The Federal Government has entered into a landmark agreement with China, worth $1 billion, to develop an iron ore steel project. This significant deal aims to boost Nigeria’s steel production capabilities and strengthen economic ties with China.
This was stated in a statement by the Special Assistant to the Minister on Solid Mineral Development, Dr. Oladele Alake, Kehinde Bamigbetan, who announced the deal.
The agreement was signed with Kogi State as a breakthrough in the Federal Government’s campaign to make local value addition a development model for the solid minerals sector.
Alakewho met with the project proponents, Chart and Capstone Integrated Limited of Nigeria and Sinomak He of China, in Beijing to coincide with President Bola Ahmed Tinubu’s visit to China, assured the Federal Government that it would work with the project proponents to ensure the speedy implementation of the project, which the project will ensure.
He said the Federal Government had rescinded the “pit to port” policy under which mining companies exported raw minerals for extraction with local value addition, saying this was the best way to ensure youth employment, technology transfer, and increased trade balance between the country and its trading partners.
He said that to boost local value creation, applicants for mining permits would be required to disclose plans for processing of raw minerals as a condition of 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 are possible,” he said.
Abel Edijala, Chief Executive Officer of Chart and Capstone Integrated Limited, handed over the MoU signed by both companies to the Minister and commended the Honourable Minister for putting in place an efficient license application process that is free from bureaucracy 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 is that iron ore deposits will feed steel mills and grow to meet the industrialization needs of the Nigerian economy.
Edijala further explained that the project requires exemptions from taxes on the import of equipment and exemptions from taxes during the start-up period to manage the fluctuations of the macroeconomic system and achieve its goals.
Hou Encai, Deputy Manager of Sinomach-He, expressed enthusiasm for the launch of the project, saying that the state-owned company was established in 1958 to meet the needs of the Chinese economy and employs more than 15,000 people, including 2,000 engineers. Enkai said the company is engaged in mining, steelmaking, steel rolling, steel production and infrastructure construction, supplying 80% of the steel demand 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 the site to the factory, my group produces the trucks,” he said.
According to the MoU, Sinomach-He will be the prime contractor and will leverage its expertise in the design, procurement, installation, commissioning and training of the project.
Other participants at the meeting included Executive Secretary-General, Working Committee for Overseas Co-operation of China Association of Small and Medium Entreprises, Professor He Lixiong, Sinomach-He overseas general manager, Li Ke, and senior project manager, Deng Shiyuan
Earlier, Ambassador Gbadebo Afolabi, Consul-General of Nigeria in China, confirmed the sincerity of Sinomach-He, revealing that the embassy’s team had conducted due diligence on the company and found it suitable for the transaction.
