How To Start Solid Mineral Exploration And Production Business
How To Start Solid Mineral Exploration And Production Business
Nigeria is blessed with abundance of solid minerals of various categories ranging from precious metals to stones and furthermore industrial minerals which are yet to be fully explored. Statistically, the degree of exploration of these minerals is exceptionally low in connection to the degree of deposits found in the country.
In this article, we will list out the steps you need to take so as to successfully start a solid mineral exploration and production business in Nigeria.
MINING INDUSTRY IN NIGERIA
There are various means for investment in the solid mineral sector in Nigeria. Solid minerals are discovered in large /commercial quantities in the country for possible investment and exploitation.
For instance, there are more than 40 million tons deposits of talc distinguished in Niger, Osun, Kogi, Ogun and Kaduna States. Once more, there is more than 3 billion metric tons of iron ore deposits found in Kogi, Enugu and Niger States as well as the Federal Capital Territory. Iron Ore is currently mined at Itakpe in Kogi State.
Furthermore, an estimated 10 million tons of lead/zinc veins are spread over more than 8 States of Nigeria. Bentonite and Barite are the principle constituents of the mud used in drilling of a wide range of oil wells. The barite found in Nigeria has specific gravity of about 4.3.
More than 7.5 million tons of barite have been distinguished in Taraba and Bauchi States. Enormous bentonite reserves of 700 million tons are accessible in numerous States of the Federation prepared for massive development and exploitation.
Additionally, there are proven reserves of both alluvial and primary deposits of gold in commercial quantities distributed across several areas in the northwest and southwest of Nigeria. There are also various smaller occurrences past these significant areas.
The occurrences of Bitumen deposits in Nigeria are shown at around 42 billion tons almost double the measure of existing reserves of unrefined oil. When completely developed, the bitumen industry will without uncertainty meet local requirements for road construction and furthermore improve Nigeria’s foreign exchange.
Besides, Nigerian coal is one of the most bituminous on the planet inferable from its low sulfur and ash content. It is environment well disposed. There are almost 3 billion tons of demonstrated reserves in 17 recognized coalfields and more than 600 million tons of proven reserves.
In the same vein, limestone occurrences are accounted for in almost all the 36 States of the Federation with extensive deposits in Sokoto, Gombe, Benue, Kogi, Oyo, Ogun and Cross River States. Other Solid Minerals that can be found in Nigeria incorporate; Rock salt, Gemstones, Kaolin, Tantalite, and Gypsum.
Exploitation and exploration of Solid Minerals are administered by the Nigerian Minerals and Mining Act 2007 (“the Act”), and the Nigerian Minerals and Mining Regulation 2011. The Act vests control everything being equal and minerals in Nigeria in the States and prohibits unapproved exploitation or exploration of minerals.
According to the Act, all lands where minerals are found in commercial quantities shall from the commencement of the Act be obtained by the Federal Government as per the Land Use Act. Property in mineral resources shall pass from the government to the person who legitimately acquires a right over the exploration or mining of the mineral resources.
The Act also create room for the establishment of the Mining Cadastre Office (MCO) which is responsible for the administration of mineral titles and the maintenance of the cadastral registers, and empowers the Minister of Mines and Steel (“the Minister”), by regulation, to decide areas qualified for the grant of an exploration or mining lease based on a competitive bidding process.
The Federal Ministry of Mines and Steel Development is the body which is responsible for prospecting licenses for both local and foreign investors to take an interest in the exploitation of the vast mineral resources in Nigeria.
The Regulation streamlined the procedures for granting licenses to investors and ensured access to mining sites without any hindrance whatsoever. The regulation accommodated the right to search for, or exploit minerals in Nigeria which is acquired through any of the following Licenses;
- Reconnaissance Permit:
- Exploration License
- Small Scale Mining License
- Mining Lease
- Quarrying License
- Water Use Permit
WHAT IS A MINING BUSINESS/COMPANY?
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 acquired from various mines are precious gems, coal, metals, limestone, gravel, and shale.
Mining companies conduct search for mineral deposits, make research on the profitability of prospective mines, then set-up mining sites, extract mineral deposits and restore the mining area back to its previous, natural state.
Heavy-duty machinery and intensive human labor are utilized with the daily mining operations of a mining firm. The interest for local miners is reducing as mining companies lean more on machinery.
GPS, drills, trams, lifts, explosives, trommel, trucks, excavators, stone crushers, sand washers, attractive separators, and sluices are some of the gear mining companies use. Such heavy gear eases the weight of minerals processing, stone breaking and evacuation, 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 significant roles to play in the every day operations and management of the mining process.
HOW TO START A SOLID MINERAL/PRODUCTION BUSINESS IN NIGERIA
Get The Necessary License Permits
Before starting out, choose and get information on the specific permits required for your venture. Significant license permits in Nigeria incorporate small or huge scale mining lease, quarry lease, water use permit, reconnaissance permit, and an exploration license.
The Nigerian Cadastre office oversees all the mining activities inside the country. You should accumulate the correct information on their operations and requirement and afterward register your mining company.
The licenses/permits to be obtained include:
A Reconnaissance Permit grants on the holder the right to-
- Easy access into, enter on or fly over any land inside the territory of Nigeria accessible for mining purposes to search for mineral resources on a non-exclusive basis; and
- Obtain and remove surface sample in minute quantity.
