Nigeria is endowed with over 34 commercially viable solid minerals deposited across the country. With emerging opportunities in the mining sector and improving regulatory frameworks, now is an ideal time to start a mineral export business in Nigeria.
This guide will walk you through the key steps and requirements for starting a successful and sustainable mineral export company in Nigeria as a beginner.
Conduct extensive market research.
Before diving into the business, conduct thorough research to understand the market dynamics and opportunities.
- Analyse demand and supply data. Look at global and domestic demand and supply for different Nigerian mineral resources. Identify minerals with good export potential.
- Study export procedures. Understand the laws, regulations, and processes for exporting minerals from Nigeria.
- Assess competitors: research other players exporting minerals from Nigeria. Gauge their scale, strengths, and weaknesses.
- Identify target markets. Figure out the most lucrative export target markets for Nigerian minerals. Analyse factors like demand, pricing, and trade policies.
- Examine export incentives. Find out about incentives like tax holidays and export expansion grants offered by the Nigerian Investment Promotion Commission.
- Consult experts: Talk to business consultants, mining experts, exporters, and government agencies to get insights on the sector.
Thorough market research will give clarity on the feasibility and profitability of the venture.
Choose the Right Minerals
Focus on minerals with established export demand and high-profit margins. Some of the major exportable minerals from Nigeria include:
- Gold is used for jewellery, electronics, aerospace, and many other applications. Nigeria has reserves of over 200 million ounces and is Africa’s largest gold producer after South Africa.
- Iron ore is a key raw material for steel production. Nigeria has over 3 billion metric tons of iron ore reserves. The major markets are China, Europe, Japan, and India.
- Lead/zinc: used in batteries, x-ray shielding, weights, paints, etc. Over 10 million metric tons of reserves are found in Nigeria.
- Coal is a key fuel for electricity generation and industries. The main markets are India, China, Lebanon, and Egypt. Proven coal reserves are in excess of 600 million metric tons.
- Barite is used as a weighing agent in drilling fluids in the oil and gas industry. Nigeria has over 7.5 million metric tons of barite deposits.
- Gemstones: Emeralds, sapphires, rubies, and topaz are found in Nigeria. Good export value as jewellery and for industrial uses.
- Tantalite: This contains tantalum used in electronics, alloys, medical equipment, etc. Nigeria is one of the world’s largest tantalite sources.
Select minerals that align with your target markets, require low capital investment and offer good long-term growth prospects.
Obtain operational licenses.
You need to acquire all the necessary permits, licenses, and clearances to legally export minerals from Nigeria.
- Mining Lease: Obtain a mining lease from Nigeria’s Mining Cadastre Office, which gives you rights to carry out mining operations. It is valid for 25 years.
- Export Permit: Get an export permit from the Nigerian Export Promotion Council to export minerals out of the country. Required for each shipment.
- Company Registration: Incorporate a company with the Corporate Affairs Commission and register for taxes.
- Business Operational Permit: Get the necessary permits from state and local governments.
- MSME Registration: Sign up on the National MSMEs portal to access support schemes for miners.
- Export Expansion Grant: Apply for the grant from the Nigerian Export Promotion Council, which provides financial aid for exporters.
Ensure all licenses are current and regulations are adhered to. Also, consider getting fair trade, ISO, and environmental certifications to access certain markets.
Build strategic partnerships.
Partner with players across the mineral extraction and export value chains:
- Mining companies: Partner with big mining companies in Nigeria involved in the extraction of minerals. Can benefit from their capacity and infrastructure.
- Artisanal miners: Collaborate with artisanal and small-scale miners who account for substantial mineral extraction. Provides jobs and local engagement.
- Commodity exporters: Join hands with established commodity exporters to leverage their global buyer networks and supply chains.
- Foreign importers: Connect with foreign mineral importing and processing companies as off-takers for your exported minerals.
- Government agencies: maintain relationships with agencies like the Nigerian Export Promotion Council, the Miners Association of Nigeria, etc. for regulatory support, access to financing, and export promotion platforms.
- Service providers: Partner with logistics, warehousing, testing labs, and other players to build an efficient ecosystem.
Strategic partnerships reduce costs, risks, and barriers across export operations.
Set up export operations.
Structure your mineral export operations for smooth functioning:
- Sourcing and extraction: build capacity for reliable mineral sourcing via mining, partnerships, purchases from artisanal miners, etc. Invest in efficient extraction.
- Processing and packaging: Process minerals into export-ready condition. Invest in equipment like crushers, grinders, and separators. Appropriately package minerals for export.
