The Federal Government has finalized a $1 billion iron ore and steel deal with China, marking a significant advancement in its strategy to promote local value addition in the solid minerals sector.
The announcement was made by Kehinde Bamigbetan, Special Adviser to Dr. Oladele Alake, Minister of Solid Minerals Development.
This deal, focused on Kogi State, represents a key milestone in the government’s efforts to enhance local processing and development within the mining industry.
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During President Bola Ahmed Tinubu’s recent visit to China in Beijing, Alake assured the promoters—Chart and Capstone Integrated Limited of Nigeria and Sinomach-He of China—of the Federal Government’s full support to expedite the project.
Alake highlighted that the government has shifted away from the previous pit-to-port policy, which allowed for the export of raw minerals.
Instead, the new approach emphasizes local processing and value addition, which is expected to create jobs for youth, facilitate skills transfer, and improve the trade balance between Nigeria and its trading partners.
To further encourage local value addition, Alake announced that mining license applicants must include plans for processing raw minerals as a condition for approval.
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“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 to the Minister, Chief Abel Edijala, CEO of Chart and Capstone Integrated Limited, praised the Honourable Minister for establishing an efficient licensing application process free from 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 outlined that the model involves the iron ore site supplying the steel manufacturing plant, which will then expand to support the Nigerian economy’s industrialization needs.
Edijala also noted that the project will require tax waivers for importing equipment and tax holidays during the initial phase to manage macroeconomic fluctuations and achieve its objectives.
Sinomach-He’s vice manager, Hou Encai, highlighted the company’s preparedness to commence the project. Established in 1958, the state-owned company has over 15,000 employees, including 2,000 engineers, and is deeply involved in mining, iron making, steel rolling, steel making, and infrastructure construction.
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Encai emphasized that Sinomach-He handles 80 percent of China’s steel requirements.
“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.
The MOU stipulates that Sinomach-He will act as the master contractor, bringing its expertise to engineering, procurement, installation, commissioning, and training for the project.
Attendees at the meeting included Professor He Lixiong, Executive Secretary-General of the Working Committee for Overseas Cooperation of the China Association of Small and Medium Enterprises; Mr. Innocent Okonkwo, Chairman of the Belt and Road Africa Economic Initiative; Li Ke, Sinomach-He’s overseas general manager; and Deng Shiyuan, senior project manager.
Earlier, Nigeria’s Consul-General to China, Ambassador Gbadebo Afolabi, confirmed Sinomach-He’s integrity, noting that an embassy team had conducted due diligence on the company and deemed it suitable for the project.
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