- A qualified applicant for Reconnaissance permit is either a citizen of Nigerian with legal capacity and who has not been charged of any criminal offense or, a body corporate appropriately included under the Companies and Allied Matters Act; or a Mining Co-operative.
The Act provides that the Mining Cadastral Office shall inside 30 days of the receipt of the use of any qualified applicant having paid all prescribed fees, grant and issue to that person/body a Reconnaissance Permit to search for mineral resources.
A Reconnaissance Permit is issued for a time of one year and is renewable every year given that the requirements of the Act and its regulations have been met.
The holder of an Exploration License shall have the exclusive right to conduct exploration upon the land inside the area of his license and in the wake of satisfying every one of the conditions stipulated by the Act, shall be entitled to the grant of a Mining lease for any mineral for which he was approved to explore (the authority not having been determined by a notice) under the provisions of the Act in respect of any bit of the area included for the license.
A qualified applicant for an Exploration license must be a body corporate appropriately incorporated under the Company and Allied Matters Act; or Mining Co-operative; or the holder of a Reconnaissance Permit granted in respect of the area subject to the application; given that the applicant has fulfilled every one of the conditions joined to the Reconnaissance Permit.
The term of an Exploration License is 3 years and it might be renewed for 2 further periods of 2 years each provided that the titleholder has complied with the base work obligation commitment and every single other requirement of the Act and its Regulation have been met.
A grant of a Mining Lease to a prospective company is subject to verification of economic reserve of the mineral commodity for which a concession is sought. A qualified applicant for a Mining Lease is a body corporate appropriately incorporated under the Companies and Allied Matters Act that has-
(a) Shown under conditions stated in the Regulations that a commercial quantity of mineral resources exists in the area in respect of which the application is made; and
(b) Has fulfilled every one of the conditions joined to the Exploration License in respect of the area subject to the application.
The following steps are to be followed;
- Apply to the Minister for Certificate of Entry into Mining Industry and include the company’s Certificate of Registration, evidence of technical competence and of financial capability.
- Apply and acquire a prospecting right (PR) to empower it complete general and scientific prospecting for the categories of minerals inside the prospecting right. In the event that appropriately conducted, work on this right will control the company towards zeroing into a specific mineral inside a specific land area.
- Submit an application for an Exclusive Prospecting License (EPL) in the States Mines Office where the mineral is found. Exploration License for a specific mineral over a specific land area which, by law, should not surpass 22 square kilometers. Once granted, the area is held exclusively by the company to confidently invest in mineral exploration work on the area without impediment.
- Once the company has satisfied itself of the accessibility of the mineral in commercial quantity on the EPL, it will at that point apply for a grant of Mining License over the entire or part of the area covered by the EPL.
A Quarry license confers on the holder the right to enter on the land inside the area of the license granted, to complete quarrying activity on the land inside the area of the license, and to evacuate and dispose any quarriable minerals specified in the license.
A qualified applicant for a Quarrying license is-
- Any singular citizen of Nigeria with legal capacity and who has not been convicted of any criminal offense;
- A Mining Co-operative; or
- A body corporate appropriately registered under the Companies and Allied Matters Act; or
- Any person or company extracting construction materials for the construction of roads, railway lines, dams and other engineering works or structure of public interest.
WATER USE PERMIT
A Water Use Permit might be submitted in conformity with the provisions of the Act by-
- The title holder of a small scale mining lease, mining lease, quarry license or exploration license; or
- An applicant for a small scale mining lease, mining lease, quarry license, for which the water use right will be required to be used.
A water use permit is most times applied for when a mining lease, a quarrying license or an exploration license is approved and granted. It remains valid so far the small scale mining lease, mining lease, quarry lease or exploration license or which use it was granted remains valid.
A comprehensive package of incentives has been set up to make a great environment for investment into the Nigerian solid mineral sector and furthermore encourage investor to invest in the sector. Some of the incentives incorporate the following:
- Deferred royalty payments
- Capital allowances of up to 95% of qualifying capital expenditure for mining operations.
- 3 to 5 years tax holiday as applicable; and tax concessions
- Possible capitalization of expenditure on exploration and surveys
- Expatriate quota and resident permit in respect of the affirmed expatriate personnel
- Personnel remittance quota for expatriate personnel, free from any tax imposed by any enactment for the transfer of external currency out of Nigeria.
Subsequent to acquiring every one of these licenses according to the requirements by the federal government, the following steps need to follow:
A mining business plan must be point by point and widely inclusive because of the high risk and capital-intensive nature of this business. It is also basic to do feasibility studies and work out provisions for capital expenditures.
Survey Mine Site
Surveying the site of the mineral deposit you expect to extract is a significant step of the process. Here, everything about the quality and quantity of the minerals can be recorded for necessary documentation and analysis.
Site prospecting provides you with precise calculations of the quantity of minerals that can be extracted every day. This process improves the efficiency of mining operations.
Set-up Mining Machinery And Tools
Lease or purchase the necessary gear required for the extraction of ore deposits. This includes provisions for transportation of minerals and workers.
Power Supply And Housing
Housing provisions should be made accessible for your workforce. Furthermore, living quarters should not be close to the dig sites for health reasons.
Mining/extraction begins as soon as each issue in regards to requirements and necessary provisions have been settled with the respective bodies and authorities.
In case you are Interested in starting Solid Mineral Exploration and Processing Business, you can request us to develop a business Plan for You.
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