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How To Start A Lucrative Mining Company In Nigeria and make $29,000 yearly

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Mining has been a significant part of Nigeria and Africa’s economy, providing valuable minerals and resources that have contributed to the development of various industries. In Nigeria, mining has historically played a crucial role in the growth of the country’s economy, with the sector contributing 0.3% to the GDP in 2018. Africa, on the other hand, is home to over 30% of the world’s mineral reserves, making it a crucial player in the global mining industry.

The mining sector in Nigeria has the potential to contribute significantly to the country’s economy, with estimates showing that it can generate up to $27 billion by 2025. Similarly, the mining industry in Africa has the potential to become a major driver of economic growth, given the continent’s vast mineral resources and the growing demand for minerals globally.

Despite the potential of the mining sector in Nigeria and Africa, the industry remains largely underdeveloped due to inadequate infrastructure, limited investment, and outdated mining practices. However, recent efforts by the government to promote the industry through policy reforms, investment incentives, and partnerships with private companies are beginning to yield positive results.

Furthermore, Nigeria’s mining sector has significant export opportunities for local mining companies, especially in the areas of mineral processing and value addition. The Nigerian government has implemented policies to encourage local companies to invest in mineral processing and value addition to increase exports of finished products.

In Africa, the mining industry is attracting significant foreign investment, with China being a major player. The continent has become an attractive destination for mining companies due to its vast mineral resources and improving business environment.

To fully tap into the potential of the mining sector in Nigeria and Africa, there is a need for increased investment, improved infrastructure, and adoption of modern mining practices. The industry has the potential to create job opportunities, boost the economy, and contribute to sustainable development in the region.

See Also: How To Start Exporting Muscovite Mica Minerals From Nigeria To International Buyers

What Is Mining?

Mining is the process of extracting minerals, metals, and other valuable geological materials from the earth’s surface or subsurface. It involves various techniques, including underground and surface mining, as well as exploration and development of mines.

The scientific name for mining is “extractive metallurgy,” which involves the extraction of metals and minerals from ores through various physical and chemical methods.

Mining plays a vital role in the global economy, as it provides essential raw materials for various industries, including construction, manufacturing, and energy production.

In Nigeria and Africa, mining has significant potential for economic growth, job creation, and revenue generation. However, the industry faces several challenges, including poor infrastructure, regulatory and legal hurdles, and environmental concerns.

See Also: How To Start A Lucrative Consulting Business In Nigeria and Africa: The Complete Guide

What Is The Mining Company Business In Nigeria and Africa About?

Mining business is a process that involves the extraction of minerals, metals, and other valuable resources from the earth’s crust. This process involves a range of techniques and technologies to extract and process the resources efficiently and safely. The mining industry in Nigeria and Africa is a vital sector, contributing significantly to the economic growth and development of the region. Mining companies invest heavily in research to identify potential areas for mineral exploration and the best methods for extraction.

Mining companies in Nigeria and Africa produce a variety of minerals, including gold, diamond, bauxite, copper, tin, and iron ore. The production yield after mining varies depending on the type of mineral, the location of the mine, and the extraction method used. For example, gold mining in Nigeria and Africa has produced significant yields, with the continent being the world’s second-largest producer of gold.

Mining companies provides a significant export opportunity for Nigeria. The country has vast mineral resources, but the mining industry is still in its infancy, with enormous potential for growth. The government has implemented several policies and programs aimed at attracting foreign investment in the sector, creating jobs, and diversifying the economy

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Benefits of The Mining Company Business In Nigeria and Africa

