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Bank loans to mining sector in Q3 2023 surge by 296% —  CBN

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By Sodiq Adelakun

In a remarkable turn of events, Nigeria’s mining and quarrying sector has seen an unprecedented surge in bank loans in the third quarter of 2023.

According to the Central Bank of Nigeria’s (CBN) latest quarterly statistical bulletin, borrowing in the sector skyrocketed to an astonishing N12.76 billion.

This figure marks a 296 percent increase from the N3.22 billion reported in the previous quarter, signaling a strong demand for capital amidst wider economic headwinds.

The total debt of companies in the mining sector had jumped by 43 percent to N42.35 billion, a significant rise from N29.59 billion at the end of June.

This growth in financial commitment to the sector is particularly striking given the regulatory challenges faced during the same timeframe. In a sweeping move to clamp down on illegal mining operations, which have been linked to environmental harm and a rise in insecurity, no fewer than five Nigerian states imposed bans on mining activities.

Taraba State led the charge in June 2023, with Governor  Agbu Kefas issuing Executive Order No. 3, which brought all mining activities to a standstill from June 23. Niger State followed suit in August under Governor Mohammed Umaru Bago’s orders, suspending all mining operations.

The trend continued into September, with Zamfara, Kebbi, and Enugu states all enacting similar prohibitions. The juxtaposition of the sector’s financial influx with the regulatory crackdowns highlights the complexities of Nigeria’s mining industry. The increased financial activity suggests a robust confidence in the sector’s prospects, despite the government’s stringent measures to curb illegal mining and its associated security challenges. The situation remains dynamic, with industry observers keenly watching how these developments will shape the future of mining in Nigeria.

These state-level interventions coincide with broader national security concerns. Previously, in 2022, the former Minister of Justice, Abubakar Malami, floated the idea of a nationwide mining ban as a strategy to undercut the financial pipelines fueling terrorist activities.

However, these measures have not been without controversy. The Miners Association of Nigeria (MAN) has criticised the state-imposed bans, arguing that such actions infringe on federal jurisdiction over mining and mineral resources.

The association’s grievances point to a contentious legal and regulatory landscape, which may further heighten the risk tendency of the mining sector.

The state bans, while aimed at curbing illegal mining and its associated security risks, also raise questions about the impact on legitimate enterprises and the broader economic implications for regions reliant on mining for revenue and employment.

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Money market

Naira depreciates by 0.17% against dollar at official market

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The Naira on Thursday slightly depreciated at the official market trading at N1,476.24 to the dollar.

Data from the official trading platform of the FMDQ Exchange, revealed that the Naira lost N2.58.

This represents a 0.17 percent loss when compared to the previous trading date on Tuesday when it traded at N1,473.66 to the dollar.

Also, the volume of currency traded reduced to $92.68 million on Thursday down from $385.91 million recorded on Tuesday.

Meanwhile, at the Investor’s and Exporter’s (I&E) window, the Naira traded between 1,500 and N1,400 against the dollar.

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Money market

GTCO issues Notice of Proposed Offering

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By Seun Ibiyemi

Guaranty Trust Holding Company Plc (GTCO PLC) has filed a preliminary “red herring” prospectus (Red Herring Prospectus) with the Securities and Exchange Commission (SEC) in connection with a proposed offering for subscription of ordinary shares of 50 kobo each in its share capital (the Ordinary Shares) to raise gross proceeds of up to N500 Billion (the Proposed Offering).

The number of Ordinary Shares to be offered and the price range for the Proposed Offering have not yet been determined.

According to the notice cited, the notice is issued in reliance on Rule 283 of the Rules & Regulations of the Securities & Exchange Commission, Nigeria. The notice read in part, “This notice does not constitute an offer to sell or the solicitation of an offer to buy any securities. Any offer, solicitation or offer to buy, or any sale of securities will be made only by a prospectus duly registered by the Securities and Exchange Commission, Nigeria (SEC) in accordance with the provisions of the Investments and Securities Act, No. 29, 2007 (the Act) and the rules and regulations of the SEC made pursuant to the Act (the SEC Rules).

