How To Start A Lucrative Mining Company In Nigeria: A Complete Guide
Before the discovery of oil, Nigeria’s solid mineral mining industry was one of the major sources of its revenue. The country mined and exported solid minerals like columbite, iron ore, gold, coke, tin, and coal. However, in 1956, the growth of the mining industry declined as focus shifted from other viable resources towards crude oil production.
The civil war made the situation worse as many foreign-owned mining companies had to shutdown their investments and return to their countries. After the war, the states gained sole ownership but did little to improve the industry. Years later, under the administration of Ex. President Olusegun Obasanjo, mining rights were sold off to investors in the private sector.
Today, Nigeria’s solid mineral mining industry accounts for about 0.35% of its Gross Domestic Product which is low compared to the 10% of its oil and gas sector. The low production rate poses a threat to the nation’s economy because the mining industry has a high potential to facilitate economic growth. It can provide job opportunities, revenue flow for infrastructural or non-infrastructural development, and create wealth within the private sector.
With the right information, anyone can benefit from solid mineral mining in Nigeria. Here is how to start a lucrative mining company/business in Nigeria.
What Is A Mining Business/Company About?
A mining company deals with the extraction of useful metals or minerals from deposits; reefs, lodes, ore bodies, veins, and seams in the earth. Some mineral ores obtained from various mines are precious gems, coal, metals, limestone, gravel, and shale.
Mining companies search for mineral deposits, conduct research on the profit potential of prospective mines, set-up mining sites, extract mineral deposits and restore the mining area back to its former, natural state.
Heavy-duty machinery and intensive human labor are involved in the day to day mining operations of a mining company. The demand for local miners is very slowly lessening as mining companies lean more on machinery. GPS, drills, trams, lifts, explosives, trommel, trucks, excavators, stone crushers, sand washers, magnetic separators, and sluices are some of the equipment mining companies utilize. Such heavy equipment eases the burden of minerals processing, stone breaking and removal, site exploration, development, and restoration.
Mining could also include several businesses that are not directly connected to the actual process of mineral extraction. Nevertheless, such businesses have important roles to play in the daily operations and management of the mining process.
Business Opportunities In Mining Companies Around The World
Mining is a pre-historic activity and catalyst in the evolution of man. In recent times, it has been a lucrative investment opportunity for both private and public sectors of the global economy.
Several opportunities for mining companies/businesses in Nigeria and the world are:
1). Limestone Mining:
Large deposits of limestones are found in the sedimentary basins of Nigeria. Records show that there are over 2 billion metric tonnes of the mineral resource in Nigeria. The Middle belt and Southwest regions in Nigeria hold claim to the purest and largest amounts of limestones.
As a primary ingredient in cement production, its national and global value is immense. Limestones are also used in road constructions, concrete aggregation, metalsmithing (iron), and rubbing/paper filling.
2). Transport Services:
For extracted minerals or metals to get to the factories for processing, hauling vehicles are needed. That is why transport services are essential to every mining company. Starting up a transport business is a way to earn considerable profit from the mining industry.
3). Gold Mining:
Gold, a very valuable commodity in the international and local markets is available for mining in Nigeria. Deposits of this metallic mineral are mainly found in the northern region, specifically in places around Iperondo, Tsohon, Maru, Malele, Gurmana, and Maru.
The government’s dependence on its oil sector has staunched the flow of funds into this industry and led to its current unexploited state.
4). Mining Consultancy:
Another profitable, mining-related business opportunity is mining consultancy. Experienced experts in the mining industry can launch consultancies and deliver solutions to mining companies in need of their services.
5). Columbite Mining:
Another mineral resource found in Nigeria is columbite-tantalite and wolframite. Large amounts are deposited within the Kaduna, Plateau, Bauchi, Kano, Nasarawa, and Kogi (northern) states. Columbite is used as a steel alloy to manufacture weldable steel for heat sensitive detectors and radio transmitting valves. It is a valuable alternative for tantalum, a metallic chemical element used by telecom companies or electronic manufacturers.
6). Iron Ore Mining:
Currently, there are over 3 billion tonnes of unmined iron ore spread across Enugu, Kaduna, Niger, Kogi and Zamfara states in Nigeria. This a huge opportunity for investors interested in the mining industry. Iron ore miners have the advantage of local and foreign markets for this mineral resource as it is needed by factories that manufacture electrical devices and equipment.
7). Brokerage Business:
The Brokerage businesses in this industry connects mineral producing companies to affiliated factories or industries. For instance, a broker can arrange a trade transaction between limestone miners and cement factories while making a commission from each trade transaction.
8). Coal Mining
Coal is used in the production of steel, cement, and liquefied fuel. Lucrative opportunities are available in the Nigerian coal mining industry with over 2 billion tonnes of coal waiting to be explored. States with large coal deposits are Enugu, Delta, Benue, Kogi, Anambra, and Gombe.
9). Safety Services
Safety hazards have been a long-standing issue in the mining industry. There is always a need for effective safety solutions to ensure that workers are unharmed during a mining operation. Mining safety experts can gain considerable profits from training mine workers on the correct safety precautions.
10). Bitumen Mining
Bitumen binds aggregate particles to create concrete asphalts in road construction. It is also used as a waterproofing agent in bituminous products. This dark viscid mineral is found in Ondo, Edo, Lagos and Ogun states of Nigeria. About 38 billion barrels of bitumen was discovered in Nigeria and 47% of it is deposited in Ondo state. Furthermore, bitumen is slated to be one of Nigeria’s revenue sources as well as a huge opportunity for investors in the future.