- Quality testing: conduct lab tests to ensure mineral quality as per international standards for purity, composition, etc. Get accredited lab certifications.
- Warehousing and storage Build climate-controlled storage facilities near ports for inventory management and bulk shipping.
- Transport and logistics: invest in a transportation fleet or partners for port connectivity. Manage shipping, customs, and documentation efficiently.
- Legal and finance: Ensure robust export contracts, financing, and compliance management for smooth exports.
- Marketing and sales: Have dedicated teams to directly market to foreign mineral buyers and processing companies.
Optimize the export supply chain for maximum efficiency and competitive advantage.
Leverage government incentives.
Make use of relevant government incentives and programs for mineral exporters:
- Pioneer Status: Apply for the pioneer status incentive and enjoy a 3-5 year tax holiday. Offered for investment in export-oriented mining businesses.
- Export Expansion Grant: Get financial support to expand export operations. Covers costs like transportation, exhibition attendance, etc.
- Solid Mineral Development Fund: Access reasonably priced financing from this $30 billion fund dedicated to the mining sector.
- Mine Site Development Services: Use government agencies for geological surveys, exploration, mining consulting, etc. to reduce costs.
- Export corridors and clusters: leverage government projects establishing mineral export corridors and clusters for improved infrastructure and linkages.
- MSME support: Benefit from MSME programs like access to finance, subsidized machinery, capacity building, etc. as a miner.
- Trade promotion: Participate in national and international mining events, trade expos, and delegations organized by the government.
Stay updated on policies, incentives, funds, and opportunities notified by agencies like the Ministry of Mines and Steel Development and the Miners Association of Nigeria.
Maintain financial planning and controls.
Mineral exports are a capital-intensive business. Maintain robust financial planning and controls.
- Project financing: explore financing options like banks, private equity, and development funds dedicated to the mining sector. Prepare detailed project reports.
- Working capital: estimate working capital needs for export operations and inventory management. Get adequate working capital financing.
- Forex management: mineral exports earn foreign currency. Employ good forex risk management. Open foreign currency accounts to receive export proceeds.
- Profitability analysis: Do regular profitability analysis, taking into account all costs, overheads, taxes, and fluctuations in global mineral prices.
- Record keeping: maintain updated records of mining production, mineral exports, taxes, sales, operational costs, etc. for financial control.
- Sustainable practices: Adopt sustainable mining practices to reduce environmental costs and improve access to green financing options.
Robust financial planning and analysis ensure the stability and longevity of the mineral export business.
Build a skilled team.
A competent team is key to a successful mining and mineral export company. Build a team with:
- Mining engineers: to design, manage, and improve mining operations and mineral processing
- Geologists: for surveys, identification, and assessment of mineral resources.
- Technical staff: operators, technicians, and workers to carry out mining, processing, packaging, and warehousing activities.
- Supply chain experts: to optimize sourcing, logistics, shipping, and export procedures
- Marketing professionals: identify export opportunities, directly liaise with buyers, and build market linkages.
- Legal and compliance officers: to ensure mining leases, export regulations, permits, and documentation are in order.
- Finance professionals: for managing finances, accounting, insurance, forex, and other financial aspects.
Invest in ongoing training and upskilling to keep the team updated on the latest industry best practices.
Maintain excellent health, safety, and sustainability standards.
Mining comes with significant health, safety, and environmental risks. Make ample provisions.
- Operational safety: Establish rigorous safety protocols, protective gear, training, and monitoring systems to minimize mining accidents and injuries.
- Emergency response: have emergency response teams and procedures ready for scenarios like fires, flooding, explosions, etc.
- Worker healthcare: Provide healthcare coverage to all employees. Conduct health screenings and enable access to healthcare.
- Environment protection: Employ sustainable and responsible mining practices. Treat effluents, reuse water, rehabilitate land, etc.
- Community development: invest in community amenities like schools and training programs to improve local living standards.
- Compliance: Follow all mining regulations and health and safety guidelines stipulated by the Department of Petroleum Resources, the Mining Cadastre Office, and other agencies.
- International standards: Get certifications like ISO 45001, the Fairmined Standard, the International Cyanide Management Code, etc. to assure global buyers.
Make health, safety, and sustainability an integral part of the company culture.
Nigeria offers immense opportunities for mineral export businesses, given its rich reserves and rising global demand. By following the tips in this guide on licenses, partnerships, operations, government incentives, financial control, skilled teams, and high standards, you can build a profitable and sustainable mineral export company in Nigeria. Conduct thorough research, start small, leverage partnerships and government support, and expand prudently once operations stabilize.