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How To Start Gemstone Mining In Nigeria (free Training- Day 3) - Business - Nairaland

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How To Start Gemstone Mining In Nigeria (free Training- Day 3) by kudosamass(m): 12:13pm On Jul 25


The subject of today's lesson is how to acquire land that has gemstone deposits for the purpose of extracting the minerals. For those who missed lessons one and two, I will post the links below this lesson. Nigeria is a country blessed with up to 100 different minerals in commercial quantity. The 2015 reviewed Royalty rates for Nigerian Minerals by the Ministry of Mines recognized 62 minerals, but there are many that were not captured in that review. These minerals are found in lands, and these lands belong to people and communities. The Federal Government, fearing not to repeat the mistakes of the Niger Delta, where Crude Oil licenses are awarded in Abuja without any consideration for the owners of the area, thereby creating crises, decided to solve the problem by providing that consent of landowners is needed before Mining License is issued.
This information is for intending investors, businessmen, and miners who want to acquire mining sites for their gemstone mining operations in Nigeria. The first step is to look for an agent who is knowledgeable with vast contact in the gemstone sector to assist you to look for lands that have deposits of the particular gemstone of choice. The second stage is to confirm whether the deposit is in commercial quantity. If that is done, then you negotiate with the landowners and move on to Mining Cadastral Office to process your mining license.
To be able to process and obtain Mining License from the Mining Cadastral Office, a Consent Letter from the owners of the land must be duly obtained and signed. This is in accordance with the provisions of the Nigerian Minerals And Mining Act 2007, which is the Law that governs Minerals and Mining Titles in Nigeria.
Let us look at the ways through which one can acquire a mining site for the purpose of carrying out gemstone mining operations in Nigeria. There are three major ways through which land-bearing gemstones can be acquired in Nigeria. An intending miner can acquire mining sites through any of the following ways:
a. Partnership Model
b. Land Leasing Model
c. Buying of Land Model

A new entrant with a low budget can acquire a mining site for the purpose of gemstone mining through the partnership model. To the uninitiated, this may sound challenging, but in actual practice, it is not as difficult as it appears. To acquire a mining site is actually very easy with little expenditure, actionable information, and the right contacts. There are many sites with huge gemstone deposits and valid licenses that are waiting to be mined. These sites and licenses belong to connected individuals and companies who use their influences to procure these licenses, but for one reason or the other, are unable to commence mining work.
What we do is to locate those who have such sites, and partner with them. We take charge of the Site or a part thereof depending on the agreement, hire miners (laborers), and finance the work. When we get minerals, it is shared according to pre-agreed percentages. The product is shared between the License Holder and the Financier by 40% and 60% respectively. Some greedy License Holders will insist on fifty-fifty. But that is not a problem since it is the Financier who controls everything. The License Holder settles the community (landowners) from his own share based on their pre-operation agreement when negotiating for their consent. The Financier settles his workers/miners from his own share based on the agreed percentage (i.e if the workers are not paid salaries). The general practice is that the laborers sell their own share to the financier based on 'bush price'. It is considered a loss for a Financier to allow minerals from his site to be sold to an outsider except by him or herself. However, if the financier/ miner is paying his workers monthly salary, there is no need for sharing. But if they are not paid, then they have a share of the proceeds. In terms of the financial implications of acquiring a Site under the partnership model, a budget of Six Hundred Thousand Naira (N600,000) to One Million Naira (N1,000,000) should be made. This budget covers logistics, Cola nut fee, Agents' fee, and legal fee for the MOU.
Under the partnership model, the miner does not necessarily need to obtain any permit to start mining as he or she is working under the license of the Partner Company. One major disadvantage of this model is that you may be selling your products, and receiving payments through the Company name as you do not have papers to trade on your own. However, the above challenge can be solved by obtaining a Permit to Possess And Purchase Minerals.
In conclusion, therefore, it is hoped that with this Partnership Model of Gemstone Mining, the participants will acquire experience and raise enough capital to acquire their own sites, procure licenses and upgrade to medium-scale miners.

The leasing of land is the second way through which a gemstone mining site can be acquired. Agreements of land leasing for the purpose of mining differ from place to place. In some places, the landowners may demand up to 10% to 20% of products plus the leasing fee. The duration of the lease is often open until the objective of the operation is achieved. That is until minerals are recovered. One good thing is that everything here is subject to negotiation and the people are always ready to negotiate, but they don't entertain a breach of agreements. A budget of One Million, Five Hundred Thousand Naira (N1,500,000.00) to Two Million, Five Hundred Thousand Naira (N2,500,000.000) should be made for land leasing. The budget includes agency fees for all those that will make the agreement a success, logistics, the ‘kola money’ for signing the government’s Consent Letter, and legal fees.
When the Lease Agreement is concluded, the miner then approaches the Mining Cadastral Office, or the Department of Artisanal And Small Scale Mining, Federal Ministry of Mines And Steel Development to obtain the Mining License, which normally takes about four weeks with the right contact. With the License, you are good to go. You then recruit your boys, mobilize and start work. You can also be working as the license is being processed. One great benefit of this license is that you will be entitled to Mining Grant from the Ministry of Mines to enable you to progress to a large-scale miner.

Buying land with gemstone deposits is the third method of acquiring a mining site. This is suitable for those with financial capacity. However, buying lands with mineral deposits is not as easy as the first two methods of acquiring sites. This is because it is not every time that those lands are available for sale. And even when they are available for sale, information about it might not be so available. You can only know about it through the small circle of people within that particular mineral sub-sector in that particular area.
Prices of mineral lands are determined by a lot of factors such as size, location, and the condition of the seller. Some owners may not know about the existence of such mineral deposits in the land and that also will influence the price. Buying of lands is for medium and large-scale operators. One good thing about buying the land is that after the gemstone mining operations, you can also reclaim the land and use it for other purposes.
In tomorrow's lesson, we are going to be looking at the hiring of miners.
See my signature below to contact me for your questions & inquiries.

Link to Lesson One:https://www.nairaland.com/6664503/how-start-gemstone-mining-nigeria
Link to Lesson Two: https://www.nairaland.com/6666307/how-start-gemstone-mining-nigeria

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