Randgold Resources
Clearly, despite all the challenges and difficulties our industry has been through or may continue to experience moving forward, there is always something to celebrate. That is what makes this job worthwhile!
- Laura Cornish, Editor
Mining investments
Interviews  
9 October 2017

Exclusive interview with Francisco Igualada, Senior Mining Specialist, Energy and Extractive Industries

He is a featured speaker at Nigeria Mining Week in October on “Establishing a strong  foundation for mining sector development: Enhancing competitiveness and fostering domestic investment in Nigeria.”

“In Nigeria we have managed to develop a real 'partnership' with the Federal Government of Nigeria and we are still working along with some of the States that have higher mining potentials.”

1)     Let’s start with some background on your work at the World Bank?
It is important to note that the Extractives Industries and Energy Department at the World Bank form a single Global Practice and we are driven by a strategy that is designed to reach four sets of outcomes, which, if achieved, should contribute to attaining the World Bank Group’s twin goals. Those WB goals are 1) End Extreme Poverty and 2) Promote shared Prosperity. Therefore our work at the WB is very broad and we try to focus it around revenue maximization & governance, Local content and shared infrastructure and skills, social and environmental sustainability and finally how we may contribute to conflict prevention by improving economic conditions.

Clearly all these aspects are directly linked to a sound and efficient way to develop the mining sector in Nigeria or in any other country that we are requested to support through loans. These loans are the vehicles for sustaining the country’s development as we are aiming at having fair conditions of repayment as well as to ensure that the right pace of legal, regulatory and economic reforms are creating the right environment ensuring transparency and good environmental and social practices. This sounds very good and interesting but we should not forget that each country has its specificities and the different mechanisms should adapt to those conditions as for instance we cannot start from the same premises in DRC, Guinea or Nigeria. However, and above all, one of our main concerns, besides technical aspects is to make sure that institutions are fully capable and governance issues are not going to affect the loan in a negative way.

2)     Any specific projects in the mining sector that the World Bank is involved in that you are particularly excited about?
The World Bank follows a kind of value chain that bring those countries we support from Non-renewable resources to a stage in which sustainable development may take place. Each country, as I said, has its own idiosyncrasy and characteristics. I am particularly excited about two projects; our critical involvement in DRC in support of the rationalization of the sector through nearly five years as well as my responsibility in managing our recently approved 150 million loan project (MinDiver) for developing the Nigerian mineral sector and diversifying it from its dependency on other sectors like Oil & Gas as H.E. President Buhari has clearly indicated in his inaugural speech; two sectors need continuous development in Nigeria, that are agriculture and mining. This is the reason why the Honourable Minister Dr. Kayode Fayemi with his drive and strong determination has led the initiative to put Nigeria “on the African mining map again” as, from my opinion, the country deserves.

From the Bank's side, I am really looking forward to contribute to transforming their potential resources into some tangible exploration and exploitation mineral projects bringing economic prosperity and jobs. Nigeria is the first African economy and really needs the employment that mining and all types of value-chain including local content can bring.

In addition we have another very interesting initiative called the Billion dollar map of Africa or AMGI (African Mineral Geoscience Initiative) in which we are developing some pilot projects, supported by the Korean international cooperation and this project is having difficulties in taking off and having some shape reason why we need as well some donor support to start.

3)     What in your view are the main challenges to the African mining sector? And Nigeria in particular?
The challenges are often well known though the solutions can vary from country to country and they constitute the main barriers such as financing since investors lack access to exploration and capital financing and are consequently unable to carry out preliminary work that would attract foreign companies and different types of investors working along the value-chain of the sector. Do not forget that mining is not like other sectors: it is very capital intensive and the lead times are very long from discovery to exploitation. Very often the lack of reliable geoscience data or (geo-data) is another blocking factor. There is a need to have access to pre-competitive geoscience knowledge and geological mapping suitable to identify prospective areas for attracting investor interest and to facilitate the targeting as well as encourage the development of pre-feasibility studies.

This is very important as many junior and mid-tier mining companies are unaware of the full mineral prospectivity potential of a country, as a result of incomplete coverage of geological mapping, at the required scale, and associated geochemical and geophysical surveys. In Nigeria we have managed to develop a real “partnership” with the Federal Government of Nigeria and we are still working along with some of the States that have higher mining potentials. I would like to mention that we have a long history of consultative processes and direct engagement starting in 2005 with the SMMRP WB-funded project that establish the frameworks such as legal, fiscal, mining cadaster basic geodata collection, ASM issues and formalization and also important we continue to strengthen the inspection functions among a large number of other activities. It is important to underline that, in Nigeria, the process has been fully inclusive with the participation of all key actors PS, MMSD DGs, States representatives and civil society.

As mentioned, our Bank's involvement in the country benefits from a broad partnership with other Nigerian and international counterparts. In addition, our engagement in Nigeria has been designed based on the “Roadmap for the Growth and Development of the Nigerian Mining Industry” and previous WB analytical work. Our current engagement in the country with the “MinDiver” project that is a lending operation, it can be considered as a “revitalizing program” to meet short (quick wins) and long-term objectives in a technically consistent and sustained way. I would also like to mention other important challenges such as infrastructure as in most African countries where infrastructure such as roads, rails, and electric power supply is fully inadequate for multi-sector planning to support exploration, mining, and mineral processing activities is a key blocking factor or challenge for developing the sector.  Moreover, investors also mention the inadequate master plans for water resource management, and this has become a limiting factor as well.  In Nigeria, it is clear that power supply to meet the increasing demands for mineral processing facilities is going to become an “important factor” impacting the sector. This means that in taking the decision to exploit or not an ore deposit; and such situation needs to be solved in a way that takes into account the interests and expectations of all stakeholders in a balanced and logical way.

