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Fidelity Bank offers N100m financing window for miners


May 10, 2007/ Punch



<P>Despite the reforms in the solid minerals sector designed to attract investments, one major challenge that has hindered the development of the sector is lack of access to finance.</P>
<P>The sector, which has the potential of contributing significantly to the growth of NigeriaÃÃâ€


’¢â‚¬â„¢s economy and competing with the oil sector in terms of contribution to the Gross Domestic Product, is more or less in oblivion.</P>
<P>It was against this backdrop that the Nigerian Mining and Geosciences Society held its annual lecture on Friday with the theme, ÃÃâ€


’¢â‚¬Å“Financing Imperatives for Nigeria’s Solid Minerals Sector.”</P>


<P>The lecture, which attracted shareholders in the finance sector, was aimed at opening up a window of financial opportunity for miners, according to the President, NMGS, Mrs. Marie Sonuga.</P>
<P>She noted that in spite of efforts to resuscitate the solid minerals sector, the sector’s performance was woeful.</P>


<P>Currently the mining sector contributes 0.12 per cent to the Nigeria’s GDP, according to official data.</P>


<P>Sonuga said one of the areas that was a major bottleneck to the sector’s development was the absence of finance.</P>


<P>According to her, the finance and banking sector still has a vague understanding of the solid minerals sector based on lack of knowledge of the dynamics of the sector, opaqueness of operations by both government and private entrepreneurs, and the unwillingness of the finance sector to undertake the seeming high risk and long-term investments.</P>


’¢â‚¬ËœThere is no doubt that unless we begin a serious sustained interface between these two sub-sectors of the economy there will continue to be a lacuna,” she said.</P>


’¢â‚¬Å“This will lead to an obvious disconnection in the chain of resources evaluation, mining, production, processing and marketing of these mineral commodities,” she added.</P>


<P>In what came as a succour to the operators, the Managing Director of Fidelity Bank Plc, Mr. Reginald Ihejiahi, said that the bank had made a proposal to the ministry of solid minerals and steel development that would see the bank funding barite and bentonite mining projects to the tune of N100m.</P>


’¢â‚¬Å“The package is aimed at providing immediate funding for operators in the sector for capacity building,” Ihejiahi said.</P>


’¢â‚¬Å“It is also aimed at ensuring adequate supply of products to consumers in the oil and gas industry in order to sustain drilling activities in the sector,” he added.</P>


<P>Both barites and bentonite are industrial minerals used in drilling oil wells in the oil and gas sector.</P>
<P>With crude oil prices hitting record highs, analysts predict a boom in the exploitation of the two mineral commodities.</P>


<P>Ihejiahi, while delivering his paper, noted that one of the major challenges facing the mining sector was lack of access to finance.</P>
<P>He said the bank had created a desk for financing options for projects in the mining sector.</P>
<P>The Fidelity Bank boss also said the basic challenge to funding in the sector was the unstructured nature of the industry with businessmen that lacked acumen in the sector having an upper hand.</P>


<P>“Besides, the lack of bankable proposals because of the preponderance of informal players has hindered the sector from accessing finance,” he said.</P>


<P>Nigeria, Africa’s largest crude oil exporter to the United States of America is endowed with 34 largely unexploited mineral commodities in over 450 locations.</P>


<P>In 2005, the country embarked on reforms to attract private investors into the sector but the frequent change of leadership in the ministry has spurred investors’ apathy towards the sector.</P>


<P>Ihejiahi said the changes were not good for a fledgling sector.</P>
<P>He called on the Federal Government to ensure policy consistency in the sector.</P>
<P>He reiterated that the key factors to the growth of the sector were the availability of modern equipment for operators, adequate power supply and long-term funding.</P>
<P>He said the lease option was a viable alternative in view of the high cost of equipment. ÃÃâ€


’¢â‚¬Å“We are ready to also offer the lease option to miners,” he added.</P>


<P>According to him, the development of the sector will create the needed job opportunities in the country with a significant improvement on the economy.</P>
<P>The General Manager Exploration/ Executive Director, Mobil Producing Nigeria, Mr. Chikwe Edoziem, lauded the finance option of Fidelity Bank.</P>
<P>He called on stakeholders in the industry to double their efforts in order to optimally harness the potential in the mining sector.</P>
<P>“This will help transform the country into a modern and industrialised nation within the shortest possible time” said.</P>
<P>He said the country’s mineral potential, if properly harnessed, could support operations in the oil and gas sector.</P>
<P>Edoziem noted that many projects in the oil and gas industry were entirely dependent on iron and steel products that could be sourced locally.</P>
<P>He said that a strategy that would encourage local production of solid minerals used in the oil and gas industry would certainly enhance Nigeria’s local content development policy and by extension, build the capacity of Nigerian entrepreneurs.</P>
<P>“An understanding and appreciation of all possible financing scenarios for solid minerals development, is therefore a development in the right direction,” he added. <EM><SPAN style=\"FONT-SIZE: 8pt; COLOR: #dcdcdc\"></SPAN></EM></P>

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