Geologist-cum-entrepreneur, Makoji Aduku, has come a long way from his days as an undergraduate at the Ahmadu Bello University (ABU), Zaria. Today, he is a specialist in the mining and processing of dimension stones. He talks about the intricacies of his specialty with….
How did you cross over from being a geologist and becoming an entrepreneur, before dabbling back to end up as a dimension stones’ specialist?
I studied geology at the Ahmadu Bello University, Zaria and bagged a master’s degree in sedimentary geology from the University of Benin. My first job was as a mud-logging engineer with Kragha & Associates in 1989, working on oil and gas drilling rigs around various locations in the Niger Delta.
Dr. Sam Coker, who was my lecturer at the University of Benin at the time got me and several other graduating students into the job. He is my mentor and took proper care of me to develop my academic skills around working as a practical geologist. I later worked for Shell Petroleum as a well site petroleum engineer for over a year, before I joined a group called Dupont around 1992. They were just coming in to the country as an American Independent Operator. They later became Conoco Nigeria Ltd. I was recruited as an operations geologist and moved on to be an exploration manager. Also, I had the chance to work at the company’s head office in Houston, Texas, for a while and I was exposed to my first business life in the new ventures and business development divisions of the company.
I returned to Nigeria to work again, now, as a government affairs and new ventures manager for Conoco. I relocated from Lagos to Abuja as a director of the company and, sometime in 2002, there was a huge drop in oil prices that affected the business environment and forced many oil and gas exploration and production companies to merge to create value. Then, you had Chevron merging with Texaco, Exxon with Mobil, Conoco with Phillips etc. We were advised to go if we did not want to stay on and they provided us with what was called a ‘voluntary severance package’. That was when I decided to go start my own thing.
Since then, I have been working for myself. I always had the aspiration to be my own boss on or before my 40th birthday. Working in the corporate office was not too engaging for my level of energy, especially going to the office as a defined routine. Usually, I am a quick worker and will generally finish my work very early in the day and have nothing else on my hands to do. Generally, everyone else would be reading newspapers at most corporate institution – and this was at a time when internet was not in vogue. I couldn’t afford to do that and needed other challenges in life. We are here today and the rest is history.
We set up our first mineral company, Onshore Frontiers Limited (OFL) with a quarry and processing facility in Lokoja around 1999. After several years of operations, we got into partnership with investors from China and set up Fujian Stone Limited, with quarries and processing facilities in Nasarawa State. We are currently setting up a quarry and processing facility in Afo, Ondo State. We hope to expand to other location in the country in future if we can find different sets of rocks. Sometime, we also operate as OFL Marble and Granite Limited.
We are trying to relate all of these to how you came across or dabbled into dimension stones…
While I was in Houston, I learnt a lot of things working for Conoco, especially around acquiring oil and gas assets and operations of independent oil and gas companies. The rules are different, in comparison to bigger operators and allow profit-taking from small operations and sale of oil and gas.
For you to produce crude oil in Nigeria, the Petroleum Act says the fields should demonstrate that they can produce 10,000 barrels of crude oil a day. But, then, in America, the average barrels production is around 20 barrels of oil per day per field and these businesses were successful. It also means that small things can be optimised if properly managed. Also, we learnt about the business of acquisition of oil fields properties, small gas production and successfully managing them. These are practical things you learn on the job. The same goes for solid minerals. For you to work on minerals, you must acquire them legally through ownership of titles as exploration licence, quarry or mining leases. There are so many minerals in Nigeria but you must understand the value proposition. You have to study the aggregate volume of utility. We started by crushing, pulverising and supplying feldspars and calcium carbonates to end users from our Lokoja, Kogi State factory.
As geologists, we start to qualify the grade and quantify the mineral deposits, before looking for the utilities. What volumes are used and the value / per ton / per carat etc and, possibly, demand regime. If you look at the utility of a particular mineral, it can actually tell you the value proposition. However, we pulverised industrial minerals for a while and the value proposition dropped and business became unprofitable. The aggregate market value fell, due to a lot of circumstances, though a lot of other operators are still into it. For my kind of person, the margin was small and not healthy anymore, considering the amount of work required.
We started to consider other earth-related businesses and then ventured into dimension stones, based on the statistics that we ran on the country. We will only do business if we consider that there are off-takers of the product and an aggregate demand has been established. Before establishing any business, you must ask yourself about the volume required. For example, if Nigeria needs 5 million square metres of granite per annum, then 5 million square metre x N5,000 per square meter (unit price) conservatively, should be about N25billion worth of business that is open to many operators. That is the business proposition in a country where annual local production is still under 200,000 square metre a year and depends very heavily on imports. You can do the same calculations for several other minerals – especially industrial minerals – that are continually imported into the country.