Even if Nigeria was a country with a developed mining sector in the 70s and 80s, skills are very reduced -in the full range of disciplines related to the mining cycle-. Note that his aspect is certainly a common denominator to most African countries. Thus, we also see the need to improve human resources skills and adequate geological, geophysical, geochemical as well as mining & metallurgy training. There is a shared need as well to enhance the Regulatory aspects that are often complex and cumbersome, related to land acquisition, community relations, equipment importation and various types of issues affecting expatriates. Not less important are the challenges affecting mining sites -and Nigeria has a number of abandoned old mining sites- in Environmental, social and Health related matters. The aspects related to use of land by artisanal and small scale miners (ASM) are very critical in order to avoid social and health problems. In summary, Africa and Nigeria in particular, are facing similar challenges though its intensity and preponderance show varying levels as each country is certainly different in such a complex sector with such a number of different types of mineral deposits and social issues.

4)      What is your vision for the sector?
The mining sector as you know is composed from a large number of sub-sectors, even each commodity and type of mineral deposit could conform a sub-classification therefore it is very difficult to generalize looking into a uniform sector called just mining. However, I would say that Nigeria has a dormant mineral sector that needs to wake up, in other words ore deposits, old mines and infrastructures are there but, there is a need to boost the situation now. It is not useful to wait to a higher commodity prices cycle as Nigeria, let’s not forget, will be competing with neighboring countries in west Africa which are already mining destinations per-se, thus we need to get ready before such a time comes. I have some degree of confidence that the commodity cycle will change its current trend, perhaps, in a couple of years from now. The mineral sector continues to present important levels of volatility non predictability (if I may use this word) not only linked to commodity prices but also related to geopolitical factors in a number of African countries. It is impossible to make some reliable predictions on how the sector will behave in the coming years. However, from my own perspective, I see some signs of “slow recovery” that will be impregnating some specific commodities as some of them are starting to recover its cyclical trend. As far as, other aspects of the sector, it is showing some gains in terms of legal or regulatory enhancements bringing more transparency, as well as more pre-competitive geological knowledge. Even if there is a difficult substitution/ replacement in mine sites as no new large mines are in the pipeline so far. I wish I would have a crystal ball…Finally, I would like to mention that Nigeria has an important industrial minerals sub-sector and this is one of the quick wins that we are attempting to develop and where there is room for rapid improvements as Nigeria has already attracted some manufactures and the linkages downstream could become a key success factor.

5)      Which African countries are doing the right things in your opinion?
It is interesting to note the example of Botswana, Namibia, Kenya and Morocco and of course the decisive efforts started by Nigeria in recent times. It is rather difficult to make comparisons as the situation evolves and often there is not much political continuity. Therefore, again, predictability is a “risk-minimizing factor” like socio-political issues. And we should not forget that the mining sector in Africa pays strong attention to “risk levels” and, of course, the grade and tonnage of deposits because without such conditions it would be totally impossible to move ahead.

6)      You are a featured speaker at Nigeria Mining Week in October on “Establishing a strong foundation for mining sector development: Enhancing competitiveness and fostering domestic investment in Nigeria” - What will be your message at the event?
The initial message is rather straightforward “we need to get it right” once for all and this means that a “strong sector foundation” is a must. Afterwards facilitating downstream sector developments and the enhancement of competitiveness need to happen as a logical result. This cannot and should not be improvised and built on a piece-meal basis. Consequently, the only way to bring competitiveness….that obviously comes from competing with our external environment- is by building an integrated approach that would facilitate sharing information and resources with other development donors that are betting on Nigeria as well.  Competing should be both internal and external even if nowadays such distinction is a bit blurred due to globalisation of economies.

Mining without sub-surface knowledge cannot be sustained, thus boosting precompetitive geoscience data and sound deposit valuations is key to attract serious investors in Nigeria where geological & mining potentialities are known to exist but no large corporations are present only junior exploration companies

In my opinion, the extractive sector is a good example of such global reach. Clearly, domestic investment becomes key for building something consistently that will not drive Nigeria to an external dependency.  I believe that this requires good planning, good decisions and more importantly, timely actions. I am really confident that the government is making the right decisions in fully supporting the sector so decisively. My end message is: we need to be able to work, work and work… together to consolidate day-by-day all those small steps achieved so far, in sector development. It is important not to be complacent but very demanding in all aspects especially quality of project outputs.

7)      What are you most looking forward to at the event?
I really like to see a wide and serious audience of companies and mineral operators committed to the sustainable development of the sector in Nigeria to establish more and more partnerships among donors and financers and finally I would also like to see the social and economic development value for the Nigerian population. Finally I would like to better understand how we, together, may improve our support actions within the sector.

8)      Anything you would like to add?
I am sure the conference will be a success and I am really looking forward to the opening day for the benefit of Nigeria.

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