By Patience Chat Moses
In a giant move that could reshape Nigeria’s industrial landscape, the Nigerian government has signed a Memorandum of Understanding (MoU) worth $1 billion with Chinese firms for an Iron Ore-to-Steel project in Kogi. The MoU is with China Civil Engineering Construction Corporation (CCECC) and Sinomach-He, worth $1 billion (N1.6 trillion) iron ore-to-steel project in Kogi State.
This initiative aims to promote local value addition in the solid minerals sector, marking a significant step in Nigeria’s drive towards industrialization. The information was contained in a statement by Bayo Onanuga, Special Adviser to President Bola Tinubu on Information and Strategy. The MoU was signed during President Tinubu’s recent visit to Beijing, China, where he attended the Forum on China-Africa Cooperation (FOCAC). “Solid Minerals Development Minister Dr. Dele Alake has hailed the $1 billion (N1.6Trillion) new iron ore to steel project planned for Kogi State as a breakthrough in the Federal Government’s campaign to make local value addition the model of development in the solid minerals sector,” the statement read in part.
The statement noted that the Minister of Solid Minerals Development, Dr. Dele Alake, hailed the project as a key milestone in the Federal Government’s efforts to shift Nigeria’s mineral sector from raw material exports to local processing. This transformation, he noted, is expected to create jobs, facilitate skill transfer to the youth, and improve Nigeria’s trade balance by exporting value-added products. Alake also noted that future mining licenses will mandate companies to include local processing plans, reinforcing the government’s commitment to enhancing local value addition in the sector. Chief Abel Edijala, CEO of Chart and Capstone Integrated Limited commended the government’s transparent licensing process, noting that their exploration license was approved without red tape. He explained the project’s role in supplying iron ore to a steel plant, aiding Nigeria’s industrialization, and called for tax waivers during the project’s early stages to manage economic fluctuations. Sinomach-He Vice Manager Hou Encai affirmed the Chinese company’s readiness to begin work. Established in 1958, Sinomach-He, which handles 80% of China’s steel needs, will serve as the master contractor, overseeing engineering, procurement, installation, and commissioning.
“In mining, we have the technology and equipment needed for iron ore excavation, and we will ensure the successful transport of ore to the factory for steel production,” Encai stated.
The statement further noted that the Federal Government’s partnership with the Chinese firms is expected to boost Nigeria’s local production, create jobs, and support President Tinubu’s push for sustainable industrial development.
Economic Impact
In Kogi State lies Nigeria’s iron ore reserves in its abundance. With Kogi State being home to the Ajaokuta Steel Complex and several other mineral-rich sites, these reserves have been largely underutilized for decades due to mismanagement, political interference, and infrastructural challenges. The newly signed MoU with Chinese firms promises to address these issues, providing not only capital but also technical expertise to help Nigeria move from a raw material exporter to a steel-producing nation. The coming of this project will bring a reduction in the country’s dependency on imported steel products, which have often been a drain on foreign exchange. The steel industry is foundational to industrialization, providing critical input for industries such as construction, manufacturing, transportation, and energy. With the MoU signed, there is optimism that the Ajaokuta Steel Complex and other related sites in Kogi will finally be operational. The project is expected to generate thousands of direct and indirect jobs, especially for local communities in Kogi State. In addition to employment, the influx of infrastructure that typically accompanies such mega-projects—roads, railways, and power facilities—will further boost regional development. Furthermore, the effect of a functioning steel sector will be felt across various industries, contributing to Nigeria’s Gross Domestic Product (GDP) and improving its balance of trade by reducing reliance on imported steel products. According to the statement issued to journalists, Nigeria’s trade balance with China is unfavourable due to the export of raw minerals, with Minister Alake stating, “Once Nigeria begins exporting value-added mineral products, our balance of trade will be more favourable, and our foreign exchange earnings will increase.” Experts in the solid minerals sector, however, have drawn the attention of stakeholders to possible challenges that could hinder this project from coming to fruition. Concerns on the areas of Infrastructure, bureaucracy, and environmental issues have topped the list. These challenges must be addressed for this project to become feasible. 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. Other participants at the meeting were the Executive Secretary-General, Working Committee for Overseas Co-operation of China Association of Small and Medium Enterprises, Professor He Lixiong, Chairman, Belt and Road Africa Economic Initiative, Mr. Innocent Okonkwo, Sinomach-He Overseas General Manager, Li Ke, and Senior Project Manager, Deng Shiyuan.