Stating the purpose of the proposed offering, the notice further read that, “The net proceeds of the Proposed Offering will be used for (i) the growth and expansion of the GTCOPLC Group’s businesses. Such planned growth and expansion will be effected through investments in technology infrastructure to fortify existing operations, the establishment of new subsidiaries and selective acquisitions of non-banking businesses; and (ii) the recapitalisation of Guaranty Trust Bank Limited”.

Identifying the target investors, the notice read that, “The Proposed Offering is structured as an institutional offering targeted at eligible investors and a retail offering within Nigeria (the Nigerian Tranche) and a private placing to persons reasonably believed to be qualified institutional buyers outside Nigeria (the International Tranche)”. The Proposed Offering is anticipated to open by July, 2024.

The filing of the Red Herring Prospectus was undertaken with a concurrent filing of a preliminary universal shelf registration statement. The universal shelf registration will permit GTCOPLC to establish a multi-currency securities issuance programme (the Programme) to issue various types of securities, or any combination of such securities, in one or more offerings, from time to time, to raise proceeds in an aggregate amount of up to U.S.$750 million (or equivalent amount in Nigerian Naira) in the Nigerian/international capital markets during the validity period of the Programme.

The Proposed Offering is expected to be the first issuance under the Programme.

For a caveat, the notice read that, “This notice does not constitute an offer of securities for sale in the United States or to U.S. persons (“U.S. persons”), as such term is defined in Regulation S promulgated under the United States Securities Act of 1933, as amended, (the U.S. Securities Act). The Ordinary Shares being offered have not been, nor will be, registered under the U.S. Securities Act or any state securities laws, and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from such registration requirements”.

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NDIC lists Heritage Bank’s head office, other assets for sale

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The Nigeria Deposit Insurance Corporation has listed the head office in Lagos and branches of failed Heritage Bank across the country for sale in its role as liquidator of the bank.

NDIC announced the sale of the bank properties numbering 48 and its chattel including vehicles, office equipment, plant, and machinery in another 62 locations across the country in an advertorial published on Thursday.

“The Nigeria Deposit Insurance Corporation in the exercise of its right as Liquidator of failed Deposit Money Banks hereby invites interested members of the general public to buy the assets (landed property and chattels) of defunct Heritage Banks through public competitive bidding,” part of the advertorial read.

The head office of the bank and its annex located at 143 Ahmadu Bello Way and 130 Ahmadu Bello Way, Victoria Island, Lagos was listed for sale (buildings, chattels, generator, and motor vehicle). Also listed for sale were six other branches in Lagos, four branches in Abuja, four in Rivers States, and the others spread across the country.

Interested parties are invited to come for an inspection and subsequently put in bids on the assets to be submitted to the NDIC office in Lagos.

Bids are expected to come in with 10 percent of the bid amount in Certified Bank Draft. Successful bidders will be required to pay the balance of the bid price within two weeks of notification.

Earlier, the corporation announced the commencement of the verification and payment of the depositors of the bank with N5m or less in their accounts. This category of customers makes up about 99 per cent of the bank customers.

The Managing Director of the NDIC, Bello Hassan, at a media briefing on the liquidation of Heritage Bank in Abuja last Wednesday, put the total depositors at Heritage Bank at 2.3 million.

Hassan noted that the total bank deposits at Heritage Bank stood at N650 billion  while its loan portfolio was about N700 billion.

In announcing the revocation of the licence of Heritage Bank, the apex bank in a statement signed by the Acting Director of Corporate Communication, Sidi Ali, said, “This action has become necessary due to the bank’s breach of Section 12 (1) of BOFIA, 2020. The board and management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability.

“This follows a period during which the CBN engaged with the bank and prescribed various supervisory steps intended to stem the decline. Regrettably, the bank has continued to suffer and has no reasonable prospects of recovery, thereby, making the revocation of the licence the next necessary step.”

Stakeholders in the sector have gone on to express confidence in the decision of the CBN in the overall interest of the sector.

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