How To Start Gold Mining Business In Nigeria (Guide To Starting Gold Mine Exploration Company In Africa)
This article is a business guide, designed to show you the tricks, tips and steps to follow in starting a gold mining business in Nigeria.
Nigeria is blessed with variety of mineral resources, with millions of tons of these resources lying untapped beneath the crust of the Nigerian environment. Although, one of these mineral resources – crude oil – remains the mainstay (major source of income) of the Nigerian economy, the amount of significance placed on it has been to the detriment of other equally (or even more) valuable resources. A notable mention in this regard is GOLD, which, at a time, was of great economic significance to the Nigerian state.
Gold is present in virtually all states of the federation (Nigeria), and it is present in commercial quantities in a good number of these states. And with the recent development and the upsurging demand for gold across the globe, gold mining is fast becoming a key investment opportunity in the country, which is being ventured into by the notable who-is-whos in Nigeria.
If you have interest in this business and you want to enjoy from the largess it offers, follow this article with full attention.
Gold Mining Business In Nigeria
The exploration of gold in commercial quantity started some time in the early 20th century in Nigeria. At this time, the mineral resource was mainly being mined by the British colonialists, who controls the country at the time.
From the time of the early colonialists, in the early 1910s, up until the mid 1950s, when oil was discovered, gold maintained its significance as a valuable state resource. In 1956, when petroleum was discovered in Oloibiri, Bayelsa State, the attention, funds and manpower were subsequently diverted to crude oil mining. Consequently, gold lost its place as a major economic resource in Nigeria. And the Nigerian Mining Corporation (NMC), which was overseeing mining activities at that time, also became moribund.
Fast forward to the early 2000s, gold mining started regaining its significance, as the Nigerian government initiated the search for alternative sources of income, in the face of the global instability of petroleum price. At this time, gold was still being mined, albeit at insignificant quantities, by individuals, local groups and communities.
Today, gold mining has somewhat regained its significance, as there are now big mining companies, who engage in the exploration of this highly valuable mineral. Last year, in 2018, solid mineral resources, including gold, tin, columbite, iron ore and coal, contributed approximately 0.5% to the Nigerian GDP. This figure, though relatively insignificant compared to those of petroleum and other products, shows the growing trend of importance of solid minerals in Nigeria.
On the downside, with the increase in gold mining activities in the country, there have been serious security challenges within and around notable mining hubs. Affected regions are basically the North-Western and South-Western states, notably Zamfara, Kebbi, Taraba, Ondo and Osun state. Interestingly, these states are the major hubs of gold ores in Nigeria, where there are significant gold reserves in mammoth quantities.
With the increase in the awareness of gold exploration in Nigeria, as well as the corresponding increase in demand, gold mining business has started to live up to its name. In clearer terms, gold mining business has become a “gold mine” (a highly lucrative business) for smart investors.
If you have interest in starting a gold mining business in Nigeria and you are looking for how to go about it, we’ll be putting you through in the next section of this article.
Guidelines on How to Start a Gold Mining Business in Nigeria
As emphasized earlier in this article, gold mining is a serious business that is highly lucrative, but for some reasons is greatly overlooked in Nigeria. Despite the level of awareness as to the abundance of this resource in Nigeria, many are still oblivious of this fact.
In any case, if you are looking for how to put your money to good use, starting a gold exploration business would not be a bad idea. And some of the guidelines below will provide you with every necessary step to take in going about this.
Ensure you have what it takes
Gold mining is not your everyday small scale business, which you can start with a meagre sum of money. Depending on a number of factors, you need to have a moderate startup capital, starting from 3-5 million Naira (could be more or less).
This is because, you need a sizable sum of money to hire manpower, obtain permits/licenses and more importantly, procure machinery (of various kinds). However, you can procure machinery on lease, at lesser, but significant sum of money.
In a nutshell, if you are certain you have what it takes, basically in terms of finance and access to manpower, you can proceed on your path to entrepreneurship prowess.
