IRON MINING AS A CATALYST FOR INDUSTRIAL REVOLUTION AND ECONOMIC DEVELOPMENT IN NIGERIAN by jerry Solomon

The importance of Iron mining to industrial growth of any nation cannot be over emphasized. Iron is the major component of steel which forms the primary raw material in the construction and fabrication industry globally and makes about 2% of the raw materials used in the electronics and non-metallurgical industries. Steel is a major fuel in the ever growing engineering and infrastructural construction, machineries and automobiles, real estate, transportation system, aircraft and ship building industries. Steel is also used extensively in cans and containers fabrication, in oil and gas industries for pipes and infrastructures and in various appliances and other equipment manufacturing. As an indispensable component of modern civilization, iron will continue to experience increasing demand by mankind.


The primary source of iron is Iron Ore, which occur mostly as magnetite, hematite, goethite, limonite, pyrrhotite, siderite, ilmenite and pyrite. In addition to oxides and carbonates that combine with iron, iron ores also contain gangue minerals such as quartz, cherts or fluorite which are not wanted in iron making. Consequently, extracting iron from iron ore require a complex process from mining through beneficiation to refining.


Each of the processing phases that associate with transforming iron from ore to consumer products contribute immensely towards economic growth.


Exploration expenditure, which is the cost involve in searching for ore, defining orebody and quantifying the resources in the ore, inject significant amount of fund into the economy in addition to creating significant amount of jobs. For example, SNL Mining and Metal’s 2015 World Exploration Trends report compiled a total exploration budget of US$1.4 billion for iron ore in 2014, down from US$1.7 billion in 2013 and US$2.9 billion in 2012. Australia alone spent US$565.2 million on iron ore exploration in 2014


Iron mining is a huge project that injects a lot of fund into the economy through capital and operating expenditure. The cost of iron ore mine construction and machineries procurement runs into trillions of US Dollar while annual operating cost is always in double digit billions of US Dollar. In addition to the huge direct employment in the mines, numerous businesses spring up to provide services to the iron and steel mining. The workforce of these service providing companies and their expenditure put together is always in excess of that of the mine itself. For example, iron ore haulage contribute significantly towards the business of “Rail Australia” and “Canadian National Railways” where a single train can consists of up to three locomotives and over 250 wagons, measures over 2 kilometers in length and carries excess of 25,000 tons of material. Iron mining is known to attract development such as opening up of new built-up areas and building of infrastructures. A good example is India where government opens up new towns near mines or prospective ore deposit, install infrastructures, build houses and open it up for businesses and to the general public. 


Iron mining can start to earn revenue as early as at mining stage. Countries like Japan buys iron ore directly once it grade up to 60% Fe. Most Nigerian iron ore grades between 50% and 85% Fe and require little or no beneficiation to qualify for Direct Shipping Ore (DSO) which contributes significantly to foreign exchange earnings in countries like Australia, Canada, Brazil etc.


Iron ore is smelted to produce an impure metal called “hot metal” when liquid, or “pig iron” when solid. The hot metal is refined to remove impurities and to develop the desired composition. The liquid steel is continuously cast into blooms, slabs or billets, and these semi-finished products are processed into the desired shapes by rolling or forging. In addition to iron ore, iron and steel processing requires significant amount of coal and limestone/dolomite which means coal and limestone mines would have to be opened in addition to iron mines in order to make iron and steel. The implication is that more jobs will be created and more funds will be injected into the economy.


The steel rolling sector of the industry which transforms the iron and steel into consumer goods such as iron rods, iron bars, steel, barb wires, coils etc, provide jobs to millions of workers, keeps a lot of manufacturing companies in business and injects a lot of fund into the economy through their huge operating expenditure.


