1 st West Africa Islamic Investment Forum

1. 1st West Africa Islamic Investment Forum • Date: 28th February - 1st March, 2011/ 26th – 27th Rabi’ul Auwal 1432 A.H. • Venue: Tahir Guest Palace Kano, Federal Republic of Nigeria

2. INVESTMENT OPPORTUNITIES IN THE NIGERIAN MINERAL AND ENERGY RESOURCES Prof. Ibrahim Garba VICE-CHANCELLOR Kano University of Science & Technology, Wudil

3. PAST MINERAL PRODUCTION • Early 1900s-1972 Nigeria was the world’s largest exporter of Columbite, accounting for about 95% of total world supply. • World’s 6th largest producer of Tin (Cassiterite). • Important exporter of Coal. • Widespread Gold production. • Substantial Wolfram and Lead-Zinc production and export.

4. Mining Industry Decline - Since 1970s • Falling metal prices • Depleted alluvial reserves • Indigenization Decree • ‘’Oil Boom’’ • Inefficient State Operation

5. EXPLORATION OPPORTUNITIES Geology of the African Continent Geology of West Africa

6. GEO-POLITICS OF MINERAL RESOURCES Geological Political

7. MINERAL RESOURCES OF NIGERIA – Other than oil and gas (Petroleum) • GOLD • COLUMBITE-TANTALITE (COLTAN) • COAL • IRON ORE • TAR SAND (BITUMEN) • LEAD-ZINC • TIN, COLUMBITE, WOLFRAM • INDUSTRIAL MINERALS • GEMSTONES

9. GOLD Production started in 1913, Peaked 1933-43, Declined during 2nd World War period Associated with the schist belts of the western half of Nigeria • Approx 3Moz produced • Widespread artisanal mining, targeting rich veins and associated alluvial deposits

10. GOLD ….. Consistently attracts more exploration expenditure than any other metal The Ghanaian success/Nigerian paradox

11. NIOBIUM AND TANTALUM (COLTAN, COLUMBITE, PYROCHLORE) COLTAN NIOBIUM-URANIUM-TANTALUM-CRYOLITE DEPOSIT - RIRUWAI, KANO STATE, NIGERIA • In recent years Nigeria is the largest producer in Africa. • Informal (Artisanal) mining activity. • 40,000-70,000 Ib/year (1994-2003) • A pyrochlore-bearing granite containing niobium, uranium, tantalum and cryolite. • In the period 1949-50, the Atomic Energy Division of the British Geological Survey investigated the deposit and found it to be worth over £ 1 billion.

12. MARADUN ANKA MAGAMI KUSHAKA KAIAMA SHIRORO NASARAWA PATEGI WAMBA SHAKI EGBE IJERO IBADAN MAJOR COLTAN FIELDS (± GEMSTONES)

14. COAL • Discovery in 1909 • Exploration/mining started in 1913. • Mainly sub-bituminous in more than 22 locations in central and eastern Nigeria. • Some coking coal also found. • Proven reserves of about 639 Million Tonnes with a further 2.75 Billion Tonnes inferred. • In the period 1950-59, 580,000-900,000Tpa were produced for export and local consumption • Powered the railway system and some industries • Used for power generation • By 1980, less than 100,000T were produced • No production for nearly 20 years

15. THE NIGERIAN RESOURCE/ENERGY PARADOX • Proven oil reserves of 35.2 bbl (in 2005), to expand to 40 bbl by 2010. • Hosts the 10th largest reserves while it is the 6th largest daily producer within OPEC, the largest producer in Africa and the 11th in the world (in 2004). • The natural gas reserves are put at > 166 TSCF with the current production at 2 billion SCF. • This places Nigeria among the top 10 countries with largest gas reserves in the world. • Nigeria is the world’s highest natural gas flaring country with 42% of its total annual production being flared, accounting for 20% (approx.) of world’s total.

16. The consequence of this trend has been a structural imbalance between electricity supply and increasing demand, which was estimated at 10,000 MW in 2005 and is forecasted to rise to 20,000 MW in 2010 THE ENERGY DEFICIT In 2006, Nigeria’s actual power generation capability (including IPP-generated electricity) ranges 2,900 – 3,500 MW.

