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Exploring the Investment Opportunities in Delta State’s Mineral Deposits

Delta State, located in the oil-rich South-South region of Nigeria, is endowed with abundant natural resources, especially rich deposits of commercially viable minerals. The state nicknamed “The Big Heart” offers immense investment potential in the exploration and processing of mineral assets for investors seeking new markets or business expansion opportunities.

This article provides comprehensive information and analysis on the investment prospects in Delta’s multibillion-dollar mineral reserves, spanning limestone, glass sand, gypsum, iron ore, clay, tar sand, bitumen, and natural gas deposits. We explore available geological data, estimated deposits across locations, government policies and incentives, logistics, infrastructure development projects, operational and expansion plans of active mining companies, challenges, and outlook.

Geological Surveys Confirm Delta State’s Vast Mineral Reserves

Geological surveys conducted in Delta State have revealed astonishingly rich mineral deposits spread across the state. However, a significant proportion remains untapped despite the inherently strong economy. There are growth opportunities for investments by both local and foreign mining companies at different points across the mineral value chain, from exploration, quarrying, and processing to refining or export.

Limestone

Delta State contains limestone reserves estimated at 3.2 billion metric tonnes, according to the Raw Materials Research and Development Council (RMRDC). Active mining companies operating large-scale limestone quarries in the state include BUA Cement, which runs the second-largest cement company in Nigeria, and UNICEM.

The identified limestone belts cover the Asaba, Agbor-Abavo, Illah, Ogume-Ute, and Ogwashi-Uku areas of the state. BUA Cement operates two limestone mining sites in Ukpilla and Okpai, spanning Okpai and Ndokwa East Local Government Areas. The company holds over a 70% share of the cement market in south-south and south-east Nigeria.

UNICEM also runs a 2 million MT per year quarry with a cement production plant in Mfamosing, near Calabar, Cross Rivers State, which sources limestone from its mining lease in Delta State.

Investment Opportunities in Limestone Mining

With BUA and UNICEM barely scratching the surface of Delta’s limestone reserves, sized at 3.2 billion MT, ample room still exists for new entrants across the limestone mining value chain. Specifically, investment opportunities lie in:

  • Exploration and geophysical surveys to enhance data on estimated reserves across identified belts
  • Acquisition of new mining leases for untapped limestone belts
  • Opening new mechanised limestone quarries and processing plants
  • Expanding haulage and export logistics channels
  • Production of limestone products like crushed rocks, aggregates, and grits

Key Drivers

  • Rising cement demand is driven by rapidly expanding real estate and construction projects across Nigeria.
  • Limestone’s increasing industrial applications
  • High-profit margins due to limestone’s relatively low extraction costs
  • Strong federal and state government support through favourable legislation, tax holidays, and access to mining cadastral office services
  • Excellent domestic limestone qualities with CaCO3 contents of between 96% and 98%
  • Strategic proximity to target markets in south-south and south-east Nigeria

Gypsum

Delta State houses gypsum reserves estimated at 4.8 billion MT, which can spur massive growth in Nigeria’s cement and plasterboard industries. Gypsum plays a crucial role as a retarding agent during the cement manufacturing process.

Currently, Lafarge Africa PLC operates major gypsum mining sites in Ewekoro and Sagamu in Ogun State, which supply raw gypsum to all the major cement manufacturers in Nigeria.

Untapped Opportunities in Gypsum Mining

However, the enormous gypsum deposits in Delta State remain largely untapped, despite their strong potential. Investors can leverage these virgin investment opportunities across the gypsum mining value chain:

  • Carrying out extensive geological surveys to ascertain precise Gypsum reserves available in identified belts
  • Exploratory drilling and analysis by mining experts
  • Facilitation of Mining Leases and Permits
  • Opening mechanised mining and processing complexes for mass gypsum production
  • Integrating production with cement manufacturing by establishing collocated cement plants
  • Strategic positioning to serve emerging cement factories in the southeast and south zones

Key Attractiveness Factors

  • Essential accelerator compound for all types of cement
  • A vital component of plasterboard used in interior construction and decor
  • Steadily rising demand for cement and plasterboards is driven by Nigeria’s real estate boom and construction projects.
  • High latent demand against supply shortfalls

Glass Sand

Abundant deposits of high-grade glass sand suited for industrial applications exist in Delta State. The identified glass sand belts include sites across the Aboh, Eluama, Mosogar, Ogharefe, and Owa areas.

Estimated reserves stand at about 6.2 billion MT, which mining and geological experts classify as some of the finest glass sand varieties in the West African region.

