By Adewale Sanyaolu
The announcement by the Acting President, Prof. Yemi Osinbajo, at the National Mining Summit in Abuja, last Tuesday, that the Federal Government is working towards new mining sector fund of $600 million to be raised via Nigeria Sovereign Investment Authority (NSIA), Nigerian Stock Exchange (NSE) and other investors, may have opened a new vista of opportunities for those that intend to venture into the mining business, especially that of quarry/granite.
The Federal Government, through the Dr. Kayode Fayemi-led Ministry of Solid Minerals Development, however, is yet to come up with modalities on how it intends to disburse the funds, the qualification requirements and the general framework for the fund.
But having unveiled its plan to float the fund, the time is now for would-be investors to begin preparations towards tapping into this novel idea that may eventually turn the fortunes around for the country’s mining sector while creating massive employment for the sector.
It is equally on record that the activities in the mining sector, if well harnessed, are capable of generating over 500,000 jobs but funding remained a major stumbling block to the realisation of the full potential in that sector.
But hope seems to be at the end of the tunnel as the Federal Government has equally announced fresh plans to grant the Ministry of Solid Minerals Development access to N30 billion under the mining sector component of the Natural Resources Development Fund (NRDF).
On the other hand, it stated that another $150 million has been raised globally from the World Bank for mining diversification. With all these funds, the stage is now set for serious entrepreneurs to come up with robust business plans, which may eventually give them access to these funds.
As at the last count, the Ministry of Mines and Steel Development has discovered about 33 commercially available industrial minerals in Nigeria and granite is one of such industrial minerals. According to Foraminifera, a market research outfit, the granite deposit in Nigeria is estimated to be in billions of metric tonnes.
The earth crust is filled with different types of rock, ranging from igneous, sedimentary and metamorphic rocks. Granite is an igneous rock formed from the cooling of magma in an exothermic process.
Granite, popularly known as chippings/gravel, is a very hard stone good for building and construction works globally. It is a common and widely occurring type of intrusive felsic, igneous rock. It has a medium to coarse texture occasionally with some individual crystals larger than the groundmass forming a rock known as porphyry. It can be pink to dark grey or even black depending on their chemistry and mineralogy.
Granite is a hard, usually grey, stone used for building and the most common rock type on the continental landmasses. It is widely distributed throughout the continental crust of the earth and is the most abundant basement rock that underlies the relatively thin sedimentary veneer of the continents.
Nigeria is richly endowed with granite stone and other related solid minerals like marble, dolomite and basalt. It is found in Enugu, Ebonyi, Kogi, Plateau, Ogun, Oyo, Osun and Ekiti states. Hence, granite is among the most available and affordable building materials.
Nigeria being a country located in the tropics has these rocks in commercial quantity and it is a means of livelihood for many in some parts of the country.
In the past, it was mined manually but now there are sophisticated equipment that make quarrying very easy. Lagos as a cosmopolitan city developing by the day cannot do without granite. There is high demand for the product in Lagos, Ibadan, Abeokuta and other surrounding cities. The product is equally needed in other parts of the country.
Lagos is not an igneous environment where granite can be found. All the real estate developers, contractors and civil engineering and construction companies get their granite from nearby towns. Its hard nature made it a very suitable and durable material for most civil engineering and construction works.
In 2004, the total production was about 15 million tonnes whereas the demand was 16.2 million tonnes leaving a supply gap of 1.2 million tonnes. The market is vast even to the international level. That is, the product could be sold locally or exported out of the country with over 200 per cent return on investment. Granite business is one that can be done by people of all classes.
The business could be done in large scale and small scale as the investor’s financial strength is. As stated earlier, Lagos is one of the fastest developing cities in Nigeria with lots of building and construction works done daily but Lagos does not have granite so all the ones consumed in Lagos come from the nearby towns. The market is stratified into three, including large scale, medium and small scale.
Floating a quarry
An investor would require millions of naira to start and operate a quarry. The actual cost would be based on the scale the investor wants to start the business.
