Engineering Economy Analysis on the Production of Iron Ore in Nigeria

R. A. Adebimpe, J. M. Akande

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DOI: 10.4236/gm.2011.11002                

Abstract

In line with the Federal government decision to attract direct foreign investment to the solid mineral sector and to further diversify the Nigerian economy; this study used the discounted cash flow micro-economic as-sessment to evaluate large-scale iron ore production in Nigeria. The iron ore project has an initial investment cost of US$ 73.934 m, annual expenditure and benefit of US$ 48.128 m and US$ 270 m respectively .The net present value (NPV), internal rate of return (IRR) and payback period of financial analysis at 100% ca-pacity utilizations are US$ 833.10 m, 444.36% and 6 years respectively. The economic assessment also shows a positive NPV at both 75% and 60% capacity utilizations. The study further show that the iron ore project has good economic potential and will also guide potential investor(s) in making decision on whether or not to commit resources to the project.

Keywords

Iron Ore, Micro-Economic Assessment, Solid Mineral Sector, Nigeria

Conflicts of Interest

The authors declare no conflicts of interest.

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