As the major raw material, iron and steel keeps foundries and fabrication companies in business. Foundries, often small, produce various grades of cast iron and/or steel. The molten metal is ladled or poured into sand or metal moulds to produce complex shape of cast iron and steel to meet customize end uses. Fabricators take the various primary steel mill products and turn them from cut-to-size, shape, machine, thread, punch, join, protective coat, etc. into a host of commercial and industrial products.
Iron ores of diverse origin and quality are found in Nigeria with the purest and largest reserve found in Itakpe, Kogi State where Proven Iron Ore reserves are in excess of 200 million tons, grading in ferrous (Fe) content from 25 – 50 per cent and could be up to 70 percent. The true reserve of the deposit is yet to be quantified. In addition to Itakpe deposit, large reserves of sedimentary iron ore are exposed at Agbaja area in Kogi State, holding excess of 30.5 million tons of iron with an average assays of 50 per cent Fe (high of 85 per cent Fe) and economic percentage of phosphorous and alumina that can be processed as by-products.


It is very sad that previous administrations in Nigeria chose to spend well over N1.0 trillion annually on iron importations and ignore the huge economic gains that associate with iron mining and processing locally.


Media presentations of the minister for Solid Mineral and Steels Development, Dr. Kayode Fayemi, indicates the administration of President Buhari is set to do things differently from the past administrations. Dr. Fayemi recently said it would not be in the national interest to leave the steel sector the way it is, stressing the determination of President Muhammadu Buhari to see it revamp within the shortest possible time.


With a population of about 180 million people and the alarming importation record of consumer products made from iron and steels, Nigeria obviously have capacity to consume significant proportion of products made from iron and steels without having to worry about exportation.


While sourcing foreign investors might be a good option for developing Nigerian iron and steel industry, lack of adequate geological data and access to the limited records on Nigerian mineral resources is a major impediment. A free access web-base interactive mineral map of the country, integrated with current mining activities, and aggressive publicity will not only bring Nigerian mining industry to lime light but will earn her the recognition as a mining jurisdiction and the inclusion in the mining assessment ratings that guide investment decisions of mining investors all over the world. Nigerian government need to also figure out a way of financing mining projects locally through equity investors or sponsors as well as a syndicate of financial institutions. It is also very important for government to identify and develop business ideas and opportunities in the iron and steel sector, create awareness about them through public sensitization and woo the interest of local investors.


Government should also support investors that have demonstrated expertise in solid mineral development to raise fund for executing viable projects in iron and steel and other minerals. This can be done through intervention fund or project sponsorships for which the projects itself can be used as collateral. As a strategy to attract interest of investors to the industry, government can initiate, develop and build businesses in the industry and later sell off the controlling interest to investors at a profit.


The many decades of neglect has created knowledge and skill gap and inhibits technological advancement in the mining industry of Nigeria. Therefore, for any exploration program and mining project to be successful, people with skill sets gained from hands-on experience in the industry would have to take the lead. It therefore implies that a lot of foreign experts will be involved for a start, as well as heavy importation of exploration and mining equipments and consequently, huge foreign exchange transaction. Considering the huge difference in the official foreign exchange rate and the rate obtainable in the parallel market, government would have to assist local investors to source foreign exchange at official rate and waive import duties on exploration and mining equipment to drive down capital expenditure and operating costs.


While Nigeria already has mining policies comparable to that of other countries that are doing well in mining business, provision of required infrastructures for mining success is grossly inadequate. Effective railway system and hinterland water ways makes ore haulage possible and drive down operating cost in the mining industry around the world. Nigeria need to complete its railway network to support haulage of ore and other bulky raw material to processing plants, hinterland haulage of direct shipping ore (DSO) to sea ports as well as for effective distribution of refined products. Both mining operations and mineral processing facilities depend on effective power supply for business success. The huge consumption of power by the iron and steel industry is perceptible in their energy bills which, on average, accounts for 23 percent of their operating cost. Government has responsibility of providing adequate power supply to meet the need of the iron and steel mining and processing industry.


Litigation is a common problem in the mining industry but stakeholders weigh their options, the legal cost and extensive waste of time that associates with court process against the benefit of being able to carry on with their operation. In most cases, they opt to settle disputes out of court and move on.


The Honourable minister of Solid Mineral and Steel Development should leverage on the political will of Buhari’s administration, surround himself with a team of technical experts to support his administrative and management skills to transform the iron and steel sector, and mining in general, to a major contributor to Nigeria economy, just like other countries around the world.

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