For many, the first question about the Nigerian mining sector is not “where are the minerals?” but “how much will it cost?” While official government fees for licenses and permits are published, they often do not reflect the full, realistic cost of setting up a legally compliant and operational business in Nigeria.
This guide provides a detailed, comprehensive breakdown of the true costs of starting a mining company, revealing not just the official fees, but also the crucial, unofficial costs that every serious entrepreneur must budget for. We will analyze the investment tiers to give you a clear picture of what it truly takes to get started. Note that it is very difficult to give the exact figure of starting a mining company, especially in a country like Nigeria; however, the following figures give you clues of what it takes to set up shop in the country.
The 3 Investment Tiers: A Realistic Cost Breakdown
The cost of your mining venture is entirely dependent on the scale of your ambition. We can categorize the investment into three clear tiers:
Tier 1: Small-Scale Mining (N20M – N50M)
This tier is focused on small-scale mining leases (SSML) and typically involves manual or semi-mechanized operations. It’s a common entry point for local entrepreneurs.
- CAC Company Registration & other permits: N400,000 – N600,000
- Small-Scale Mining Lease: N2,500,000 – N3,500,000
- Geological Survey & Report: N500,000 – N2M (Varies based on location and scope. This is a crucial professional fee.)
- Environmental Impact Assessment (EIA) & Report: N1M – N3M (A mandatory, project-specific cost.)
- Basic Equipment: N5M – N20M (Includes items like a small air drilling machine, screening machine, water pump, jackhammers, and basic hand tools.)
- Contingency & Professional Fees: N2M – N10M (This covers legal fees, consultancy fees, and the cost of engaging a licensed agent with government contacts to navigate the processes.)
Tier 2: Medium-Scale Mining (N50M – N500M)
This tier is focused on a full-scale Mining Lease and involves the use of heavy machinery and a larger workforce. The goal is to maximize production for a steady stream of revenue.
- CAC Registration & other permits: N2,000,000 – N2,500,000
- Mining Lease Application Fee: N5M – N15M
- Detailed Feasibility Study & Mine Plan: N5M – N20M (This comprehensive document is a non-negotiable requirement for an ML.)
- Environmental & Community Costs: N5M – N15M (Covers a detailed EIA, a Community Development Agreement (CDA) fund, and other related expenses.)
- Heavy Equipment: N30M – N200M (Includes jaw crushers, heavy excavators, trommels, dump trucks, and generators.)
- Working Capital & Professional Fees: N50M – N200M (Covers initial labor, fuel, and the cost of engaging expert legal and regulatory consultants.)
Tier 3: Large-Scale Mining (N1B & Above)
This tier is for serious national or international players who can fund large-scale exploration and mining operations. Costs are typically measured in millions of dollars and involve foreign direct investment.
- Incorporation & Due Diligence: N3M – N5M
- Exploration License (Multiple Areas): N2,500,000 – N5M
- Full Feasibility Study: N50M – N200M
- Mine Development & Infrastructure: N300M – N1B (Includes setting up processing plants, roads, and a power source.)
- Equipment: N500M – N5B (Involves importing custom, heavy-duty mining and processing machinery.)
- Working Capital & Labor: N200M+ (For a full workforce, running costs, and logistics.)
The Hidden Cost: The Value of Professional Support
As our numbers show, the official fees from agencies like the MCO and CAC are just a small part of the total investment. The most critical, yet often unstated, cost is the value of time and expertise. Engaging a professional licensing agent or consultancy firm is often the most cost-effective way to get your business legally set up, avoiding common pitfalls and ensuring your application is processed efficiently.
This is precisely where our resources come in. If you are looking for a complete financial roadmap, our ebook, Funding and Financing Mining Projects in Nigeria, provides a comprehensive guide to understanding capital requirements and attracting the right investors. It includes a step-by-step guide to preparing a bankable business plan that will help you secure the funding you need.
If you are a serious investor who wants to move quickly and avoid the hidden costs of red tape, our Mining & Mineral Trading Company Setup (Nigeria) service is a done-for-you solution that handles every aspect of your legal and regulatory setup, saving you time and money.
Once your business is legally established, the Nigerian Mineral Exchange provides a platform for you to sell your legally-sourced minerals to a global audience, turning your compliance into a competitive advantage.
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