The Federal Government has finalized a $1 billion iron ore steel project deal with China, according to a statement from Dr. Oladele Alake, Special Adviser to the Minister of Solid Minerals Development.
The agreement, signed for Kogi State, marks a significant advancement in the Federal Government’s initiative to prioritize local value addition in the solid minerals sector.
During a recent visit by President Bola Ahmed Tinubu to China in Beijing, Alake addressed the project promoters—Chart and Capstone Integrated Limited of Nigeria and Sinomach-He of China—pledging the Federal Government’s full support to expedite the project’s delivery.
Alake highlighted that the Federal Government has moved away from the pit-to-port policy, which allowed mining companies to export raw minerals, and is now focusing on local value addition. This shift aims to create jobs for youths, facilitate skills transfer, and improve the trade balance with international partners.
He also mentioned that, to encourage local value addition, applicants for mining licenses are now required to present plans for processing raw minerals as part of the approval conditions.
“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 are possible,” he said.
Presenting the Memorandum of Understanding signed by both companies to the Minister, Chief Executive Officer of Chart and Capstone Integrated Limited, Chief Abel Edijala commended the Honourable Minister for putting in place an efficient licence application process that works without red tape and corruption.
“ We applied for an exploration licence for our iron ore mining project at the Mining Cadastral Office, and we did not need to see anybody before our application was approved within a reasonable period. This shows that the system you have put in place is fair and works for all. I must commend you for this.” Edijala said.
He explained that the model involves the iron ore site supplying a steel manufacturing plant, which will then expand to meet the needs of Nigeria’s industrialization efforts.
Edijala also noted that the project will require tax waivers for importing equipment and tax holidays during the initial phase to address macro-economic fluctuations and achieve its targets.
Sinomach-He’s readiness to commence the project was further detailed by its Vice Manager, Hou Encai. He noted that the state-owned company, established in 1958 to support the Chinese economy, employs over 15,000 staff, including 2,000 engineers.
Encai added that the company is involved in mining, iron making, steel rolling, steel making, and infrastructure construction, and handles 80% of China’s steel needs.
“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 the 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.
Other participants at the meeting were the Executive Secretary-General, Working Committee for Overseas Co-operation of China Association of Small and Medium Entreprises, 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.
Earlier, Nigeria’s Consul-General to China, Ambassador Gbadebo Afolabi confirmed the integrity of Sinomach-He disclosing that a team from the embassy had conducted due diligence on the company and found it suitable for the transaction.