May 2012). South Africa: IDC and Quantec study, Bain Analysis, Federal Ministry of Solid Minerals ESTIMATE OF MINING SECTORS’ CONTRIBUTION TO GDP (2015 – 2025) (US$ BILLIONS) CAGR 2015- 25 10% Mining Sector’s Indirect GDP Multiplier Effect Ranges ~2.5x for S. Africa ~3.2x for Ghana ~1.7x in Peru Nigeria Target: 2.0x
  • 27. CONTACT DETAILS FOR ENQUIRIES, PLEASE CONTACT Dr. Kayode Fayemi, CON Minister kfayemi@fmsmd.gov.ng Ministry of Solid Minerals Development 2, Luanda Crescent, off Adetokunbo Ademola Crescent Wuse II, Abuja, F.C.T, Nigeria Director General Mining Cadastre Office 37 Lobito Crescent, Wuse II, Abuja www.miningcadastre.gov.ng Director General Nigeria Geological Survey Agency Plot 31, Shetima Ali Munguno Crescent, Behind Julius Berger Office Utako District, Abuja www.ngsa-ng.org Engr. ALSO Abdullahi Director, Steel Development Ministry of Solid Minerals Development 2, Luanda Crescent, off Adetokunbo Ademola Crescent ,Wuse II, Abuja, F.C.T, Nigeria