Business Opportunities In Charcoal Export

The gradual global shift from the mass distribution of oil products has opened up opportunities in several other energy sectors. This trend has set a pace for the widespread demand of cheaper energy sources for households and communities. Since the cost of kerosene, diesel, and petrol still somewhat carry high market figures, Africans and many other countries seek cheaper alternatives. One lucrative source is charcoal, and this has given rise to a large charcoal export industry

Charcoal provides a low-cost method of cooking for local communities around the developing part of the world. Most of the locals living in these small communities cannot afford to use cooking gas, kerosene, or even electric cookers with the absence of electricity. And as a result, this Charcoal alternative represents more than 80% of the total energy used in preparing household meals in Africa.

With a large charcoal market existing in Europe, America, & Asia, its global worth continues to retain a multi-billion Dollar value. This poses a huge opportunity for investors looking to make investments in an energy sector. For instance, 70% of the slightly over 60,000 metric tons of charcoal used yearly in the United Kingdom comes from Africa. A charcoal supplier exporting between to 10,000 metric tons yearly would be generating an annual revenue of well over of 2,000,000 Euros.

 

Charcoal is a pure carbon also called char, that is made by cooking wood in a low oxygen setting, which is a process that can take several days to burn off volatile compounds like water, methane, hydrogen, and tar.

 

Facts About Charcoal Export

  • The international selling price of charcoal is anywhere from $200 to $600 per ton.
  • Charcoal is used in some toothpastes.
  • Charcoal is sometimes used in cosmetics.
  • Charcoal is a great exportable product from Nigeria.
  • Charcoal is used for cooking food in various forms.
  • The profit margins on the sale of Charcoal to international buyers can be anywhere from 30% to over 100% depending on if you’re the producer, are buying from the direct source, and the final price agreed to with the buyer.
  • As a broker, you can venture into this business with $0.
  • Nigeria is estimated to have limitless access to charcoal because of its widespread forest areas.
  • There are large volumes of charcoal for purchase in Nasarawa, Kaduna, Jos, Minna, Egbe, Jebba, Oyo, and several other states in Nigeria.
  • Charcoal prices are calculated in metric tonnes.
  • Charcoal is made in a process called carbonization.

 

How Is Charcoal Made, And In What Areas Of Nigeria?

Charcoal is largely made from tropical woods; although some variations like charcoal briquettes are made from coconut shells. During the production process, wood is burnt at really high temperatures in the absence of air. This production process is termed carbonization.

The production of charcoal is done in various communities and states around Nigeria. Some are Kaduna, Jos, Minna, Egbe, Jebba, Oyo, Nasarawa, and several others. These areas are high production centers, but production can also be carried out in most other parts of the country.

 

The charcoal industry poses several business opportunities. This large industry can be tapped from several fronts, but here are three (3) main key business opportunities in the charcoal industry:

1). Charcoal Production:

The production of charcoal, been a delicate process, requires specific individuals who are skilled in the craft, and are willing to get their hands dirty. The production is a highly labour-intensive process. Trees have to be fell, chopped, and burnt at high temperatures. Since most exporters can’t get involved with this stressful process, they leave the whole work-flow to the charcoal producers, who in turn sell to them in large quantities but at very low prices.

2). Charcoal Export & Distribution:

This is the most popular business opportunity exploited in the charcoal industry in Nigeria and around the world. With tens of thousands of metric tons of charcoal exported yearly from Nigeria, the revenues generated makes the sector lucrative. Here, the sales could be done by local traders in the market, or by large players exporting the charcoal products outside the country.

Before charcoal can be exported, certain standards must be met. For example, the moisture content, the fix carbon, the ash contents, and several others need to be right based on the buyer’s specifications. An inspection by the buyer’s agents or the buyer themselves could lead to a rejection of the full shipment if they don’t meet the required standards.

The charcoal prepared for export must also be packaged to the buyer’s taste. They could be packaged in small sizes to enable local buyers purchase easily for their needs, or they could be packaged in bulk, weighing different sizes; anywhere from 25kg and above, and then placed in containers ready for shipment by a shipping company, and delivered to the buyer anywhere in the world.

Starting out in your distribution and export of charcoal products could cost you between 360,000 Naira t0 over 1,000,000 Naira. With a signed order for shipment by a buyer, the supplier could approach the Nigeria’s Bank Of Industry (BOI) for a loan to fulfil the order. It’s a lot easier to get loans and grants in Nigeria when there’s an existing request or customer base for your charcoal products than when you’re just starting out and seeking random capital.

3). Charcoal Appliances:

Charcoal appliances could be charcoal stoves and other devices that make the charcoal production and usage process easier. You could manufacture charcoal stoves and sell them for about $8 or more for a stove. These energy-efficient stoves make charcoal usage easier for the locals who live in communities and base their cooking energy source majorly on charcoal.

Types Of Charcoal You Can Export

  • Hardwood Charcoal
  • Charcoal Briquettes
  • BBQ Charcoal
  • Shisha Charcoal

Setting Up Your Charcoal Export Business

1). Register Your Export Business:

The first step to starting a charcoal export business is to register a legal business. To do this, you must first register a limited liability company with the Corporate Affairs Commission of Nigeria, then go on to register your business with the Nigerian Export Promotion Council.

Registered business names are not allowed to register with the NEPC, and so, you can only function as an exporter with a Limited Liability Company registered under the laws of the Federal Republic of Nigeria.

2). Find The Direct Sources & Producers For Exports:

Although this can be done before, during, or after your company has been registered with the appropriate bodies, the next step is to source for the direct charcoal producers for you on behalf of your clients.

It’s usually better you get direct access to the charcoal producers, so you can get the best possible price. Going through a proxy would waste more time, cost more money, and reduce your profit margins.

Some states with large charcoal producers are Nasarawa, Kaduna, Jos, Minna, Egbe, Jebba, Oyo and a few other states in Nigeria.

3). Setup A Proper Business Structure, Trade Process, & Branding:

During or after registering and securing your buyers, it is important you set up a proper business structure that looks internationally reputable. Some ways to do this are to build an international standard website, get a business address, create a company profile, and also have a corporate offer format you can customize and send to buyers who request an offer. Also set up a corporate email that reads something like this: “yourname@yourcompanywebsite.com”.

If renting an office is too expensive, you could pay for a virtual office at a co-working hub and use their address for meetings.

When you organise your company this way, buyers would feel really confident about doing business with you and would tend to choose your business as their preferred partner.

4). Source For Buyers:

The next thing is to source for international buyers for your products. You can do this by registering on websites like:

And several others.

You can also build an influential social account on LinkedIn and market your Charcoals to a unique business audience you’d build over time.

5). Export Your Products:

Upon sealing agreements with the buyers, getting issued an Irrevocable Corporate Purchase Order, signing a Sales and Purchasing agreement, and more, you can then proceed to ship the charcoal to the buyer.

The shipment could be done on either Free On Board (FOB) or Cost, Insurance and Freight (CIF) basis. Where FOB means you cover the cost of the goods and every other thing till its arrival at the shipping point, and CIF means that you cover the cost of everything including insurance and transporting the goods to the buyer’s port of destination.

 

Conclusion

The charcoal export business is a lucrative one for anyone who chooses to venture into the export of solid minerals from Nigeria. Depending on the quantity the buyer needs, your profit margins could be far higher or lower, but still substantial.

Starting a charcoal export business in Nigeria is a way to not just only get into the industry, but a great start to building a long-term business that could someday employ thousands of people directly and indirectly.

Please follow and like us:

Leave a Reply

Your email address will not be published. Required fields are marked *