Small Scale Iron Ore Mining In Nigeria, The Pre-Feasibility Report

Nigeria is blessed with abundant mineral resources and human resources capable of tapping these resources for industrial growth, however, what is witnessed today is that most of the mineral development, especially the exploitation is done by informal and in most cases illegal miners using very crude techniques with no consideration for the environment or human health.

The Ministry of Mines and Steel Development has identified and is promoting the development of 34 mineral resources in Nigeria which include iron ore, gold, coal, tantalite, bitumen, limestone,barite, gypsum, kaolin (MSMD) etc.

It is on record that Nigeria has a proven deposit of over three billion {3,000,000,000} tons of iron ore scattered in Kogi, Enugu, Zamfara, Kebbi, Niger and Kaduna states. At present most of our steel demands are been met from the recycling of metals scraps and the demand has been estimated at two million {2,000,000} tons annually.

Two broad types of iron ore occur prominently in Nigeria. They are:

(i) Banded iron formation which occur in folded bands and lenses associated with the Precambrian metasedimentary schist belts prominently outcropping in the western half of the country. Prominent locations include Tajimi, Itakpe, Ajabanoko, Ochokochoko Toto, Farin Ruwa, Birnin Gwari, Maru, Jamare, Kaura Namoda, Kakun, Isanlu, Roni and Ogbomoso areas.

ii The Cretaceous sedimentary(oolitic) iron deposits, occur prominently around Agbaja, Kotonkarfi, Nsudde areas in the North central and south eastern zones of the country respectively.

The banded iron formation of Nigeria generally occurs in metamorphosed folded bands, associated with Precambrian basement complex rocks which include low grade metasediments, high grade schist, gneisses and migmatites.  Included in the these group are the well-known Lokoja Okene District (LOK) occurrences notably at Itakpe, Ajabanoko, Kakun, Chokochoko,  Toto Muro and Tajimi.

In the north western parts of Nigeria, the banded iron formation occurs sporadically in narrow bands and lenses interbedded with pelitic and semi pelitic phyllites and schists.

In some cases, especially around Tsofon Birinin Gwari they are interbanded with garnet-quartz mica Schist, lenticular bodies of orthoquartzites and carbonaceous schist. While in Maru area, they are inter-bedded with massive green phlyllites, feebly developed slaty rocks, flaggy tuffaceous materials and amphibolites.
The iron formation bands which vary in thickness from about 3 centimeters to 5 meters are found commonly in groups intercalated within surrounding country rocks or as isolated thin units.  The bands have variable strike extent with some stretching though discontinuously for several    kilometers.

Three man facies have been identified: They are the oxide, silicate and sulphide facies. The oxide facies which is represented by the silica iron  oxide assemblage, is the most wide usually consists of a thinly banded but occasionally slaty rock having a rhythmic alternation of light coloured (light gray)  silica rich bands of variable thickness.  The silicate facies is quartz-garnet- grunerite assemblage.

The sulphide  facies occurs as the pyrite bearing  members  of the pelitic metasediments which consists of carbonaceous schist and phyllite, green phyllite and slaty rock. These rocks are invariably interbanded with the oxide iron formation.

As Nigeria strives to achieve her economic development objectives, it is important that government pay attention to the development of the various iron ore and coal field in Nigeria because they are generally seen as a major index of national prosperity.

In fact , it can be said that the more a nations mining industry grows , the more they prosper economically and examples can be seen across the world from Canada to Australia, India ,they all have a vibrant mining industry.

Iron ore is the raw material smelted to produce pig iron {metallic iron}, which is used to make steel. It is an important industrial metal. This report seeks to examine the financial viability or otherwise of mining iron ore in Nigeria.

Table of Contents

EXECUTIVE SUMMARY 1. Business Overview 1.1 Description of the Business 1.2 Incentives / Government Policy 1.3 How to Obtain a Mining Lease in Nigeria 1.4 Occurrence and Distribution of the mineral in Nigeria 1.4 Critical Success Factor of the Business 1.5 Description of the Business Industry 1.6 Contribution to Local and National Economy 2. Marketing Plan 2.1 Description of product 2.2 Location 2.3 The Opportunity 2.4 Pricing Strategy 2.5 Target Market 2.6 Distribution and Delivery Strategy 2.7 Promotional Strategy 2.8 Competition 3. Technical Analysis 3.1 Description of the Location 3.2 Raw Materials 3.3 Production Technology / Equipment 3.4 Production Process 3.5 Production Cost 3.6 Stock Control Process 3.7 Pre-Operating activities and expenses 3.7.1 Operating Activities and Expenses 3.8 Project Implentation Schedule 4.0 Organizational and Management Plan 4.1 Ownership of the business 4.2 Profile of the promoters 4.3 Key Management Staff 4.3.1 Strategic Business Units 4.3.2 Management Support Units 4.4 Details of salary schedule 5. Financial Plan 5.1 Financial Assumption 5.2 Start up Capital Estimation 5.3 Source of Capital 5.4 Security of Loan 5.5 Loan Repayment Plan 5.6 Profit and Loss Analysis 5.7 Cashflow Analysis 5.8 Viability Analysis 6.0 Business Risk and Mitigation Factor 6.1 Business Risks 6.2 SWOT Analysis

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