  1. Economic Growth: The mining industry contributes significantly to the economic growth of Nigeria and Africa. The exportation of minerals helps to boost the economy and create employment opportunities.
  2. Source of Revenue: Mining companies generate revenue for both the government and the private sector. The government benefits from taxes and royalties, while private companies earn profits.
  3. Foreign Exchange Earnings: Mining companies help to earn foreign exchange through the exportation of minerals. This helps to boost the balance of payments.
  4. Diversification of the Economy: The mining industry helps to diversify the economy of Nigeria and Africa. This reduces the over-dependence on oil and gas.
  5. Development of Infrastructure: The mining industry contributes to the development of infrastructure such as roads, rail lines, and electricity.
  6. Technological Advancement: Mining companies in Nigeria and Africa adopt modern mining techniques and technologies. This helps to improve the efficiency of mining operations.
  7. Job Creation: The mining industry provides employment opportunities for both skilled and unskilled labor. This helps to reduce the level of unemployment in Nigeria and Africa.
  8. Capacity Building: The mining industry provides training and capacity building opportunities for the workforce. This helps to improve the skill set of the labor force.
  9. Environmental Management: Mining companies in Nigeria and Africa adopt environmentally friendly practices. This helps to reduce the negative impact of mining on the environment.
  10. Social Development: Mining companies engage in corporate social responsibility activities such as building schools, hospitals, and providing potable water.
  11. Poverty Reduction: The mining industry helps to reduce poverty by providing employment opportunities and engaging in social development activities.
  12. Infrastructure Development: The mining industry contributes to the development of infrastructure such as roads, rail lines, and electricity.
  13. Technology Transfer: The mining industry facilitates the transfer of technology from developed countries to Nigeria and Africa.
  14. Improved Standards of Living: The mining industry helps to improve the standards of living of the people by providing employment opportunities, social amenities, and engaging in poverty reduction activities.
  15. Boosts Agricultural Production: The mining industry contributes to the growth of agriculture in Nigeria and Africa by providing fertilizers and other agricultural inputs.

See Also: How To Start A Lucrative Tissue Paper Production Business In Nigeria and Africa: The Complete Guide

Business Opportunities In The Mining Company Business In Nigeria and Africa

  1. Mineral Exploration: Nigeria and Africa have vast mineral resources that are yet to be fully explored, creating opportunities for mining companies to conduct exploration and tap into these resources.
  2. Mining Equipment Leasing: Mining companies require specialized equipment to operate efficiently, but the high cost of acquiring such equipment can be a challenge. Leasing provides an affordable option for companies to access the required equipment.
  3. Mining Consultancy: Mining consultancy services offer guidance and support to mining companies in areas such as legal compliance, environmental impact assessments, and feasibility studies, among others.
  4. Mineral Trading: The export of minerals from Nigeria and Africa provides opportunities for mining companies to generate revenue through the sale of their mined products to other countries.
  5. Mineral Processing: Mining companies can add value to their mined products by processing them into finished products, which can generate higher profits.
  6. Mining Software: Software solutions can help mining companies manage their operations more efficiently, including managing logistics, scheduling, and data analysis.
  7. Mine Security: Security is a critical aspect of mining operations, and mining companies require specialized security services to safeguard their operations.
  8. Water Treatment: Mining operations can generate wastewater that can be harmful to the environment, and mining companies require water treatment services to manage this waste and ensure compliance with environmental regulations.
  9. Mining Safety Equipment: Mining operations involve various hazards, and companies need safety equipment such as helmets, boots, and protective gear to ensure the safety of their workers.
  10. Haulage Services: Transportation is a critical component of mining operations, and companies require reliable and efficient haulage services to move their mined products.
  11. Mining Infrastructure: The development of infrastructure such as roads, rail networks, and ports is critical to the success of mining operations, and mining companies can leverage these opportunities.
  12. Mining Training: Mining companies require skilled workers to operate efficiently, and training services can help to develop the required skills and expertise.
  13. Waste Management: Mining operations generate significant waste, and companies require waste management services to dispose of this waste safely and in compliance with environmental regulations.
  14. Mining Finance: Mining companies require funding to operate, and finance services can provide the required capital to support operations.
  15. Renewable Energy: Mining companies can leverage renewable energy solutions to reduce their energy costs and minimize their environmental impact.

See Also: 25+ Lucrative Mining Business Ideas And Opportunities in Nigeria

Facts About The Mining Company Business In Nigeria that will give make you $38,000 yearly