17. THE ENERGY DEFICIT • The statistics indicate the slow growth of electricity generation in Nigeria compared with the growing population trend. • Consumption of electricity per capita in Nigeria is 0.54 kw, which is very low when compared with the International Energy Institute’s recommended 2.5 kwper capita. • This is not so much of the poverty level, but mainly due to unavailability of electricity. • Up to 62.5% of the population does not have access to electricity. This average is not evenly distributed within the country.

18. THE ENERGY DEFICIT • MAN claimed that 500 industrial establishments in Kano had closed down due to shortage of power supply. • PHCN confirmed that out of a demand of 600 MW, Kano gets 200 MW. • This underpins the impression that there is a large suppressed demand for electrical power in Nigeria.

19. THE ENERGY MIX • At present, the predominance of thermal stations is concentrated in the southern part of Nigeria, where there is access to natural gas. • The thermal stations contribute about 67% of the present generating capacity in the country. • The remainder is provided by hydro power plants located in north central Nigeria on the River Niger.

20. ABSENCE OF COAL-FIRED POWER GENERATING FACILITIES • Despite the abundance of coal reserves in the country, there are no coal-fired power plants in operation. • Except for the 30 MW (installed capacity) Oji River (Enugu State) Power station, which itself has been idle since 1988 and has no potential to return to operation. • There is clearly a role to be played by future coal-fired electrical generation facilities.

21. DEMAND FOR WOOD FUEL • The burning of wood for cooking and heating is a long established practice in Nigeria. • Over 60% of the population does not have connected electricity or gas and must rely on wood fuel for its daily existence. • Bakeries and other non-residential facilities also rely heavily on wood. In Lagos State alone, there are an estimated 20,000 bakeries, each using a daily quota of wood or charcoal made from wood. • Electric and gas cooking and heating equipment is essentially non-existent in areas outside urban centres.

22. DEMAND FOR WOOD FUEL • The country’s increasing large population creates a growing demand for wood and charcoal, thereby increasing the rate at which wood is being harvested for these purposes. • Deforestation is clearly recognised as a threat to the country’s well being. • The demand for wood is causing serious deforestation problems and encroachment of the desert in the northern parts of Nigeria.

23. WOOD AND CHARCOAL

24. FUEL WOOD N 60,000 ($ 400) N 600 ($ 4)

25. CHARCOAL N 100/N 50 (¢ 0.66/33) N 1,200/BAG ($ 8)

26. THE ANTIDOTE COAL For POWER GENERATION AND BRIQUETTING

27. COAL • Provides a quarter of world energy needs. • Is the world’s number one source of electricity. • Remains the backbone fuel of the power sector. • Unfortunately, it is also the number one energy source of CO2 emission (the dirtiest fuel)

28. COAL • Around 82% of China’s electricity comes from coal-fired power plants, a new one of which gets added to the Chinese power grid every 7-10 days. • About half of all electricity generated in the USA and Germany is coal-based. • With coal prices likely to remain well below those of gas and oil, the use of coal for electricity generation will continue to grow.

29. PROJECTED COAL CONSUMPTION FOR POWER GENERATION • Coal-fired plants are generally used for the base load1component of generation in a grid. • Every grid system requires a combination of coal-fired plants to carry the base load with gas-fired combined-cycle and turbine plants and hydro facilities that can be started-up and shut down as the peaking loads increase and decrease during a 24-hour cycle. • However, more than 50% of Nigeria’s total demand is estimated to be base loaded, somewhat typical of residential demand. 1 Base load is the average minimum demand in a 24-hour period

30. PROJECTED COAL CONSUMPTION FOR POWER GENERATION • Based upon a calorific value of approx 5,300 Kcal/Kg (10,000 Btu/Ib), which is typical of the Nigerian coal, coal-fired plants will require approx 3.2 million tonnes per year of coal for each 1,000 MW of capacity.