Put together a business plan
Like every business, a business plan is highly essential in gold mining business. The plan should contain every key detail, ranging from cash at hand to projected income (monthly/yearly) to required manpower (skilled and manual), should be put down and appropriately analyzed.
Furthermore, required machinery (and their cost), permits to obtain (and their cost), business’ long and short term goals, prospective competitors, details on mining sites and other vital information should be included in the plan.
Once you’ve prepared your plan, you can proceed to make your new business a registered venture, by obtaining necessary permits.
Obtain necessary permits and/or licenses
This is very important, as a new business, it is important to obtain all the necessary permits and licenses, starting from the normal business registration with the Corporate Affairs Commission (CAC). Once you’re properly registered as a legit business owner. you can proceed to obtain relevant permits/licenses in your business area, notably quarry permit, water use permit, exploration permits and mining lease among others.
Furthermore, you can’t just take your personnel and machinery to a mining site and start digging up gold worth multimillion (if not billions) of Naira. There are procedures to follow, palms to grease and more importantly, permits to procure.
The overseeing body of mining activities in Nigeria is the Ministry of Mineral Resources, which has numerous subsets (agencies and parastatals) operating under it. Therefore, make sure you familiarize yourself with the necessary protocols, and pay the required sum to get your permits and licenses from the ministry and/or other relevant agencies. However, it is important to note that with the situation on ground in Nigeria, obtaining such permits (via due process) is no cakewalk.
Lastly, it is a known fact that mining sites have host communities i.e. the local inhabitants of the areas within and around the mining sites. Hence, to have a smooth, hassle-free, mining, it is important to gain the support of local heads, chiefs and the entire community in a site. This, of course, requires money.
Conduct a survey on the mine site
This is practically one of the most important steps here. After obtaining every necessary permit (tangible and intangible), you should carry out a survey of the area.
Notable surveys to conduct here include:
- Reconnaissance survey; to determine the physical condition (geography) of the mine site.
- Geological survey; to determine the rock type and the presence (and concentration) of the gold ore in the site.
- Hydrological survey; this applies in the event that there is a water body nearby.
Once you’ve carried out your survey and you are satisfied with the findings, you can proceed to the next step.
Procure mining instruments
As a startup, purchasing mining equipment might not be cost-effective. Hence, you can procure relevant machinery on lease, which should come at a relatively affordable cost.
Notable mining instruments include, but are limited to:
- Excavator (automated or manual)
- Sluice Box
- Slurry Pumps
- Gravity Concentrators
- Gold Dredge (Suction Cutter)
- Shaker Deck
- And more
Some of these instruments might not be needed, depending on the geography and geology of the mine site, as well as the intended quality of the extracted gold. However, you need many of these equipment if you are looking to mine in significant quantities.
Nevertheless, with respect to cash at hand, you can employ the use of improvised, locally made, instruments, if you intend to mine in minute quantities.
Put in place necessary welfare package
Mining is a serious activity, which often takes days, weeks or even months. Hence, accommodation spaces/staff quarters, as well as steady power and water supply are needed. Also, there should be access to health facility, which is especially important, as most mining sites in Nigeria are located in remote areas. All these, of course, require money, but they are necessary if you want to be successful in the business.
The first and foremost operation in mining is “excavation”, as gold is underneath the surface. Hence, to reach the gold ore beneath the surface, you would have to remove the overburden (soil) and drill through the underlying rocks.
Once extracted from the ore, you can then proceed to purify and package the gemstone. This, in itself, is another set of serious activities, which require tedious man-hour and sizable manpower, depending on the quantity.
Market, sell and pay your tax
Gold is probably the most sought-after jewel today, and its market is everywhere. Hence, you don’t need to sweat much before selling the product at profitable prices.
More importantly, however, if you want to build and sustain a successful gold exploration business, ensure you pay your taxes when required.
Best of luck!!!
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