Australian Firm to exploit Nigeria’s Iron Ore deposits

An Australian firm, Energio Limited has completed plans to exploits Nigeria’s rich Iron Ore deposits.

Energio Limited, which is listed on the Australian Stock Exchange (NSE) expects to start exporting its first iron ore shipment in 2014 with a target of 20 million tonnes, according to a report in the Australian, an Australian newspaper, which first carried the report.

The iron ore the company is set to exploit is located in Agbaja, in Kogi State with an estimated deposits of 448 million tonnes, according to a document on the company’s website.

At a current market price of about US$ 120 per tonne, the value of the iron ore deposits at Abaja will have a market value of US$53.8 billion or N8.06 trillion.

Iron ore is the raw material smelted to produce pig iron (metallic iron), which is used to make steel. It is an important metal used in developed and developing economies.  China is reported to have plans of importing up to 400 million tonnes of Iron Ore per annum from Africa from next year.

Speaking to the Australian, Ian Burston, the non-executive Chairman of Energio Limited stated that he expects the price of Iron Ore will stabilise at around $US120 a tonne.

And even if it drops to $US80 a tonne, as some predict, he insists he won't be worried because his planned Agbaja iron ore mine in Nigeria will still make a very handy profit at that price, he told the Australian.

"I've done my figures on (the cost of) getting it onto the ship and it's less than $US50 a tonne," he says. "If the iron ore price goes down to $US80 a tonne, that's not going to worry me.

"Twenty million tonnes a year at $US30 a tonne is a profit of $US600m a year."

"The biggest problem we've got is everyone who doesn't know how to spell iron ore is telling us how to do it."

"Once we are successful, then the floodgates (in Nigeria) will open, because there's so much iron there you can't ignore it." Ian Buston was quoted by the Australian as saying.

Indications are that Energio will likely discover more iron deposits on its Agbaja site. The company says that there is “considerable opportunity for resource growth.” The 488 million tonnes of Iron Ore discovered is currently on a site of just about 14.7km square which is just 15% of the potential exploration site of 90km square that Energio is set to explore for Iron Ore deposits.

Energio holds 15 granted Nigerian Exploration Licenses, which cover a total area of  448 km square, The company notes that of special interest to it are eight exploration licenses covering 303km square including the Agbaja project, considered to have prospects of more iron ore deposits. The company expects that an average of 151 km square of the exploration site will likely have deposits of iron ore, presenting it a substantial potential to significantly increase its iron ore inventory in Nigeria, according to a document on Energio Limited website. 

Other Nigerian towns with significant deposits of are Tajimi, Itakpe, Ajabanoko, Ochokochoko Toto, Farin Ruwa, Birnin Gwari, Maru, Jamare, Kaura Namoda, Kakun, Isanlu, Roni, and Ogbomosho areas. Other areas in Nigeria with significant iron deposits include Agbaja, Kotonkarfi, Nsudde areas in the Northern central and South Eastern zones of the country respectively, according to information available on the Website of the Nigerian Ministry of Solid Mineral Resources, titled Iron Ore Opportunities in Nigeria.

The deposits are mainly found in Mid Niger basin, Benue trough, Anambra basin, Sokoto, Chad and Niger Delta basins and the Lokoja Okene axis. The numbers provided by the Nigerian Ministry of Solid Mineral Resources on its “Iron Ore Exploration Opportunities in Nigeria” document on its website were non-responsive when BusinessDay called.

Nigeria’s Ajaokuta Steel Company was built mainly to exploit Nigeria’s rich Iron Ore deposits but has been unable to do that profitably. 

The above article was first published in BusinessDay on October 7, 2012