Assessing Plausible Options For Sourcing Spare Parts Of Earthmoving Equipment On The Profitability Of Nigeria’s Iron Ore Company

Assessing Plausible Options For Sourcing Spare Parts Of Earthmoving Equipment On The Profitability Of Nigeria’s Iron Ore Company

Osemenam Uchea Thomas .B. Afeni, Ph.D. Witsb,

aDepartment of Economics, University of Nigeria, Enugu State.
bDepartment of Mining Engineering, Federal University of Technology Akure, Ondo State.

American Journal of Engineering Research and Reviews

As Nigeria takes a bold step to revive her iron ore company, it is pertinent she takes adequate account of her economic and technological limitations, in order to achieve a return on this venture. To this end, the Net Discounted Present Value approach to investment appraisal in mine economics, was employed to evaluate two feasible investment options (spare part importation and conventional sand casting) for sourcing parts of earthmoving equipment on the profitability of Nigeria’s iron ore mining company (NIOMCO),over a period of five years. Findings revealed that, both options are not profitable to the federal entity, owing to the high rate of Nigeria’s inflation (15.98%) and unfavorable market exchange rate of $1 to 359.201. However, it recommends that the entity be privatized to financially buoyant investors, able to withstand the cost of operating the company. Also, a new price has to be set, using the absorption pricing technique, in order to absorb running costs, through the projected period of five years. In addition, no additional unit of labour, be employed, due to its evident burden on running expenses, over the projected period of five years. Unfortunately, selling iron ore concentrate at the prevailing market price ($62.59) was found not to be profitable to the entity. To this effect, the design of modalities aimed at penetrating and coping in the domestic market is a necessity, to enhance the entity’s sustainability, in the short-run. This is subject to further research.

Keywords: Iron ore, Spare parts, Earthmoving, Equipment, Profitability

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How to cite this article:
Osemenam Uchea Thomas .B. Afeni, Ph.D. Witsb,. Assessing Plausible Options For Sourcing Spare Parts Of Earthmoving Equipment On The Profitability Of Nigeria’s Iron Ore Company. American Journal of Engineering Research and Reviews, 2018, 1:13


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