There are abundant raw materials and diversified marbles and granites that anyone can kick-start. The market is in Nigeria, but almost 95 per cent of this material is being imported. As an entrepreneur and a geologist, you have to fill the gap, because you know where these mineral are located. These are the gaps we are trying to fill. This business does not start by liking the stones or machinery or have it promoted by one group or the other. The question you should consider as a geologist is ‘why are these stones imported?’ The second question will be ‘how can I exploit it?’ That is the business proposition. When you have advanced to thinking about acquiring the mineral titles, planning the logistics, funding and possible partnership, the rest is left for God and luck.
What are the features/qualities that make dimension stones marketable and attractive?
The first is the aesthetics. Aesthetics is like the beauty and “beauty,” they say, “is in the eyes of the beholder.” In ranges of stone worldwide, I would say dimension stones in Nigeria are the most exotic and most beautiful classes of stones on earth. Geologically, Nigeria has one of the most exotic stones and rocks in the world. Before the separation of the African continent from the South American continent in Early Cretaceous, all the Basement Complex rocks containing present-day marbles and granites had been formed. The African continent has been more or less very stable, which is a good requirement. I mean, there are many rocks devoid of too much cleavages and faulting and quite whole in outcropping. There are also migmatites and schist all over the country. All of them give you an internal morphology that is next to none. If you head to Nasarawa State, between Karu, Keffi, Gitata and Nasarawa town, you will find about 10 colours of different stones. Same applies to the areas between Kano and Dutse, for very rare species of red granites. In Kogi, between Itobe, Ajaokuta, Okene, Yagba, up till Kabba, you can establish 10 different colours of rocks. In Ondo, around Akungba, Supare, Afo, Akoko and Owo, you have an unbelievable array of rocks. You can’t even imagine the varieties you can find within the Basement Complex of Osun, Edo, Niger, Bauchi and several locations in the county. Nigeria is really a blessed country.
How about local investors, are they capable of funding the processing of dimension stones? We have aggregate quarries, but they are all in the hands of foreign investor. Hardly do you see local investors in this area…
For me, I would say it is due to a lack of knowledge. Granites chippings (aggregates) are easily marketed, because it is used for the construction industry and affordable. The knowledge base for dimension stones is very little. Utility is also for the luxury class. Anyone can easily afford alternative materials like ceramics tiles, carpets, rugs and, even, cemented floor to complete their houses. These are a lot cheaper and easily affordable. Granite and marble tiles are more expensive, because of the cost of production. The Machineries are also more complex and a lot of expertise, spare parts, technology and experience are needed to run the business. For example, Nigeria has about three crude oil refineries and the only reason they are not functioning to full capacity, in my opinion, is due to a lack of spare parts and, possibly, expertise. After all, we built it and the crude oil feed-stock is available. Why are they not working? This is what I also believe is responsible for the non-proliferation of granite processing plants in the country.
Where are the hubs, local markets for and what are the export potentials of dimension stones?
Emphatically, we have not yet started exporting, but I know that America’s annual import of dimension stones stands at around $1.2billion in 2016. This translates to around 15.6 million metric tonnes or 5.8 million cubic metres of stone in 2016. Majority of it came from Brazil, China and India. All the rocks in Brazil are also in West Africa and chances are [that] most of the rocks are also in Nigeria. Brazil sells about 40 per cent of America’s rock requirements. So, there is an export potential for Nigerian stones. We haven’t tested this market, yet. Internally, we say there is about 4 to 5 million square meters of local demand, according to the statistics provided by the Association of Dimensions Stone Producers of Nigeria (ADSON).
How has government policies helped to drive the dimension stones’ business in Nigeria?
These policies have been the main drivers for successful business operations in Nigeria, especially with the current national theme to diversify from oil and focus on mainly agriculture and solid minerals. The current minister has also focused on key advantages around minerals that are readily abundant, like industrial minerals, some readily available metals and coal. The Ministry of Solid Mineral Development has remained focused on encouraging local and international investors into these areas.
Also, recently, we have seen large funds committed to solid minerals’ operators through various schemes championed by the ministry for the first time in Nigeria, to support local miners and mineral processing companies. A solid mineral development fund has been established, a collaboration with the Bank of Industry (BoI) for a N3billion facility to artisanal and small-scale miners has been established, while the World Bank through the Mineral Diversification Fund (MINDIVER) is working on placing a $20million for access for the industry. I know that government has also established statutory offices to help mineral businesses like the Mining Cadastral Office to provide good titles and several assistances provided by the Small Scale and Artisanal Mining Office. From a practical point of view, the ministers (both state and federal) of solid minerals’ resources have visited many operating factories in Nigeria to get first-hand knowledge of the challenges facing the industry and provide further encouragement to the operators.
There is also the Mining Cadastral Office responsible for issuing permits all over the country and [it] has been very efficient in managing grants to genuine investors in the country by providing good and legal titles for operations. However, in a developing country, many things – like power supply and security – are beyond the ministry. For example, the electricity required to run a typical dimension stones’ business is from about 500KVA to as much as 2000 KVA. There is nowhere in Nigeria where you can readily get this energy from the national grid on a sustainable basis. Something like security is not what the ministry can handle. I consider all these as challenges and the government can do so much within its mandate to get them all in shape. To be candid, the regulatory environment in Nigeria is good enough for investors in the minerals’ business.