31. The Nigerian Coal Corporation (NCC) has undertaken a programme for the production and marketing of coal briquettes to supplant the use of wood and charcoal. The NCC has also begun the development of small prefabricated stoves in which the briquettes can be efficiently burned. NCC has determined that a coal briquette delivers substantially greater heating value to the usage point than wood. COAL BRIQUETTES

32. COAL BRIQUETTES • Coal briquettes have gross heating values in the range 11,200 – 11,400 Kcal/Kg, compared to wood fuels, which typically have values in the range 3,300-3,600 Kcal/Kg. • When used with properly designed briquette stoves, the “Usage Efficiency Factor”, i.e., the recovery of heat available in the briquettes, is approx 5 times that of wood burned in typical open fires. • In general, when a kg of briquette coal is contrasted to a kg of wood, it has the potential to deliver > 20 times the heating value.

33. PROJECTED DEMAND FOR COAL BRIQUETTES • A study has indicated demand for coal briquettes might be around 2 million tonnes/year. • In Lagos State alone there are more than 20,000 bakeries using firewood and charcoal. Imagine also the number of barbecue (suya) spots in most northern cities. • The study also shows the replacement of that market alone with coal briquettes would result in demand for approx 300,000 tonnes of coal briquettes per year. • If 50% of Nigerian households ultimately find coal briquettes to be preferable to wood fuel (or to connected electrical power), the demand might be in the range 7-9 million tonnes per year.

34. CARBON CREDITS FOR SUBSTITUTION OF WOOD WITH COAL BRIQUETTES • The UN Convention on Climate Changes (UNFCCC) and the Kyoto Treaty have established a system whereby parties that avoid or reduce the use of fossil fuels can claim “credits” for the corresponding reduction in global generation of certain greenhouse gases. • There is also an international system for buying, selling, and trading such credits – essentially allowing entities that “over-pollute” to buy credits from those that “under-pollute” or to buy from a pool of credits established for such exchanges.

35. CARBON CREDITS • Nigeria, as a developing country, might take financial advantage of the carbon credit market in the future, by: • Developing a large, commercial scale coal mines and coal-fired power plants – which will provide energy to the population for more efficient usage (cooking, heating, etc) than the current methods. • Burning coal in such power plants using the latest emission control technologies, thereby claiming carbon credits. • Developing a dominant smokeless coal briquettes and cooking appliance market in Nigeria, with widespread use of briquettes as substitutes for fuel wood. The production and use of briquettes with sufficient carbon emission advantage over fuel wood, charcoal, kerosene, gas, diesel and other petroleum products could attract credits that can be used to fund commercial briquettes plants

36. Summarized demand for Nigerian coal for electrical power generation (assuming 3.2 MT/1,000 MW

37. Summarized demand scenario for Nigerian coal in million tonnes per year

38. NIGERIAN COAL RESOURCES • There are at least 11 significant known coal deposits in Nigeria, mostly located in the eastern flank of the Anambra Basin in south central Nigeria, that appear to contain the largest and most economically viable coal resources. • Behre Dolbear (2006) has developed a short list of 4 properties that appear to have the highest economic potential for development in conjunction with coal-fired power plants. • These are: Ogboyega (Kogi), Okaba (Kogi), Owukpa (Benue) and Ezimo (Enugu). • Other coal deposits with potential for development for power generation include: Onyeama (Enugu), Okpara (Enugu), Ogwashi-Asaba (Delta), Inyi (Anambra), Afuze (Edo), Afikpo (Ebonyi), Lafiya-Obi (Nasarawa), Gombe, Lamja (Adamawa). • There are also reported coal occurrences in Sokoto, Niger and Plateau States

39. NIGERIAN COAL RESOURCES

41. PROJECTED COAL MINING AND POWER DEVELOPMENT • 3 coal concessions on the eastern flank of the Anambra Basin can each produce at least 8 million tonnes of coal per year which is adequate to power 2,000-2,500 MW generating plant. • The coal can be mined and delivered to a mine-mouth power plant at a cost of about $ 27/tonne. • The estimated capital costs for mining and power plant generating complex with the capacity to produce 2,500 MW are estimated to be $ 5.6 billion (N 840 billion). • This is equivalent to income generated from 40 days of oil production (@ 2 million bbl/day) at current prices.

42. THANK YOU FOR YOUR ATTENTION