The cost of the machinery required for the crushing of the granite make up between 60 and 70 per cent of the cost of establishing the business and is based on three factors, which are the input of granite, the output of the granite and the capacity of the machine required.
The investor would need to acquire/lease a rocky land for a period of one-five years and site a quarry for the manufacture of granite for sale to developers or to be used as raw material for the production of flooring tiles, marbles and antiquities.
After leasing the rocky land, the investor will then have to purchase heavy quarrying equipment including the crusher, excavator, pay loader, waybridge, dumper, carriage trucks (10-40 tonnes capacity).
It is, however, advisable to import the equipment from USA, Europe or China as the locally made ones are of very low quality, thus not reliable. The investor can choose to lease a complete quarry that has been poorly managed with all the equipment intact.
After this is done, the next thing is technical expertise. The technical know-how aspect is very important because this is the key to success in this business. You either engage the services of Chinese or a Nigerian.
Further to this, after fixing the technical and mechanical need of the business, another thing is effective and efficient management of men, machines and materials to achieve result (profit making). Thus, there is need for a business and or management expert that can make things happen.
Would-be investors should note that no matter how good their production, machines and appliances are, workers without good marketing skill, structure and strategy will cause the business to fail.
Medium scale operation
As a medium scale investor, the investor buys from the quarry owners and sells to the final users who may be real estate developers, contractors, civil engineers and resellers. A good supplier could be lucky to buy on credit from the quarry owners or agents and pay back after he/she has supplied and collected money. This could be achieved through good business relationship and integrity.
Small scale operation
This does not require any capital to begin; all you need is the ability to market the product by moving around major cities like Lagos and informing developers, contractors that one can supply them granite for their building and construction work.
And immediately the marketer secures a deal to supply, they contact a registered supplier who will provide the goods and they get their commission. The commission is usually based on negotiations with the buyer and the supplier.
Gas pricing: Govt involvement strangulating sector –NGA
The continuous involvement of the Federal Government in the determination of gas pricing will spell doom for the sector, the Nigerian Gas Association (NGA) has warned.
President of NGA, Dada Thomas, raised the alarm at the NGA Natural Gas Business Forum with the theme, ‘‘Embracing New Realities: Resetting our Gas to Power Industry’’ held in Lagos last week.
He maintained that unless concurrent action is taken to solve the problem of gas supply and other challenges making further investment unattractive for gas producers, processors, pipelines and transportation companies, the inevitable shortages seen over the years will seem trivial compared to the massive economic and social disruptions in future.
Thomas explained that every citizen of Nigeria, whether he or she realises it or not, and whether he or she uses natural gas directly or indirectly, stands to benefit both in the near term and over the long haul from removal of government price controls in a bid to ensure that a willing-seller willing-buyer market scenario comes into play.
As a way out of the current logjam for natural gas, the NGA President canvassed two options; deregulation or continuous regulation by government.
For the latter option, he said the implication is that the sector would de-incentivise new investment in gas development and continue to suffer acute gas shortage with its negative impact on producers and consumers while the former will encourage new investment in gas development and allow market forces to determine prices and cost for producers or consumers.
However, the good news, according to him, is that NGA’s engagement with government on behalf the citizenry is starting to yield positive results and indications are that willing-buyer willing-seller market is not too far off on the horizon.
He assured that the number one priority of NGA and the top priority of gas producers and investors is to ease the natural gas shortage as much as possible in the short term, and to work towards providing a long term solution.
“The challenge is how to do this in an economically viable, profitable and sustainable manner that would meet the aspirations of investors and operators on one hand and the government and consumers on the other hand.
“The shortfall in natural gas supply, further execrated by pipeline vandalisation, is as great a problem to the nation as is the impact of cost-reflective electricity tariffs, unworkable power purchase agreements (PPAs) and over regulation of gas price.
“By necessity, we have no choice now but to take whatever steps that are possible and equitable to deal with the situation and break the unending cycle of inadequate gas and power supply and unrealised economic potential that has been the lot of our nation for so long,’’ he said.