How many dimension stones’ companies or manufactures are functional here?
In the early ‘90s, there were a few companies producing granites. Julius Berger and Crushed Rock were the major ones and, then, Cibi Granite, a real leader in the Nigerian dimension stones’ business as early starter. There a few other companies that operated in Bauchi State and I think, also, around Calabar. Jakura Marble, owned and operated by the Nigerian Mining Corporation (NMC) in Lokoja, Kogi State, was definitely a pioneer in marble processing in the country.
In the years while these companies operated, the dimension stones’ machinery was not fully developed in Asia and China. When the Asians finally got the technology and started pumping granite tiles into the local market at around N4,000 per square metres or less, it affected the production in Nigeria which was dominated by these groups above and they couldn’t compete adequately with those imports, due to the high cost of production in Nigeria. Mass production from Asia and low prices initially killed the Nigerian production of dimension stones. There was nobody who recognised the need to increase the tariffs or ban the imports or do something about it. I am also wondering what the government’s policies at that time were. Moreso, the local operators had their own problems, because they were fighting people who had everything – electricity, technologies, skills, transport, funds – working for them. They will even fight you on your own ground. If you’re a Nigerian manufacturer, you already know that your competition is not in Nigeria. You should worry more about efficient production, because the stones are the same everywhere in the world – igneous, sedimentary and metamorphic. The market is too big for us. All the Nigerian producers and manufacturers can hardly satisfy up to 5 per cent of total annual local demand.
The Earth is the same everywhere, though you may have black, yellow or white people sitting on it. The marble you find in Brazil or China is the same calcium carbonate. The same stone occurs in Nigeria in abundance.
We have observed these business opportunities and are aggressively thinking of how to produce around 25 per cent of national demand within a 24-month frame. We have established quarries and processing plants in Uke in Nasarawa State, Lokoja in Kogi State and Afo in Ondo State, with an aim to deliver up to 10 different colours of stones, diversify and promote Nigerian stones to the world.
What is the price difference in terms of the quality that will match yours?
Stones are all the same all over the world; it just depends on how much polishing you apply. This is beside the exotic nature of the machines. We use infra-red cutters, so edges are perfectly squared. Quality control depends on how much you want the finishing to be. We compete very well with the foreign producers, except, of course, in terms of our business environment and cheaper products. Lately, business has improved in favour of local manufacturers with the devaluation of the naira, considering that imported product landing costs are now higher and allows us to compete, which is more like a blessing in disguise.
What policies do you think government can advocate to enforce/adopt to encourage the local production for new entrants?
Part of the problem in Nigeria is that we expect too much from government. Entrepreneurship is not government’s. The government’s role is to provide an enabling environment and basic amenities. There is so much that they can do. If government is able to give you valid permit to work and create lower taxes as we have at the moment, in my opinion, for a developing environment, they have tried. The government of Nigeria is better than lots of governments in Africa, with very active mining operations. In some places, you won’t even have roads and, if you are mining in the bush, militias are waiting, ready to take your minerals the moment you find or process it. We have access such as railways that seem not efficient but about to start, fairly good access roads and you can use your cell phones and data in most parts of Nigeria. You can find good water to drink and there are clinics and medical facilities close to most towns that, even though one is bitten by snakes, you can get anti-venom. I would rather we classify these as challenges rather than problems.
What is your advice for people interested in this area of business?
Now, we are talking business, not geology. The question is, is the market there for you? Do you think [that] because Brazil has similar stones to ours and the fact that they currently contribute 40 per cent of the stone imports into American economy, it means there is a business opportunity to compete from Nigeria? Do you think there is still another 2 million square metres of granite needed locally and in the West African market that has not been produced yet? Could we be shipping to other African countries? I advise they evaluate the business from these perspectives.
There is not enough money here to do business on a sustainable basis. You cannot walk into the banks and get facilities good for mining projects. Except you wish to set up the business for the banks to soon take over, including losing all the collaterals you would have used to secure the facility. Any interest rate above 5 per cent per annum is too expensive for this business to survive. This is not to dispute those who think that the African environment is rough and facilities will come at a premium. However, I think these are challenges that are equally surmountable with good government policies and demonstrable economic benefits.
How do you contend with the production of different varieties?
Every stone is a quarry. Every quarry is one stone. All we do is have more quarry in our possession to justify varieties for diversification: Variety ensures that clients are left with several options for choices. All the colours that you want are in Nigeria. In fact, there are even shades of any colour that you want all inside this country. Marble is more expensive then granite, because beauty is in the eyes of the beholder. Marbles were also the first dimension stones used and, also, easier to craft.