11). Blogging/Magazine Business
Blogging about the mining industry raises awareness of the importance and benefits of the industry. The focus of the blog or magazine would be on mineral resources or mining companies. A blogger or magazine business can make profits through advertising the services of mining companies or related businesses.
12). Lead Mining
Nigeria’s lead deposits are estimated to be over 10 million tonnes; causing it to be a high-value mining business opportunity. Lead is an essential mineral element to factories and industries that produce ceramics, nuclear shields, ammunition and other lead-based products.
13). Training Institutes:
People always want to gain knowledge to either acquire new skills or upgrade their current skills. Mining training institute is basically an educational enterprise that aims at imparting knowledge concerning various areas of the mining industry. Students of mining institutes get to be taught skills that would improve their work performance, safety measures, and problem-solving methods. This is a service that’s especially lucrative cause of the high demand.
14). Quartz/Silica Sand Mining:
Quartz and silica-sand are basic minerals material used by glass-making factories in the manufacturing of all kinds of glass objects. It is one of the many valuable resources discovered in quartzites and pegmatites rock bases in Kogi and Ekiti states.
15) Legal Services
Legal services offered by lawyers focused on the mining industry include counsel on water, environmental and land issues, and investigations or research into mining prospects and mining rights in Nigeria. Other responsibilities involve negotiating or drafting commercial contracts regarding a particular mineral resource or mining operation. Mining companies have a high appreciation for legal aid as it ensures ease in navigation of any law-related mining challenge.
Other mining business opportunities are;
- Gemstone Mining
- Gravel Stone Mining
- Medical Services
- Heavy-Machinery Servicing Business
- Machinery Leasing/Sale Business
- And Much More.
Facts And Benefits Of The Mining Business
- The presence of mining companies in a country boosts the economy through substantial revenues from tax and duties.
- Mining companies improve the society by providing numerous business and job opportunities.
- Necessary permits or licenses required for mining activities in Nigeria are obtained from the Cadastre Office located in Abuja.
- Mining companies are capital intensive, high-risk ventures.
- Nigeria has varied and large amounts of unmined mineral deposits.
- Mining is a source of non-agricultural and non-scientific resources.
- The effects of mining on the society and environments can be devastating. Water, land and air pollution are possible ill effects.
- Mining companies have more advantage over the global market than most industries or resources.
- Mining is a means of sustainable income for investors and mine owners.
Types Of Mining Companies/Businesses
The two main types of mining companies/businesses in Nigeria and other parts of the world:
- Small-scale mining
- Large-scale mining
1). Small-scale Mining:
This is a subsistence form of mining where a small group of individuals move from place to place, searching for and extracting valuable mineral resources. However, research has shown that small-scale mining is unfavourable to the environment and the people living within. In most cases, these nomadic miners abandon the mine sites without reclamation i.e. making sure the areas around it are restored to a natural and usable state.
2). Large-scale Mining:
Large-scale mining is a company-owned, highly equipped and efficient system of mining. In this scale of mining, the chain of operations is usually complex. A large-scale mining company stays until the mineral deposits are exhausted, reclaims the mining site and provides compensation to those who have been affected by their operations.
In contrast to small-scale mining, large-scale mining involves a lot of human and machinery efforts and produces more metals and minerals at the end of every excavation.
How To Start A Mining Company In Nigeria; A Step By Step Guide
1). Get The Necessary Licence Permits:
Before starting out, decide and get information on the particular permits needed for your venture. Important license permits in Nigeria include small or large scale mining lease, quarry lease, water use permit, reconnaissance permit, and an exploration license.
The Nigerian Cadastre office oversees all the mining activities within the country. You will need to gather the correct information on their operations and requirement and then register your mining company.
2). Business Plan:
A mining business plan must be detailed and all-encompassing because of the high risk and capital-intensive nature of this business. It is also imperative to carry out feasibility studies and work out provisions for capital expenditures.
3). Survey Mine Site:
Surveying the site of the mineral deposit you intend to extract is an important step of the process. Here, every detail on the quality and quantity of the minerals can be recorded for necessary documentation and analysis.
4). Site prospecting:
Site prospecting provides you with precise calculations of the number of minerals that can be extracted per day. This process improves the efficiency of mining operations.
5). Set-up Mining Machinery And Tools:
Lease or buy the necessary equipment required for the extraction of ore deposits. This includes provisions for transportation of minerals and workers.
6). Power Supply And Housing:
Housing provisions should be made available for your workforce. In addition, living quarters should not be close to the mine sites for health reasons.
7). Excavation Process:
Mining/extraction begins as soon as every issue regarding requirements and necessary provisions have been settled with the respective bodies and authorities.
Challenges Of The Mining Business
Some of the major challenges of mining companies and businesses in Nigeria are:
- Lack of a skilled workforce in fields like engineering, mining geology, and project design.
- The prevalent infrastructural imbalance within Nigeria, specifically inaccessible roads and inadequate power supply are major roadblocks in mining operations.
- Safety hazards are reoccurring challenges in mining operations. Mining can also be detrimental to the health of mine workers, the community, and the environment.
- Challenges with capital and operation finance impede the growth of some mining companies.
- Securing mining sites and stored mineral from vandals within a community is one of the issues mining companies have to deal with constantly.
- High cost of mining equipment leads to very low and inefficient productivity.
With the large deposits of various kinds of minerals, individuals or groups interested in mineral extraction can start up lucrative mining companies in Nigeria. However, mining is a risky venture that should be taken on after serious consideration and preparation.
Taking the right steps in setting up your mining company is a sure way of ensuring high rewards for your efforts.
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