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THE NEED FOR VALUE ADDITION IN THE MINING INDUSTRY IN NIGERIA

Nigeria is endowed with enormous mineral resources which when properly harnessed can lead to its industrial development and prospects. It is a known fact that countries abundantly endowed with mineral resources become great industrial nations. While on the other hand, the level of greatness of a nation is often a reflection of how its resources have been planned, managed and utilized.

The occurrence of mineral resources in commercial quantities alone does not however guarantee optimum benefit, factors such as technological capacity, finance and market are also equally important.

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 not only is the exploitation of these minerals done by informal and in most cases illegal miners using very crude techniques but in an effort to encourage Non- Oil Export in Nigeria, government seems to have concentrated more on the export of minerals in their raw form than encourage some form of value addition before export.

Value addition refers to a process of modifying or altering the original composition of a product to a semi-finished or finished product in order to derive more value from the product.

Through value addition, the nation can get more value/ benefits from a product than through the sales of the raw form of the product.

In the mining industry, value addition can be achieved through

1. Milling and Packaging
2. Processing / Beneficiation

Milling refers to a situation where the mined minerals are reduced to desired sizes and the gangue body sorted from the main material. It helps to reduce the percentage variability often associated with the export of minerals in their raw form. Milled minerals also attract higher prices.

Beneficiation is a process of increasing the ore concentrate of a mineral through mechanical means. For instance, the increase of tin ore of 5% concentration to 50% concentration. Virtually every mineral can be beneficiated.

Beneficiation increases the percentage of a particle mineral in the gangue body thereby adding value to the product and the market price it commands. Without beneciation, the price of tin ore 5% in the international market would be around $200/MT but with beneciation to 50%, the price at the international market would be around $ 2000/MT, same could be said for lead, talc, tantalite, Zinc, and Copper etc.

In other minerals like Kaolin and Talc, they can be processed into various grades that are required by various industries as industrial fillers.

To encourage value addition in the mining industry in Nigeria, Government can introduce new

1. Legislation
2. Tax Regime
3. Incentive for companies that creates jobs

Some of the benefits of value addition in the mining industry in Nigeria would be

1. Creation of more revenue
2. Job Creation
3. Increase Gross Domestic Products
4. Technology Transfer
5. Generate More Foreign Exchange

Through value addition, demand for minerals would increase which would make investment in mining activities in Nigeria more lucrative and definitely increase the GDP of mining in Nigeria from only 0.3%.

By Anaekwe Everistus Nnamdi

Editor’s Viewpoint
Investing in Nigeria Magazine
June,2013 Edition

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