So far, most of the mining activities on these sites remain limited to small-scale manual quarrying due to a lack of financing and modern technology required for mechanised commercial mining.

Unlocking Investment Opportunities in Glass Sand

However, huge prospects exist for investments by large-scale mining companies through value-adding activities, including:

  • Further verification of precise volumes and grades via advanced geological surveys and exploratory drilling
  • Facilitation of commercial licences to guarantee long-term mining rights
  • Building advanced production lines encompassing excavation, sieving, washing, drying, and bagging
  • Integrated manufacturing plants for making glass products using locally mined raw glass sand
  • Strategic logistics infrastructure for bulk transportation to processing sites
  • Leverage proximity to target markets for glass and glassware across West Africa.

Key Attractive Attributes

  • Rapid rises in construction projects are driving demand for glass, fibreglass, and containers.
  • Strategic suitability for multiple industries, including glassmaking, foundry operations, water filtration, abrasives, ceramics, and chemicals
  • High-quality silica content exceeds 98% purity after refining.
  • Relatively low mining costs
  • Strong technical and economic viability

Bitumen

Delta State houses a substantial proportion of Nigeria’s under-exploited tar sand fields containing mineable bitumen reserves. The identified tar sand belts cover areas spanning Eluama, Evwreni, Ukpiovwin, Kokori, Orhvwor, Owahwa, Oghara, etc.

According to estimates by the Raw Materials Research Institute, the bitumen reserves across Delta and neighbouring Edo State amount to about 16 billion barrels.

So far, marginal artisanal mining occurs in the belts by locals with basic tools and methods, generating mostly unrefined bitumen used for industrial heating.

However, large-scale mechanised mining and optimised processing can unlock immense opportunities for meeting rising domestic bitumen demand and exports.

Huge Investment Potential in Bitumen Mining

The vastly underexploited bitumen reserves allow ample headroom for potential investors to leverage the following lucrative aspects:

  • Further verification of commercially viable sites through intensive geological surveys
  • Acquisition of bitumen mining leases from government agencies
  • Opening mechanised mining complexes encompassing excavation, extraction, desulphurization, and refining
  • Integrating the downstream production of asphalt for road construction
  • Strategic bulk logistics channels to key markets

Key Prospects

  • Critical raw materials for roofing and asphalting are indispensable to Nigeria’s expanding construction industry.
  • Potential to substitute costly imports and generate export revenue
  • High latent demand against under-capacity domestic supply
  • Relatively low mining costs compared to crude oil drilling
  • Generous incentives for investment in the solid mineral sector

Iron Ore

Rich deposits of iron ore suitable for commercial mining operations also exist across multiple locations in Delta State, covering Belleli, Omadino, Otolokpo, Aladja, and neighbouring environs.

Estimated reserves range from 500 million MT to over 1 billion MT, based on assessments by the Nigerian Geological Survey Agency and independent studies.

Currently, marginal mining occurs, confined to the scrapping and extraction of iron ore by locals from surface outcrops using crude implements.

Investment Potential for Large-Scale Iron Ore Mining

However, the reserves allow ample opportunities for large-scale mining entities focused on unlocking immense hidden value through:

  • Further, exploratory surveys and feasibility analysis are needed to determine the precise quality and mineable tonnages for commercial viability.
  • Facilitation of required permits and clearances for long-term mining concessions on identified belts
  • Building advanced mechanised mining operations and integrated ore processing plants
  • Laying strategic haulage channels, including heavy rail links to ports for export
  • Tapping rising global demand and high sales margins for iron ore

Key Attractiveness

  • Essential requirement for steel production: supports expansion plans for domestic steel manufacturing hubs
  • Increasing applications in diverse industries, from construction, engineering, electronics, automotive, and shipbuilding to machinery
  • Supply deficits against rapid rises in steel output across developing economies
  • High latent demand from global iron and steel markets
  • Relatively low operating costs compared to underground mining
  • Significant construction and logistics infrastructure development is underway across Delta State to support industrial-scale mining.

Clay

Delta State also contains extensive clay deposits classified among some of the best clay varieties in the country based on key parameters.

Identified high-grade clay reserves are concentrated around Asaba, Ibusa, Oghara, Ogwashi-Uku, and neighbouring areas spanning Aniocha North, Aniocha South, and Oshimili North LGAs.

Estimated reserves are placed at about 700 million MT. However, current mining activities remain small-scale and localised to serve cottage industries due to insufficient investment capital and mechanisation.