  1. Mining contributes significantly to the Nigerian economy, accounting for 0.3% of GDP in 2019.
  2. Nigeria has rich mineral resources, including tin, coal, and gold.
  3. The mining sector in Nigeria has been largely dominated by small-scale artisanal miners.
  4. The mining sector in Africa is projected to grow at a rate of 5.7% from 2020 to 2029.
  5. The African continent is home to a variety of mineral resources, including diamonds, gold, copper, and iron ore.
  6. In 2020, Nigeria was ranked 28th in the world for mineral production, with a total value of $1.5 billion.
  7. Mining companies in Nigeria face a number of challenges, including inadequate infrastructure and lack of government support.
  8. Mining companies in Africa have also faced challenges related to political instability and corruption.
  9. The use of new technologies such as AI and automation is expected to increase in the mining industry in Africa.
  10. The mining industry in Africa has the potential to create jobs and boost economic growth in the region.
  11. Mining companies in Africa are increasingly adopting sustainable and responsible mining practices.
  12. The African mining industry has seen an increase in investment from China in recent years.
  13. The African mining industry is also seeing increased investment from Canadian and Australian mining companies.
  14. Nigeria is home to several international mining companies, including Anglo American and BHP Billiton.
  15. The Nigerian government has launched several initiatives to attract foreign investment in the mining sector, including tax incentives and the establishment of a mining investment fund.
  16. The mining sector in Africa has been impacted by the COVID-19 pandemic, with a decrease in demand for minerals and disruptions to supply chains.
  17. The African Union has established the African Mining Vision, a roadmap for sustainable and equitable mining development in the region.
  18. The African Development Bank has launched a program to support the development of the mining industry in Africa.
  19. The African Mining Partnership, established in 2003, aims to promote sustainable mining practices and foster cooperation between African countries.
  20. The African Minerals Development Centre provides technical support and capacity building to African countries to promote sustainable and responsible mining practices.
  21. Nigeria is home to the National Iron Ore Mining Company, which is responsible for the exploration, mining, and processing of iron ore deposits in the country.
  22. The Nigerian Mining Cadastre Office is responsible for the administration and management of mineral titles in the country.
  23. The Nigerian government is currently undertaking reforms to streamline the mining sector and attract foreign investment.
  24. The African mining industry has seen an increase in mergers and acquisitions in recent years.
  25. The mining industry in Africa has the potential to contribute significantly to sustainable development in the region.

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Types Of Mining Company Businesses In Nigeria and Africa

  1. Artisanal and Small-scale Mining (ASM): ASM refers to the use of rudimentary and often manual techniques to extract minerals. This type of mining is common in rural areas and involves low levels of investment, technology, and environmental and social standards.
  2. Industrial Mining: Industrial mining involves large-scale, mechanized operations that utilize advanced technologies and equipment to extract minerals. This type of mining is capital-intensive and requires significant investment in infrastructure, logistics, and human resources.
  3. Quarry Mining: Quarry mining refers to the extraction of building materials such as stone, gravel, and sand from open-pit mines or quarries. This type of mining is commonly used in the construction industry for building projects.
  4. Coal Mining: Coal mining is the extraction of coal from underground mines or open-pit mines. Nigeria has large coal reserves, and coal mining was a major industry in the past, but has declined over time due to the discovery of oil.
  5. Gold Mining: Gold mining is the process of extracting gold from the ground. This type of mining is common in many countries, including Nigeria and Africa.
  6. Tin Mining: Tin mining involves the extraction of tin ore from the ground. Nigeria was once a major exporter of tin, but the industry has declined due to a combination of factors, including low prices and competition from other countries.
  7. Iron Ore Mining: Iron ore mining involves the extraction of iron ore from the ground. Nigeria has large iron ore reserves, but the industry is largely underdeveloped due to poor infrastructure and lack of investment.
  8. Diamond Mining: Diamond mining involves the extraction of diamonds from the ground. While Nigeria has some diamond deposits, the industry is relatively small compared to other countries in Africa.
  9. Lead and Zinc Mining: Lead and zinc mining involves the extraction of lead and zinc ore from the ground. Nigeria has significant lead and zinc deposits, but the industry is largely underdeveloped due to a combination of factors, including low prices and competition from other countries.
  10. Uranium Mining: Uranium mining involves the extraction of uranium ore from the ground. Nigeria has some uranium deposits, but the industry is largely undeveloped.
  11. Gemstone Mining: Gemstone mining involves the extraction of precious and semi-precious stones from the ground. Nigeria has significant gemstone deposits, including sapphires, rubies, and emeralds.
  12. Salt Mining: Salt mining involves the extraction of salt from underground mines or salt pans. Nigeria has significant salt reserves and the industry is a major employer in certain areas.
  13. Barite Mining: Barite mining involves the extraction of barite ore from the ground. Nigeria has significant barite deposits, and the industry has potential for growth due to increasing demand from the oil and gas industry.
  14. Wolframite Mining: Wolframite mining involves the extraction of wolframite ore from the ground. Wolframite is used in the production of tungsten, which is used in the manufacture of high-speed steel and other alloys.
  15. Columbite Mining: Columbite mining involves the extraction of columbite ore from the ground. Columbite is used in the production of niobium, which is used in the manufacture of steel alloys, superconducting materials, and other high-tech applications.

