#BounceExclusive: Tapping Into The Charcoal ‘Goldmine’ Business
Since kerosene, diesel, and petrol now belong to the rich and famous in Nigeria; the masses are looking beyond crude oil and its products as sources of energy.
One lucrative alternative is charcoal.
The charcoal industry is worth billions of dollars and it remains a star attraction to prospective investors.
A large market exists in the EU, USA and ASIA with prices ranging from 200 Euro to 210 Euro per ton (FOB Nigerian Port), depending on mode of packaging.
The United Kingdom alone consumes more than 60,000 metric tons of charcoal annually, out of which about 70% comes from tropical Africa.
Other countries that produce charcoal in exportable quantities include: Ukraine, South America, Senegal, Ghana and Mozambique etc.
Bounce News had a chat with Wale Alawode, an international trader and a charcoal business expert.
How is Charcoal Produced?
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.
Where is charcoal produced in Nigeria
This product is virtually available all over Nigeria as many local communities have perfected the technology of charcoal production.
Some known charcoal deports are found in places like Oyo, Isheyin, Saki Igbo-Ora, Ogbomoso- all in the western part of the country. We also have depots in Jebba, Omu Aran, Egbe, Kabba in the Central States.
Charcoal is found in abundance also in Minna, Jos and Kaduna. Besides, an individual can produce his own charcoal wherever he/she is located.
Is Charcoal export seasonal?
The best period to buy charcoal locally for export is during the dry season (i.e. November – March).
This is because of the vulnerability of charcoal to water and because the local producers or suppliers lack the basic amenities to produce and preserve/store charcoal during the wet season.
Charcoal has a seasonal market, but the season differs from one country to another. For instances in Belgium, UK, Holland, France, Germany and Denmark, the Sales season is from May through August.
The Europeans give out their orders from September to May of the following year.
In countries like Kuwait, Israel and other Asian countries, it is all-year round and orders are placed from January through December.
However, there are some big time importers in Europe who also order all year round.
Companies like Big K Charcoal Limited and Diamond Fuel etc, in the United Kingdom order all year round.
What are the specifications?
The quality requirements for exporting Nigerian hardwood charcoal are: Fixed Carbon: 75%- 80%, Moisture: 10%, maximum
Ash Content: 3% max, long burning 4-5h, Dry without dust ,no sparks, odouless, chemical free, high caloric power
Volatile Matter: 12%, maximum Granulation (Sizes): 30mm – 150mm or 30mm – 120mm (BBQ Size) The quality of the charcoal will depend largely on the quality of wood used in the production process.
There could be variations in the quality requirements of the charcoal depending on the specifications of the buyer.
Laboratory tests may also be needed to ascertain the quality of the hardwood charcoal before export.
What about Charcoal export packaging?
The most commonly used methods of charcoal packaging in Nigeria are bulk and polypropylene bag packaging.
The bulk packaging involves the direct pouring of hardwood charcoal into a 40ft High Cube Container.
While the pp (polypropylene) bags packaging involves the bagging of charcoal bags’ sizes of 50kg, 32kg, 30kg, 25kg and 20kg or based on the specification of the buyer.
A total of 31 bags of 30-32kg make a metric ton, a total of 20 bags of 50kg make a metric ton while a total of 40 bags of 25kg makes a metric ton.
If the charcoal is packaged in pp bag or paper bags, it might require labeling or bar coding on each bag.
The labeling should state product name, company’s name, full address, email, phone numbers, quantity in kg, and quality specification. restaurants’ and domestic use.
How to make profit from the charcoal export business?
Starting out in your distribution and export of charcoal products could cost you between 300,000 ($1000) to 1,000,000 ($3,334) 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 easily fulfill 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.
The total cost for completing each ton of charcoal is in the range of N28,260 and the selling price to the buyer is at 180 EUROs per ton.
The exchange rate of Euros to Naira do fluctuate between N350 to N400.
Let's use N360 to a Euro so that we don’t get too excited and miss it.
That will give us N64, 800. That’s a profit of N34,540. You can then multiply it by the number of tons you are sending to the buyer.
Charcoal is an essential commodity in Africa and it is one of the most important sources of alternative fuel across Europe.
Are you thinking what I am thinking?