Solid Minerals

OPPORTUNITIES IN THE SOLID MINERALS SECTOR

Nigeria is endowed with numerous mineral resources. Recent policy reforms have brought the solid minerals sector to the fore. The emphasis is on encouraging massive foreign investors’ participation in this sector.

PROFILE OF SOLID MINERALS DEPOSITS IN NIGERIA

TALC –

An estimated reserve of over 100 million tons of talc has been obtained in Niger, Osun, Kogi, Kwara, Ogun, Taraba and Kaduna States. There are only two medium size talc processing plants currently operating in Nigeria and both are located in Niger State. The color of the Nigerian talc varies from white through milky-white to gray. The talc industry represents one of the most versatile sectors of the industrial minerals of the world. The exploitation of the vast talc deposits in Nigeria would therefore satisfy not only local demands but also that of the international markets as well.

IRON ORE –

There are over 3 billion tons of iron ore found in Kogi, Enugu, Niger, Zamfara and Kaduna States. Iron is currently being mined at Itakpe (Kogi State), which is more or less at the center of the region of crystalline iron deposits. The large deposit of iron ore in Kogi and Enugu States are yet to be fully explored. Itakpe iron ore is being beneficiated to 67% to feed Aladja and Ajaokuta Steel complexes. Besides, there are three inland rolling mills at Oshogbo, Jos and Katsina in addition to some privately owned rolling mills in Lagos and Kano.

GOLD –

There are proven reserves of both alluvial and primary deposits of gold with proven reserves in the shiest belt covering the western half of Nigeria. At present exploitation of alluvial deposits is being carried out mostly by artisan miners in a few places in the country. A number of primary deposits, which are sufficiently big for large scale mechanized mining, have been identified in the northwest and southwest parts of the county. Private investors are invited to stake concessions on these primary deposits. It is interesting to note that the primary deposits are of relatively high grade and at shallow depth. Production costs will easily be as low as about $50 per ounce.

BITUMEN –

The occurrence of Bitumen deposits in Nigeria is indicated at about 42 billion tones almost as twice the amount of existing reserves of crude petroleum. When fully developed, the industry will no doubt meet local requirements for road construction and also become a foreign exchange earner for the country.

ROCK SALT –

The national demand for table salt, caustic soda, chlorine, sodium bicarbonate, sodium hypochloric acid and hydrogen peroxide exceeds one million tones. A colossal amount of money is expended annually to import these chemicals by various companies including tanneries, food beverages, paper and pulp, bottling and other industries including the oil companies. There are salt springs at Awe (Plateau State), Abakaliki (Enugu State) and Uburu (Imo State), while rock salt is available in Benue State. A total reserve of 1.5 billion tones has been indicated, and further investigations are now being carried out by government to ascertain the quantum of reserves.

GYPSUM –

Gypsum is an important input for the production of cement. It is used for the production of Plaster of Paris (P.O.P) and classroom chalk, etc. A strategy for large-scale mining of gypsum used in the cement industries is urgently required to sustain existing plants and meet future expansion. Current cement production is put at 8 million tons per annum while the national requirement is 9.6 million tones. About one billion tons of gypsum deposits are spread over many states in Nigeria.

LEAD/ZINC –

An estimated 10 million tons of lead/zinc veins are spread over eight States in Nigeria. Joint venture partners are encouraged to develop and exploit the various lead/zinc deposits all over the country.

BENTONITE AND BARYTE –

These are the main constituents of the mud used in the drilling of all types of oil wells. The Nigerian baryte had specific gravity of about 4.3. Over 7.5 million tons of baryte have been identified in Taraba and Bauchi States. Large bentonite reserves of 700 million tons are available in many states of the Federation ready for massive development and exploitation.

COAL –

Nigerian Coal is one the most bituminous in the world owing to its low Sulphur and ash content and therefore the most environment friendly. There are nearly 3.00 billion tons of indicated reserves in 17 identified coalfields and over 600 million tons of proven reserves.

GEMSTONES –

Gemstone mining has boomed in various parts of Plateau, Kaduna and Bauchi States for years. Some of these gemstones include Sapphire, Ruby, Aguamarine, Emerald, Tourmaline, Topaz, Garnet, Amethyst, Zircon and Flourspar which are among the world’s best. Good prospects exist in this area for viable investments.

KAOLIN –

An estimated reserve of 3 billion tons of good kaolinitic clays has been identified.