See Also: How To Start The Lucrative Export Of Lithium Ore From Nigeria To International Buyers: Lepidolite, Lepidolite, Amblygonite, & Spodumene

Types Of Solid Minerals & Metals In Nigeria and Africa

  1. Gold: Nigeria is home to several gold deposits, including Segilola, Kogi Mines, and Dangote Gold. Gold mining is a viable business opportunity in Nigeria and Africa.
  2. Coal: Nigeria is rich in coal deposits, and it is an important resource for power generation in the country.
  3. Iron Ore: Nigeria has one of the largest iron ore deposits in Africa and is home to Ajaokuta Steel Company, which was constructed to process the iron ore deposits.
  4. Lead and Zinc: Lead and Zinc are important minerals used for industrial purposes such as batteries, paints, and rubber production.
  5. Tin: Nigeria is one of the largest producers of tin in Africa, and it is mainly found in Jos, Plateau State.
  6. Columbite: Nigeria has the largest reserve of columbite in the world, and it is used for the production of niobium, which is an important component in steel production.
  7. Wolframite: Wolframite is used in the production of tungsten, which is used for the production of filaments in light bulbs, and Nigeria has large deposits of the mineral.
  8. Limestone: Nigeria has large deposits of limestone, and it is used for the production of cement, which is a vital component in the construction industry.
  9. Bauxite: Bauxite is used for the production of aluminum, and Nigeria has a large reserve of the mineral in Ekiti State.
  10. Gypsum: Gypsum is used for the production of plaster of Paris, which is used for building construction, and Nigeria has large deposits of the mineral.
  11. Kaolin: Kaolin is used for the production of ceramics and other industrial products, and Nigeria has large deposits of the mineral in several states.
  12. Tantalite: Tantalite is used for the production of tantalum, which is used in electronic equipment such as mobile phones and computers.
  13. Barite: Barite is used in the oil and gas industry for the drilling of wells, and Nigeria has large deposits of the mineral.
  14. Gemstones: Nigeria is home to several gemstones, including sapphire, aquamarine, topaz, and emerald.
  15. Feldspar: Feldspar is used in the production of ceramics, glass, and other industrial products, and Nigeria has large deposits of the mineral.
  16. Clay: Clay is used for the production of bricks, ceramics, and other industrial products, and Nigeria has large deposits of the mineral in several states.
  17. Bitumen: Bitumen is used for road construction and the production of roofing materials, and Nigeria has large deposits of the mineral.
  18. Talc: Talc is used in the production of cosmetics, paint, and other industrial products, and Nigeria has large deposits of the mineral.
  19. Dolomite: Dolomite is used in the production of refractory bricks and other industrial products, and Nigeria has large deposits of the mineral.
  20. Rutile: Rutile is used in the production of titanium dioxide, which is used for the production of paint, plastics, and other industrial products.
  21. Garnet: Garnet is used in the production of abrasives, and Nigeria has large deposits of the mineral.
  22. Mica: Mica is used in the production of electrical equipment, insulation materials, and other industrial products, and Nigeria has large deposits of the mineral.
  23. Nickel: Nickel is used for the production of stainless steel, and Nigeria has large deposits of the mineral.
  24. Lithium: Lithium is used for the production of rechargeable batteries and other electronic devices, and Nigeria has potential deposits of the mineral.
  25. Phosphate: Phosphate is used in the production of fertilizers, and Nigeria has potential deposits of the mineral.

And much more.

See Also: How To Start A Lucrative Event & Party Equipment Rental Business In Nigeria and Africa: The Complete Guide

2 Ways Coal Can Still Make You Rich (make $12,000 monthly with Coal Mining)

Few industries have been more brutalized in recent years than coal. However, this article explains how long-term investors can still make a killing in this unloved but still lucrative industry.

ake metallurgical pure play Walter Energy (WLTGQ) for example.

