Pprocessing and Export of Lead, Zinc and Copper Ore in Nigeria

For the benefit of those who need to know, an attempt would be made to define mineral and metal ore. Mineral is an inorganic substance found in nature with a characteristics chemical composition and in some cases, of definite crystal structure. The earth crust contains rocks of different composition with different physical properties. Some hard, some soft. Rocks are the materials which the earth's upper crusts are made of.

Rocks are themselves composed of minerals. Minerals are naturally occurring elements like Gold, or a compound such as Iron Oxide. If a rock contains a mineral from which a metal can be extracted at a profit, it is call an Ore. For example, copper Ore.

Uses

Depending on the mineral that can be found in the rock, the ore can be subjected to various uses. This is due to the fact that the rocks are of different composition hence different physical properties. We shall concentrate on the uses of Lead , Zinc and Copper Ores.
Lead Ore : Some of the uses of Lead are given below.

Lead is a major constituent of Lead- Acid battery. Lead is used as a coloring element in ceramic glazes, notably in the colors red and yellow. Lead is used as projectiles for firearms and fishing sinkers because of its density. Low cost compared to alternative products and ease of use due to relatively low melting point. Lead is also used in high voltage power cables as sheathing material to prevent water diffusion into insulation

Zinc Ore: The major uses of Zinc are > Anti – Corrossion coating on steel { Galvanizing }
> Precision Components {Die Casting}> Construction Material>Brass> Pharmaceuticals and cosmetics

Copper Ore: Copper is malleable and ductile, a good conductor of heat and, when very pure, a good conductor of electricity. Copper has been used as water-proof roofing material since ancient times, giving many old building their greenish roofs and domes. As a material in the manufacture of computer heat sinks, as a result of it's superior heat dissipation capacity to aluminium.

The market for Lead, Zinc and Copper ores especially the overseas market in China is large, expanding and sustainable because of the numerous use of these ores. Buyers usually would like to secure steady source of supply of these products. An exporter that is able to secure a contract at the right price would have an uphill task meeting the demand of the buyer because the output from the mines in Nigeria is low due to the use of crude implement. You can imagine a situation whereby the daily need of the factory of the buyer is 600/MT and the exporter would struggle to supply 500/MT on a monthly basis.

A detailed analysis of the cost and profit of the three ores namely Lead, Zinc and Copper is given below.

For Lead Ore 50%: International Market .

Cost of 1 ton of Lead Ore 50% at site = N40, 000/MTCost of 60 tons = N2, 400,000
Cost of 2% PB =N127,500 {When price is $850 and Quantity 60 tons}
Cost of transportation to site of Crushing/loading = N10,000/3 tons
Cost of 60 tons =N200,000{ Please do know that this cost can be eliminated if the site is accessible}
Cost of Crushing @ N40/Bag = N48,000 {Since 1 ton = 20 bags of 50 KG each}
Cost of packaging = N5000
Cost loading to the truck @ N20/ Bag = N24,000
Cost of transportation to Warehouse/Port = N180,000/30 tons=N360,000/60 tons
Cost of Testing =N100,000Cost of Freight = N78,000/20 FT Container{Since 20 tons= one 20 FT container, N78,000 * 3 = N234,000
Warehousing = N100,000
Deposition Fee = N150,000 { Returnable after shipment of goods}
Agent Fee = N80,000
Miscellaneous = N100, 000

Total = N3, 928,500

It is important that the exporter confirms the prices given above before going into the business because the prices of Lead Ore and the other services mentioned are not stable. With a good arrangement with the forwarding agent, the exporter can eliminate the cost of warehousing and deposition fee by choosing another shipping company with good freight cost. The miscellaneous expenses can not be more than N70, 000 but just to be a safe side, let put it at N100, 000.

As previously stated, the price of lead ore is usually a function of the lead content in the Ore and also the LME price. For this analysis, we would assume that the lead content is 50% and exporter was able to sign a contract at the price of $850/MT and Pro Rata at $13.7/1% . Given that we are dealing with 60 tons, below are the calculations

60 * $850/MT = $51,000

@ $1= N120

$51,000 = N6, 120,000

Profit = N6, 120,000 - N3, 928,500 = N2,191,500

This is the basic profit the exporter would make as profit without returning of the Cost of 2% PB and Deposition Fee.

Knowing that the Lead content is not stable and say the actual lead content is 56% and Pro-Rata at $13.7/1%, the calculation would now be

{56-50}% = 6% *$13.7= $82.2 $850 + $82.2 = $932.2

$932.2 * 60 tons = $ 55,932 @ $1=N120 = N6,711,840

Profit = N6,711,840 - N3, 928,500 = N2,783,340

For Lead Ore 50%: Local Market :

In the local market , delivery is usually done on Ex-warehouse basis .That is, the cost of talking the goods to the warehouse of the buyer . The distance of the warehouse from the mine usually affects the price. Delivery can also be at site .This is a situation where the buyer is buying at the mining site of the Exporter/miner.

