“Congratulations,” said the voice at the other end of the call. It was the fifth call Nere Teriba received in less than 10 minutes. There are also messages on her phone, which she plans to read much later. They are all congratulatory messages. “Go, girl. You rock!” reads the message staring at her as she peeped at her phone for the last time, repeating the words she had read almost inaudibly. Surprised at the sudden frenzy about a gold refining license her company secured months earlier, Nere smiles as she recalls months of hard work. Kian Smith can finally start smithing.
Starting in 2019, Nere Teriba, Vice Chairman of Kain Smith Trade & Co Ltd., will become the first and youngest Nigerian to refine gold locally.
“On one hand, we can say it took a few months, on the other hand, it took seven years,” says 36-year-old Nere Teriba as she tells The Nerve Africa how long it took the company to secure the gold refining license.
It was a meeting of preparation and opportunity for Nere, who had a proposal on a gold reserve buying programme for the country ready when she was invited to join the Economic Recovery and Growth Plan (ERGP) focus labs. Her proposal highlighted the need for a gold policy and a framework for gold refinery license permit structure for anyone who wants to apply for one.
The proposal by Nere’s Kian Smith made a case for the establishment of a Nigerian Gold Council which will be in charge of the country’s gold policy.
“The establishment of the council will drive innovation, stimulate the economy, and generate income for government coffers,” the proposal states. “Nigeria can become a gold economy irrespective of whether it mines gold or not. India, UAE, Singapore, Italy, Switzerland, Turkey and London are renowned world gold markets without the classification of gold mining countries.”
Kian Smith raised some important questions in its proposal, some of which formed the basis of The Nerve Africa‘s discussion with Nere when we met her at an art-themed tea room in Victoria Island, Lagos in October, weeks before the groundbreaking of her refinery.
Nere paused at different intervals during our conversation, politely explaining, each time, why she had to answer her phone calls. Nere runs a multimillion-dollar minerals, commodities and mineral services company, which has grown tremendously over seven years. Sleeves always up, ready to work, Nere plays in a male-dominated industry, where women sometimes have to work twice as hard to make desired impact. To Nere, mining is a calling and she would give all it takes to help Nigeria and by extension, West Africa harness the mining economy.
How can the existing gold value chain be organized and strengthened? One of the questions posed in Kian Smith’s proposal stems from Nere’s belief that the Nigerian mining industry is not as broken as most people believe.
“The issue is not that there is no regulation, it’s just that they are not enforced,” explains Nere, who has plans on how to help the government solve some of the major challenges faced in the mining industry, especially as it concerns artisanal and small-scale miners.
Mining in Nigeria
Organized mining in Nigeria started in 1903 when the British Secretary of State for the Colonies established the Mineral Survey of the Southern Protectorate of Nigeria. In 1904, a survey of the Northern Protectorate was also established as the exploration of mineral resources for use as raw materials in Britain began. As a result, several mineral deposits including Columbite, Bitumen, Coal, Iron Ore and Gold were discovered. However, it was not until 1913 that Gold production started, peaking in the 1930s before World War II brought about a decline.
Nigeria had no choice but to participate in the war, being a colony of Britain. With Britain’s economic, industrial and military power weakened by World War I, the kingdom fell back on its colonies, using both their human and natural resources to prosecute WWII. Colonial companies abandoned mines during the war and the gold mining industry has not recovered since then.
Although in the 1980s the Nigerian Mining Corporation (NMC) resumed gold exploration, it could not sustain it. Fast forward to the 2000s, artisanal mining has become a thing in Nigeria, from Bin Yauri in northern Nigerian’s Kebbi State, to Bagega in Zamfara State where 163 people died from lead poisoning in 2010.
Investing in Mining
There have been attempts in the past to bring the mining industry up to date to make it attractive to private investment. Beginning in 2007, the Nigerian Minerals and Mining Act was introduced, setting the rules for the exploration and exploitation of solid minerals. The law stated that the government owns all the country’s mineral resources. However, in 2011, the year Kian Smith was registered in the country, the government released new mining regulations, which was believed would bring about greater accountability in the sector. This also, was reviewed, leading to the Roadmap for the Growth and Development of the Nigerian Mining Industry which was adopted in September 2016.
The country is gradually getting it right, showing an unprecedented commitment to the growth of the mining industry, with the issuance of a gold refining licence to Kian Smith one of the recent wins in the industry. The company has already started work on the site of its new refinery in Ogun State, south west Nigeria. Nigeria’s Minister of State for Mines and Steel Development Hon. Abubakar Bawa Bwari broke the ground at the site on December 13 as construction began.
“During the focus labs of the Economic Recovery and Growth Plan (ERGP) of this administration, we discovered that a well organised gold value chain can trigger an economic revolution like it did in India, South Africa, Switzerland and others,” Hon. Bwari said at the groundbreaking ceremony. He explained that his Ministry was determined to develop the mining sector to increase its contribution to Nigeria’s GDP, improve its capacity to create jobs and engender sustainable mining.
Nere says the refinery will be ready to start production by the end of the first half of 2019.
While Nere did not disclose details of investment in the new refinery, which she says include both local and international interests, she says Kian Smith is working with several banks, including Stanbic IBTC Bank and Zenith Bank Plc. According to her, Kian Smith is also in talks with the African Finance Corporation (AFC).
“The truth is, we need banks,” says Nere. “Not even so much for the setup; we need banks for the trading. To buy an unlimited amount of gold, at any time, to refine; we need the banks,” Nere says.
She dismisses the widely held belief that banks are not committed to the mining industry.
“The issue with banks is ‘show me your bankable feasibility study (BFS)’, and most Nigerian miners cannot show that, because they haven’t got the investors who will do the work to produce the BFS. So, the thing is banks are looking for that; Nigerians don’t have that.”
She adds that a bank would like to see a supply contract, a buying contract; “those are the transactions that banks are considering”.
Nere believes that for every player in the mining industry who can get their acts together, banks are always ready to do business. After all, she’s working with some banks to bring her refinery to life next year. Nere says the refinery has the potential to provide more than 500,000 direct and indirect jobs. But beyond jobs, Kian Smith is interested in helping to build the gold value chain in Nigeria.
Nere is hopeful things will get better but admits the mining industry in Nigeria is a tough one to play in. She highlights policy inconsistency and the reaction of mining communities to operators as two of the major challenges the industry faces.
“The reason why the sector has struggled and even investors have issues is because the Nigerian ecosystem does not encourage long-term investment and perseverance to get anything,” Nere says. “Everybody wants money now.”
One of the issues Nere’s Kian Smith is taking up with the government is how to grant gold a VAT-free status. She explained the dynamics of VAT as it concerns gold.
“Gold should be VAT-free because it’s a financial instrument. However, even if there will be VAT on gold, it should not be too high so as to encourage export. We need the government to review VAT status on gold bars and coins,” Nere says.
According to her, the Nigerian government is working with the United Nations Industrial Development Orgasnisation (UNIDO) and other bodies to decide an efficient policy on gold products and alloys.
Kian Smith is also working on seeing import duties on gold and gold doré reduced.
Source / Read More: The Nerve Africa