September 09, (THEWILL) – Nigeria’s sustained efforts to revive the Ajaokuta Steel Company, which is designed for the take-off of industrialisation in the country, got a big boost in China during the weekend when the Federal Government pledged cooperation with Sinomach-He of China and Chart and Capstone Integrated Limited of Nigeria, promoters of the $1 billion (N1.6 trillion) new iron ore-to-steel project planned for Kogi State, where the steel company is located.
The Minister of Solid Minerals Development, Dr Oladele Alake, who hailed the steel project as a breakthrough in the Federal Government’s campaign to make local value addition to the model of development in the solid minerals sector, urged the promoters to ensure delivery of the project as soon as possible.
THEWILL recalls that the Minister of Steel Development, Prince Shuaibu Abubakar Audu, on September 1, 2024 restated the Federal Government’s resolve to revive the ailing Ajaokuta Steel Company located in Kogi state.
The Minister who said the resuscitated Ajaokuta Steel Mill is capable of providing employment opportunities to 500,000 Nigerians, added that the government has discussed with various stakeholders and done rapid assessment on the plant.
He added that his ministry was in advanced discussion to sign a Memorandum of Understanding, (MOU) with the Ministry of Defence to bring the military industrial complex to Ajaokuta.
“The last thing we look forward to doing within the industry is to enact a law that will create a regulatory framework for the steel industry so that the over $4 billion worth of steel that is being imported into Nigeria can be invested.
“We have the raw materials, equipment and facilities to start producing steel. The entire value chain is within our reach. We have to pass some bills through the National Assembly to make all these things work. We are willing to draw up a 10-year road map for the revival of the Steel industry. Steel is not an easy industry to manage. We are here to resolve the problem that has grounded the steel plant for more than 40 years. It will take some time to unravel the solutions” Audu stated.
Special Adviser to Alake, Kehinde Bamigbetan quoted the minister as saying that the Federal Government has reversed the pit-to-port policy under which mining companies exported raw minerals to extraction with local value addition, which is the best guarantee of jobs for the youths, skills transfer and better balance of trade between the country and her trading partners.
He said that to promote local value addition, Alake had announced that applicants for licences to mine solid minerals in the country must disclose their plans for processing the raw minerals as part of the conditions for approval.
“The trade balance between Nigeria and China is over one billion dollars in favour of China because the minerals imported from Nigeria are essentially in raw forms. Once Nigeria starts to export finished or semi-finished value-added mineral products to China and other trading partners, our balance of trade will be more favourable, and our foreign exchange earnings will improve. With aggressive local value addition and the revenue from it, the prospects of reducing our debt burden in the nearest future is possible,” he said.
Explaining Sinomach-He’s readiness to start the project, its Vice Manager, Hou Encai, said the state-owned company was established in 1958 to meet the needs of the Chinese economy and it has over 15,000 staff, including 2,000 engineers, on its payroll.
Encai said the company engages in mining, iron making, steel rolling, steel making, the construction of infrastructure and handles 80 per cent of the steel needs of the Chinese economy.
“In mining, we have the technology on how to excavate the ores from the earth. We can evaluate the iron ore potential of any site and tell you what the feasibility of mineral extraction is on a site. Secondly, we have the equipment needed, including excavators and drilling machines for mining iron ore. For transportation of iron ore from site to the factory, my group produces the trucks,” he said.
According to the MOU, Sinomach-He shall be the master contractor and deploy its expertise in the engineering, procurement, installation, commissioning, and training of the project.
Earlier, Nigeria’s Consul-General to China, Ambassador Gbadebo Afolabi, confirmed the integrity of Sinomach-He.
Afolabi also said that a team from the embassy had conducted due diligence on the company and found it suitable for the transaction.
Nigeria currently imports steel bars from China at $1.33 million, South Africa at $112 million, Italy at $7.59 million, Switzerland at $3.38 million and France at $1.64 million.
This deal is a major breakthrough in the sustained efforts by Nigeria to revive the Ajaokuta Steel Company since it was set up in 1982 alongside Delta Steel Company, Aladja and 13 rolling mills, seven mini-mills and two integrated steel companies, some of which have become moribund.
Between 2006 and 2020, Ajaokuta Steel Company went through concessions, deals and reversals from former President Olusegun Obasanjo’s tenure to his successors’, namely Goodluck Jonathan and immediate past President Muhammadu Buhari, who in 2020 reached a deal to pay off $497 million as a settlement for the $5.3 billion claim made by Indian firms, Global Steel Holdings and Global Infrastructure Steel, over the ownership and control of Ajaokuta Steel Company and the iron ore mine. This deal followed a Senate resolution for an urgent need to complete the plant.