Ex-warehouse price are usually in Naira and and if the destination to be delivered to is Lagos ,the price ranges from N65,000/MT –N80,000/MT depending on the negotiating skills of the seller and on the lead content. If the seller was able to to get an LPO for lead ore 50% N72,000/MT and Pro-Rata at N1000/1% , Below would be the calculation

Cost of 1 ton of Lead Ore 50% at site = N40, 000/MT
Cost of 60 tons = N2, 400,000
Cost of transportation to site of Crushing/loading = N10,000/3 tons
Cost of 60 tons =N200,000{ Please do know that this cost can be eliminated if the site is accessible}
Cost of Crushing @ N40/Bag = N48,000 {Since 1 ton = 20 bags of 50 KG each}
Cost of packaging = N5000
Cost loading to the truck @ N20/ Bag = N24,000
Cost of transportation to Warehouse/Port = N180,000/30 tons=N360,000/60 tons
Miscellaneous = N100, 000

Total = N2,677,000

Price of goods to Lagos =N72,000 /ton= N72,000 * 60 tons=N4320,000

Profit =N4320,000 - N2,677,000 = N 1,543,000

If the actual lead content is 56% and Pro-Rata at N1000/1%

{56-50}% =6% * 1000 = N6000 = N72,000 + N6000 = N78,000

N78,000 * 60 tons = N4,680,000

Profit = N4,680,000 - N2,777,000 = N1,903,000 .

For the Zinc and Copper Ores:

Overseas Market ; The cost of procuring Zinc and Copper ores from the mine is almost the same but for the fact that Zinc Ore would be at 50% and Copper Ore at 20%.

Cost of 1 ton at site = N30, 000/MT
Cost of 60 tons = N1, 800,000
Cost of 2% PB =N93,600 {When price is $650 and Quantity 60 tons}
Cost of transportation to site of Crushing/loading = N10,000/3 tons
Cost of 60 tons =N200,000{ Please do know that this cost can be eliminated if the site is accessible}
Cost of Crushing @ N40/Bag = N48,000 {Since 1 ton = 20 bags of 50 KG each}
Cost of packaging = N5000
Cost loading to the truck @ N20/ Bag = N24,000
Cost of transportation to Warehouse/Port = N180,000/30 tons=N360,000/60 tons
Cost of Testing =N100,000
Cost of Freight = N78,000/20 FT Container{Since 20 tons= one 20 FT container, N78,000 * 3 = N234,000
Warehousing = N100,000
Deposition Fee = N150,000 { Returnable after shipment of goods}Agent Fee = N80,000
Miscellaneous = N100, 000

Total = N 3,294,600

The Exporter/ Seler can get a contract at $650/MT for Copper Ore 20% and Zinc Ore 50% .Given that the Pro-Rata is $10/1% ,then the calculation would be

60 * $650/MT = $39,000 @ $1/N120=N4,680,000

Profit = N4,680,000- N 3,294,600 = N 1,385,400

If the Zinc and Copper content is actually 52% and 22% respectively ,then the calculation would be
2% * $10 = $20

$650+ $20 = $670

$670* 60 = $40,200 @ $1/N120=N4,824,000

Profit = N4,824,000 - N 3,294,600

=N1,529,400.

For the Local Market ;

Given that the seller secured the LPO at N50,000 and Pro- Rata at N1000/1% , the calculation is given below

Cost of 1 ton at site = N30, 000/MT
Cost of 60 tons = N1, 800,000Cost of 2% PB =N93,600 {When price is $650 and Quantity 60 tons}
Cost of transportation to site of Crushing/loading = N10,000/3 tons
Cost of 60 tons =N200,000{ Please do know that this cost can be eliminated if the site is accessible}
Cost of Crushing @ N40/Bag = N48,000 {Since 1 ton = 20 bags of 50 KG each}
Cost of packaging = N5000
Cost loading to the truck @ N20/ Bag = N24,000
Cost of transportation to Warehouse/Port = N180,000/30 tons=N360,000/60 tons
Miscellaneous = N100, 000

Total = N2,630,000

Profit = N50,000 * 60 = N3,000,000

= N3,000,000- N2,630,000

= N370,000.

Get the detailed business plan on the subject matter, by searching for the report on our sister website/company at www.marketreportportal.com

Report Title: LEAD, ZINC AND COPPER ORE EXPORT IN NIGERIA
Product Code: FOR A/08/2011/06

We do accept payment by credit card and the report immediately downloaded to your desktop after payment.

You can send us a mail with the report title and product code for payment through bank wire and liberty reserve.