TANTALITE –

Large deposits of Tantalite are known to occur in Nasarawa, Gombe and Kogi states as well as the Federal Capital Territory. The deposits are both alluvial and primary in the numerous pegmatite bodies that infest these areas. Grades of well over 50% Ta2O5 are found. Private investors are invited to stake concessions for the development and exploitation of tantalite in these areas.

PELLETISATION OF COAL FOR DOMESTIC USE –

Given the large deposits of brown coal in the tertiary sediments east and west of River Niger; Nigeria can cash in on foreign investors’ technology to produce coal pellets for industrial use, coal briquettes for domestic use; that is, to replace firewood.

INCENTIVES AND STRATEGIES FOR INVESTMENT

Investment Incentives:

• 3-5 years Tax Holiday.
• Deferred royalty payments.
• Possible capitalization of expenditure on exploration and surveys.
• Extension of infrastructure such as roads and electricity to mining sites, and provision of 100% foreign ownership of mining concerns.

HOW TO OBTAIN MINING LEASE IN NIGERIA

There are two options available to a company or an individual to enter into mining industry in Nigeria: (i) through the acquisition of an existing mining property from the original owner. Approval must be obtained from the Ministry of Solid Minerals Development for such a purchase; or (ii) by obtaining an application, either a Prospecting Right (PR), an Exclusive Prospecting License (EPL), or a Special Exclusive Prospecting License (SEPL); the application should state financial and technical capability qualifying the applicant for entry into the mining sector.

OPPORTUNITIES IN THE POWER, STEEL AND ALUMINIUM SECTORS POWER SECTOR:

Investment Opportunities exist for hydro-power generation in Mambilla Fall, Adamawa State and Agbokin Fall in Cross-River State. Government will readily negotiate a Memorandum of Understanding (MOU) with any foreign energy company to cover the following areas:

(i) Development of energy resources and infrastructures,

(ii) Management of energy infrastructure;

(iii) Commercialization of energy

(iv) Training; and

(v) Exchange of information and experience.

It is expected that further discussions will centre on:

(i) Construction and management of power stations by private companies;

(ii) Production of Steam and gas turbine spare parts;

(iii) Repairs and testing of power transformers;

(iv) Development of wind turbines for generation of electricity;

(v) Manufacture of distribution transformers and line hardware;

(vi) Technology transfer through joint erection of new power plants;

(vii) Training of staff in computer based maintenance system etc.

STEEL SECTOR

Plans are underway to revitalize the steel sector. As a first step to reviving the sector, technical audit and cost estimate for completion of Ajaokuta Steel Project are being considered. The Government is also planning to revitalize the Delta Steel Company and three in-land Steel Rolling Mills in the country with a view to making them function effectively. Staff training and development is also being given attention because local skilled manpower availability can motivate an investor into the industry. These are aimed at putting the sector in a state of readiness for foreign investment.

In consonance with the nation’s technical and economic co-operation policies for this sector, some areas of joint co-operation have been identified, and investors will be encouraged to invest in the sector. Discussions will centre on joint venture commercial operation of the completed units of the Ajaokuta Steel Project. Investors will be encouraged in the following areas:

(i) Iron Making Plant with capacity to produce 1.35 metric tons of billets;

(ii) Billet Mill with capacity to produce 795,000 tons of billets per annum;

(iii) Light Section Mill with capacity to produce 400,000 tons of bars per annum;

(iv) Medium Section Mill with capacity to produce 130,000 tons of wire coils per annum; and

(v) Engineering Workshops comprising:

– The Power Equipment Repair Shop

– Forge Fabrication and Rubberizing Shop with capacity to produce 4,200 tons of fabricated structures.

ALUMINIUM SECTOR

The Aluminum Smelter Company of Nigeria, ALSCON, is a joint venture project in which Nigeria owns 70% of the equity shares, while the remaining 30% is shared between AG Ferrostaal of Germany with 20% shares and Reynolds Inc. of United States with 10% shares. The present administration is making efforts to ensure that the aluminum smelter plant is properly funded. It has given invitation to private investors to invest in the company and /or take part of Nigeria’s 70% shares. The plant is one of the best and biggest in the world with the most modern technology. A number of countries have signed or are negotiating trade and economic cooperation agreements with Nigeria. Since the essence of these bilateral agreements is to foster unity: boost economic growth and technological co-operation, foreign investors should take advantage of existing bilateral ties and harken to the call to invest in the ALSCON project as in other projects in the power and steel sectors.