Back in 2011 when metallurgical coal, (used to make steel) was at a high of $350/ton, Walter Energy acquired high-cost Canadian coal miner Western Coal for $3.3 billion.

Today due to soft demand from China and new supply from Australia, metallurgical coal is trading for $120/ton and Walter has had to: cut its dividend 90%, shut down its Canadian mine and attempt to cut administrative expenses by 10% this year.

Walter’ Energy’s biggest problem is its massive debt load of $2.4 billion, in the form of bonds with interest rates of 8.5%-11%. With a debt/adjusted EBITDA ratio of 24 and the company hemorrhaging cash, Walter will deplete its cash reserves by the end of 2015. This is why the company’s bonds are trading for 60% of face value (yielding 20%) and 65% of the company’s shares are held by short sellers.

The only way Walter Energy survives is if it either sells more shares and dilutes shareholders as it’s been doing at an annual rate of 5.3% since 2006 (see the chart above) or if metallurgical coal prices rebound.

Walter Energy: speculative commodity bet
This is pretty much what investors in Walter Energy are now doing, making a speculative commodity bet that metallurgical coal will rebound before the company’s cash runs out. Given its massive short interest and the fact that each $1/ton increase in metallurgical coal price is worth about $10 million in EBITDA, this is a bet that may pay off handsomely. For example, should metallurgical coal rebound to $175/ton, Walter Energy’s EBITDA would soar to $715 million, its debt/EBITDA would fall to 3.36, and it could easily service its debts. This would likely send the share price soaring several fold in the short-term.

However, here at The Motley Fool we believe in owning high-quality companies with solid management teams and good growth prospects. That is why I don’t recommend Walter Energy but rather Alliance Resource Partners (ARLP -1.30%) and its general partner Alliance Holdings GP (NASDAQ: AHGP).

Unlike Walter Energy, which has returned -4.5% annual total returns over the last 15 years (vs the greater market’s 8.8%), Alliance Resource Partners and Alliance Holdings have proven to be very good at making long-term income investors rich. For example, Alliance Holdings in the last 10 years has nearly tripled the market (20.6% annual returns vs 7.7%) while Alliance Resource Partners, over the last 17 years has beaten the market by 583% (31.4% annual returns vs 4.6%).

While I don’t expect either security to continue with such sky-high returns, there are three reasons I believe Alliance Resources can outperform the market in the long-run and make income investors very rich.

The first reason is because Alliance Resources has some of the best, lowest-cost reserves in America in the form of its 14 Illinois and Appalachia mines.

With coal fired electricity production up 15.1%, overall coal consumption up 12.6%, and utility coal reserves down 28% this year, it seems a bottom has formed in the coal market.

Alliance Resource Partners, which has reported 13 consecutive years of record production and revenues (as well as 24 consecutive quarters of distribution growth) is well poised to continue its impressive winning streak.

Specifically it has three projects: two new mines (Gibson South and an investment in the White Oak mine) and one expansion (Tunnel Ridge longwall), that will result in a 29% increase in coal production by 2016.

What’s more, Alliance Resource Partners has proven itself a master at cutting costs, with production costs at Tunnel Ridge dropping 29% this quarter.

The second reason for investing in Alliance Resource Partners is because management has proven itself skilled at protecting the balance sheet and unit holder wealth. Consider this:

  • Alliance Resource Partners hasn’t had a secondary offering since 2003 (almost unheard of with MLPs).
  • Its leverage is remarkably low with a debt/EBITDA ratio of 1.2 vs 3.9 for MLPs and 7 for the coal industry.
  • Its distribution coverage ratio over the last year is 1.58, representing a bank-vault like distribution/dividend security and portending strong growth in years to come.

Which brings me to the final reason for investing in Alliance Resource Partners: the generous yield of 5.3%, which analysts predict will grow at 8.5% for Alliance Resource Partners and 9.8% for Alliance Holdings for the next 10 years.

With dividend/distribution growth like that long-term investors can expect total returns of about 14.5%-15.9% annually over the next decade.

Foolish bottom line
Walter Energy represents the kind of short-term, speculative coal play I’d recommend investors avoid. Alliance Resource Partners on the other hand is the epitome of a Foolish investment. It represents a best of breed company with impeccable management, a rock-solid balance sheet, and a Volvo-safe dividend/distribution set to grow strongly over the next decade. 

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