Investment Opportunities in Commercial Clay Mining

Considering the enormous reserves, clay mining provides a viable diversification opportunity through FDI in aspects like:

  • Further prospecting surveys to ascertain precise commercial volumes and grades
  • Obtaining the requisite mining permits and operational licences
  • Building advanced mechanised excavation, preparation, and product manufacturing plants
  • Strategic partnerships with construction product manufacturers
  • Developing targeted logistics channels for distribution across Nigeria

Key Prospect Drivers

  • Strong applications in cement, ceramics, paint, paper, rubber, plastics, and fertiliser production
  • Essential raw material input for building product makers
  • Rising local demand for tiles, bricks, pipes, and tiles amid a construction boom
  • Huge potential as a substitute for imported clay variants
  • Relatively low capital intensity compared to other minerals
  • Generous Ease of Doing Business incentives are assured by both federal and state governments.

Natural Gas

Delta State produces a significant share of the natural gas output in Nigeria’s prolific Niger Delta oil and gas basin. The state provides prime investment destinations for upstream gas production and midstream development projects to support the country’s expanding domestic gas-based industry.

Active companies operating gas production assets in onshore and shallow offshore fields located in Delta State include Seplat Petroleum, Pan Ocean Oil, Nigerian Petroleum Development Company (NPDC), and Shoreline Energy.

These sites feed into an existing network of gas pipeline infrastructure connected to downstream installations that unlock immense processing and utilisation potential.

Investment Opportunities in Natural Gas Mining

Investors can tap into lucrative aspects across the gas value chain, including:

  • Acquiring equity interests in existing gas blocks and joint venture partnerships with producers
  • Facilitating concession rights for new exploratory gas blocks
  • Building centralised gas processing facilities for the extraction of LPG, propane, ethane, and lean gas
  • Integrated methanol-synthesis plants using natural gas as feedstock
  • Investments in associated gas-gathering infrastructure and pipelines
  • Captive power generation plants fueled by locally produced gas

Key Prospects

  • Surging domestic demand for clean fuels and a power deficit of over 25 GW
  • Highly underutilised gas reserves compared to capacity
  • Generous fiscal and tax incentives for gas utilisation projects
  • Strategic location near target markets in south-south and south-east
  • Excellent distribution logistics by road, rail, and sea routes
  • Assured off-take considering supply shortages in consumer markets

Infrastructure Development in Mineral Host Communities

In a bid to enable large-scale commercial mining activities across Delta State, both the Federal and State Ministries of Solid Minerals are spearheading strategic infrastructure development projects.

This entails extensive construction and expansion work on roads, rail networks, power plants, sea ports, river ports, trailer parks, and security outposts across identified mineral-rich belts.

In particular, the state government has announced plans for a 37-kilometre standard-gauge railway with designated freight terminals to open four major mineral zones in Boji-Boji Agbor, Kwale, Ogwashi-Uku, and Ave-Awele Asaba.

Other Ongoing and Upcoming Infrastructure

  • Expansion of cargo handling capacity at Warri Ports
  • Establishment of Export Processing Terminals for Solid Minerals
  • Building access road networks spanning over 190 km, cutting across gypsum, limestone, and clay belts
  • High-capacity transmission lines and injection substations
  • Security Area Commands and Armed Forces Formations
  • Development of dedicated industrial layouts and low-cost housing schemes

Policies and incentives

Delta State runs an investor-friendly system anchored on generous incentives, tax holidays, and infrastructure provisions targeted at rapidly opening up the solid minerals space.

Specifically, the state government actively facilitates key aspects like standardised geophysical surveys, mining cadastral services, pre-operational logistics, and fast-track access to incentives for investors in commercially viable sites.

Other Support Measures

  • Pioneer tax holiday status for five years
  • Waiver of duties on imported mining equipment
  • Free acquisition of titled land in mineral zones
  • Zero charges for borehole water usage for mining operations
  • Highly subsidised lease rates and waivers on specific mining permits and licences
  • Single-digit interest rate window for medium-term CBN loans
  • Exemption from minimum tax under the Companies Income Tax Act
  • Assured security and community cooperation frameworks

Challenges and risks

However, some prevailing risks exist, which investors should appropriately mitigate. These include:

  • Insufficient geoscience data covering some mineral belts
  • Possible community agitations over job opportunities and other concerns
  • Risk of uncontrolled artisanal mining activities on some sites
  • Porous port security results in high demurrage charges.
  • Multiple taxes and levies by different agencies
  • Bureaucratic delays in obtaining some licences and permits

Outlook

Overall, with assured government facilitation and support frameworks, Delta State offers immense attractions for investment in commercially viable mineral deposits that guarantee healthy returns.

These opportunities support Nigeria’s strategic blueprint to increase the mining sector’s contributions to 10% of GDP over the next decade from less than 1% currently.

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