Dr Davies Ibiamu Ikanya is the Chairman, Hope-Up Integrated Industries, producers of industrial gases processors of barite, an essential solid mineral used as drilling fluid in the oil industry. In this interview with FRANCIS KADIRI, he calls on the Federal Government to make effective, the Executive Order on Ease of Doing Business, saying the inability of government to address challenges of electricity supply as well as end the importation of barite has continued to militate against the growth of the Nigerian economy. Excerpts.
What is the major challenge of the production industry in Nigeria today?
Poor power supply is the biggest problem facing the manufacturing industry in Nigeria. Heavy duty machines are used in production and they are powered with huge electric power. Since government is not yet able to fix the problem, it should encourage manufacturers by reducing the tariff on power used by manufacturing industries. In terms of power generation and availability, government has not been able to put in place the kind of working environment needed for the production industry to thrive.
How does this costly production affect the cost of your services?
In business, you never say die. You must encourage yourself and you must move-on even when the business climate is toughest. So, we are moving on despite the excruciating challenges. However, the truth is that it is difficult to grow in the midst of various problems that could have been solved if the country has a working system. So, you see stagnation in the industry because you are not making profit and therefore you cannot promote staff because you need to pay them if you promote them.
Apart from that, you can’t increase remuneration and you can’t execute growth plans of expansion, purchase of more equipment, among other plans. It is sad that the excruciating circumstances under which we operate do not allow us to expand the scope of operation, increase turn over because we are not making enough profit. Sometimes we make losses.
Government should ban importation of barite and should also regulate price of barite. The oil companies should be made to purchase barite from local producers at the same rate they have been importing barite
How exactly can these problems be solved for your industry?
Simple! Government should ban importation of barite and should also regulate price of barite. The oil companies should be made to purchase barite from local producers at the same rate they have been importing barite. If they have been importing at two hundred dollars per ton, why are they buying from local producers at thirty dollars? They should be able to buy at 150 dollars from local processors of barites. If the oil producers buy barites at 150 dollars per ton from local processors, they make some profit from not importing while the local producers also make some profit. This is what it should be but they continue to buy from us at thirty dollars.
If the federal government bans importation of barite, it would be a springboard for multifaceted development of the economy because a lot of indigenous business will thrive and flourish while new one will be established. The ban, when done, will give way for inward looking for Nigeria, especially if the Nigeria Content Development and Monitoring Board also regulates the price of barites in the country. Pricing will enable indigenous miners to get added value for their products.
In addition to this, a ban on importation of barites will also make processors get added value for their works. As it is now, processors of barites are producing at a loss in order to be able to supply. The off-takers are taking it from us at very low cost. When you are paid so little for your product, you are likely to begin to cut corners in order to make some profit. So, for this reason, price regulation is very important just as the quest for production of high quality barite of not less than 4.0 Specific Gravity quality is also important. Therefore, government should pursue quality and price regulation of barite in the country. Indigenous producers must produce high quality barite while government must move to ensure that they are able to sell the product at rates that will pave way for economic development and growth of the industry. This done, the quality will improve, the workforce will also improve, more people will become interested in investing in barite and the economy will grow.
What processes sustain high processing costs?
Production is capital intensive apart from the regular bills of salaries that must be paid. The cost of machines and equipment must be met besides labour. So the issue of regulation in terms of pricing is inevitable if indigenous processors will make the needed headway.
Can you shed more light on the problems of pricing?
A point of note is that while Oil Producing Companies buy barite from drilling companies at about two hundred dollars per ton, the same companies buy same product from indigenous processors at less than thirty dollars per ton. This tells you how inhuman the big conglomerates can be. There is no justification for buying from us at thirty dollars per ton.
What will be impact of price regulation ad ban on importation on mining sector?
If will significantly contribute to the realisation of the African Mining Vision. Nigeria is the giant of Africa and the country is expected to take the lead in the pursuit of the continent’s set goals for the mining sector. At the moment, there is some quest for improvement in mechanisation of mining in the country. If government bans importation of barites while it continues to ensure the local production of high barites, the sector would sure develop.
A lot of capital is needed to improve and sustain mechanisation of the mining process and government must show support for development of local content in order to encourage Nigerians to go into the sector. Until this is done, there will be little or no profit for local miners and processors of barites, and this does not encourage prospective entrants into the sector. Under the subsisting circumstance, if an investor takes loan and invests in mining and processing of barites, he will not make sufficient profit and will not be able to pay back the loan. Only price regulation and effective pursuits of quality standard can address the anomaly.
So the conditions of pricing and quality must be put right and then things will fall in place.
What is your rating of the quality of barite produced in Nigeria?
It is on record that the barite from Nigerian soil, apart from existing in huge commercial quantities, has a meticulous specific gravity of 4.2 and above. The quality and quantity of Nigerian barite is more than that of Morocco and India, yet Nigeria continues to tolerate the importation of the commodity. Nigerian barite is pure and natural. The issues bedeviling the sector are the cost of mining and processing. I expect that government already knows this challenge and ought to have taken steps to address it. It is because the problems are not solved that the miners and processors are re-grouping to address it. An association is also in place and I am sure that government will do the
needful.
