Nigeria: FG Signs U.S.1 Billion Mining Deal with Foreign Investors

May 15, 2012 (allAfrica) -- In a move that will further diversify the economy from the oil sector and kick-start an industrial revolution, the federal government yesterday signed a memorandum of understanding (MoU) with Glencore International plc to invest $1 billion (about N157 billion) in the mining industry.

Segun Aganga, Trade & Investment, Nigeria

The government also said that, in its bid to achieve power adequacy in the country, plans have been made to deploy LG electric bulbs that will save energy consumption.

Glencore International Plc is a multinational commodities trading and mining company headquartered in Baar, Switzerland, and with its registered office in Saint Helier, Jersey.

Glencore is the world’s largest commodities trading company, with a 2010 global market share of 60 per cent in the internationally tradeable zinc market, 50 per cent in the internationally tradeable copper market, 9 per cent in the internationally tradeable grain market and 3 per cent in the internationally tradeable oil market.

Glencore has production facilities around the world and supplies metals, minerals, crude oil, oil products, coal, natural gas and agricultural products to international customers in the automotive, power generation, steel production and food processing industries.

Segun Aganga, minister of trade and investment, said the presence of the Glencore in Nigeria is a major development that will bring about a robust mining industry and induce development in other areas as well.

He said he expected the presence of the global company to boost the level of trade between Nigeria and other countries.

Meanwhile, a two-day workshop  on enhancing the productivity of Nigeria’s industries, organised by the Ministry of Trade and Investment in Lagos, commenced yesterday. Captains of the manufacturing sector like Aliko Dangote and Kola Jamodu were present at the workshop.

Minister Aganga, who declared the workshop open, noted that as part of the industrial revolution, the ministry had started brainstorming with the organised private sector and the Ministry of Power to reduce the cost of doing business in Nigeria and ultimately increase the productivity of the manufacturing sector.

He said that the nation’s industrial revolution plan would be based on areas  where the country had comparative and competitive advantage, adding that the government had embarked on far-reaching reforms aimed at improving the business climate and making Nigeria the preferred investment hub in Africa and globally.

He said, “Africa’s share of the global trade is only 3 per cent. This is because Africa has been exporting raw materials rather that exporting finished products. For us as a country, manufacturing is very important because it solves three critical problems: it solves the problem of GDP growth, unemployment and balance of payment.

He said manufacturing  is critical for wealth creation. “If we are going to move from a poor nation to a rich country, industrialisation holds the key because it has the potential for unlocking the wealth of our country.

This is why we are kicking off an Industrial Revolution Plan for our country,” said Aganga. “Part of the objectives of this workshop is to come up with big, practical and implementable steps on how to remove the barriers to industrialisation because we must industrialise our country. If we are going to diversify our economy, then, the industrial sector must play the leading role.

If we are going to move from a poor nation to a big nation, we must have a strong and vibrant industrial sector”.

Speaking during the event, the minister of power, Prof. Barth Nnaji, said that the federal government was committed to the successful implementation of its power sector reforms programme, adding his ministry would partner the Ministry of Trade and Investment on the provision of dedicated, uninterrupted power supply to key industrial areas across the country to fast-track the country’s industrial revolution plan.

According to the power minister, the new tariff that will soon become operational will be subsidised for low electricity consumers, particularly in the rural areas.

Also, he said, in a bid the conserve energy, government has concluded plans to deploy LG electric bulbs that will reduce the amount of power consumed. According to him, about 80 per cent of energy will be saved with the usage of the new bulbs.

“As part of this strategy, we are going to partner the Ministry of Trade and Investment on delivering more power to the country’s industrial areas such as Lagos, Kano, Kaduna, Onitsha, Aba, Shagamu and other places. Already, we have mapped out the industrial areas and more power will be delivered to these industrial centres,’’ he added.

“For example, we have concluded plans to move power about 1,000MW from the two power plants at Olorunsogo to Shagamu. This is because we have identified power as very critical to Nigeria’s Industrial Revolution Plan.

Part of the problem militating against investment in the power sector is that we operate a non-cost reflective tariff structure.

Currently, power producers owe gas producers about N24 billion due to our non-cost reflective tariff.’’