The funding is part of the government's plan to encourage the local miners and to lure investors to the industry.
This was disclosed by the Minister of Mines and Steel Development, Dr. Kayode Fayemi, at the two-day conference on Sustainability in the Extractive Industries (SITEI) on Thursday, July 20, 2017, in Abuja.
He said that the funding is part of the government's plan to encourage the local miners and to lure investors to the industry.
He explained that it will be disbursed through the existing Development Finance Institutions (DFIs) in the form of loan interest loans that will support the industry.
According to Dr. Fayemi, "We have decided at the level of the Ministry to put in at initial stage N2.5bn to our DFIs, as a Pilot project to our small scale miners, who have been able to show proof of what they have been able to do.
"We are working with our DFIs to finalise modalities, so that they could access this money.
"We give the DFIs money through the banks and develop the template that would guide access to the money. We would ensure monitoring and evaluation of the process."
He also said, "We are working with the Nigerian Sovereign Wealth Fund to develop an investment vehicle for mining, which is huge sum of money close to $500 million. We are also targeting junior miners, whose projects have long gestation periods."
The minister noted that the Federal Government is not neglecting the bigger players in the sector, as it is also supporting them to do explorations and transition to production.
He said while the government is working tirelessly to attract global attention to the mining sector, it has to review some laws and regulations that make it hard to be competitive.
"The Nigerian Mining and Mineral Act by and Large is a good law, it is 10 years old and we are reviewing it currently to fill gaps we have received as feedbacks from players in the industry," he said.
Dr. Fayemi also condemned the raw exportation of the country's minerals, stating that the country imports 80 percent of bitumen used even though it is one of the most endowed with the product.
He said, "We are working with the customs on this. We are encouraging our companies and giving them 18 months before we can come down heavily against them.
"We do not take kindly to raw exportation of our minerals because it can be processed, and there are companies that are adding value now to what they produce. We need to work and support them."
Dr. Fayemi also said the Federal Government is working on how to create avenues for states to participate better in the mining sector.
"We said the states can set up a company, approach government for a license and use that to mine.
"States have latched onto that. We have also organised a session with them on how you run a Special Purpose Vehicle in the mining and mineral sector.
"Just a week ago, we gave Ondo state government a license for Bitumen exploration and we have been doing this with many states," the minister said.