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What to Know About Charcoal Export Business



 

For quite some time, lump-wood charcoal has carved a niche as very big business world wide, on account of the fact that demand for the product has virtually exceeded supply because it is a vital raw material of several industries like the smelting, steel furnaces, catering, public water purification systems and chemical industries

The swing producers in Nigeria use the traditional pit method of burning waste wood sourced from all kinds of places ranging from logging companies furniture makers, trimmers, building contractors and forests. In the pit method, you dig or excavate a pit in the earth whose length should be 6 metre and width 2.70 metre and a lighting point of 1.20 metre.

The beauty of this method is that you can convert your back yard (subject to environmental considerations) to a charcoal making factory. Capital investment is minimal, nothing more than a shovel; an axe and a box of matches is required. To acquire mastery in this production type, a visit to the charcoal belt which straddles Oyo-Iseyin- Igbeti, Eruwa, in the southwest and Kogi would suffice.



Other production methods are the brick kilns and the metal cylindrical transportable kiln you could move from one location to the other. Hardwoods like Iroko, shea tree, oak “emii” “idi” “ayin” “asapa” produce excellent grade charcoal much sought after by overseas buyers. Talking about the overseas buyers, one should quickly mention that they dictate the quality parameters and, to some extent, prices.

If you are not ready to conform to quality standards, you are well advised to invest elsewhere as the market out there is fastidious, ruthless and competitive. However, if you can get your acts together as many serious Nigerian exporters are doing, you will laugh your way to the bank.

Charcoal for exports are usually shiny black, well carbonized, dried, cleaned and contain no unburnt pieces, stones or which have been sorted out; and graded in three categories namely industrial (20mm–60mm) barbecue (20mm-80mm) and restaurant (20mm-140mm) The essence of producing charcoal yourself is to drastically cut down on procurement costs. The charcoal cartel or middlemen/ processors at Oyo, Iseyin, Eruwa, Ago Are, Shaki, Ijio, Ijiko axis now sell a 32kg bag of charcoal for N600.




If you produce yourself your total cost for the same size of bag falls within the range of N300- N400 per bag. The advantage of dealing with the processor/ middlemen is their capacity to deliver very large orders within a limited space of time.

Having been in the business for a very long time, they produce in line with the international standards and classifications for exports, having acquired the hands-on experience for choosing the requisite trees and wood for burning.

Quite a lot of them are good business people; but a few of their members are so unscrupulous and operate on the fringe of criminality.

You have to keep a hawk’s eye when dealing with them. The physico-chemical parameters of export grade charcoal fall within these limits: Carbon content: (75-80) per cent Moisture content: (10 per cent maximum) Ash content: (3-4) per cent Volatile matter (15 per cent maximum) Nobody expects you to hop into the laboratory to verify each consignment bag-by-bag. Advisedly, you could do only a random sample.

In other climes where you have genuine pre-shipment inspectors, it is their job to ascertain the quality of all export shipments and thereby issue a clean report of findings. The way around this problem is to ensure the charcoal is well carbonised, and dried as stipulated above.

The fob & c&f prices of charcoal swing within a continuum depending on the buyer, charcoal type, bulk delivery or packaging; and mode of payment. Last season, a German importer of barbecue charcoal paid 170 Euro per ton fob Apapa on CAD terms. Same season, a Polish buyer bought restaurant charcoal for 195 Euro C & F Hamburg. This 2011/2012 season has opened up with offers hovering 170-175 euros/ton fob Apapa for barbecue bulk.

Using this as a working figure a profitability analysis of charcoal looks thus:

Profitability analysis estimates for the export of 1 x 40ft container of charcoal on fob Apapa basis as at november 2011

Cost

Wood charcoal 23 tons in a container x 11,200 N400,000.00 Transportation (Trailer: Lagos- Oyo-Lagos) N130,000.00 Oyo State Internal revenue fee N 3500.00 Forwarding expense N60,000.00 TOTAL N 593,500.00

Revenue (selling price)

170euros/mt FOB Apapa 170euros x 23 tons = (3190 Euros)…………… N868,020.00 Less (costs) …… N593,500.00 Profit N274,520.00 Assumptions 1 x 40 foot container contain 23 tons of packaged charcoal Outside stuffing of container at Oyo Wood charcoal (720 bags x 32kg) per container Turnaround period: 21 days. Exchange rate: 225 Euros = 1 Naira

Source: New Telegraph

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