Nigeria, home to mineral reserves valued at an estimated $700 billion, is taking a bold step to revitalise its underperforming mining sector, which currently contributes less than 1% to the country’s GDP.
Chart & Capstone Integrated Limited, a Nigerian company, has partnered with China’s Sinomach-He to establish an iron ore mine and steel mill in Kogi State. The two companies signed a $1 billion memorandum of understanding (MoU) during the China-Africa Cooperation Forum in Beijing, with the agreement presented to Nigeria’s Minister of Solid Minerals, Dele Alake.
Kogi State as the Project Hub
Kogi State, known for its vast iron ore reserves, will host the proposed complex. It is also home to Australia’s Macro Metals, which is developing the Agbaja iron ore project, containing 586 million tonnes of mineral resources and 205 million tonnes of ore reserves.
While specific details about the project’s timeline and production capacity are yet to be disclosed, Sinomach-He will serve as the main contractor, overseeing engineering, procurement, and commissioning for both the mine and the steelworks.
Economic Potential
The project has the potential to significantly increase the mining sector’s contribution to Nigeria’s economy, providing a much-needed boost to industrialisation. Additionally, the steel mill could enable Nigeria to export more value-added products to China, helping to address the nation’s trade deficit, which exceeds $1 billion.
Minister Alake highlighted the importance of moving away from Nigeria’s pit-to-port policy, which allowed for the export of raw minerals. He stated on social media platform X (formerly Twitter):
“The recent shift to local extraction and value addition is essential for job creation, skills transfer, and improving our trade balance.”
This development comes amid a turbulent period for the global iron ore market. Prices have dipped below $90 per tonne and are projected to decline further to $78 per tonne by 2033.
In Africa, countries such as South Africa, Mauritania, Sierra Leone, and Liberia currently lead in iron ore production, while Guinea is set to begin production at its massive Simandou deposit by 2025. The addition of Nigeria as a producer could reshape the continent’s iron ore landscape in the years to come.
If executed successfully, this project could transform Nigeria’s mining sector, enabling it to drive industrial growth and economic diversification. With growing global competition and fluctuating market prices, the collaboration between Nigeria and China signals an ambitious move to position the country as a significant player in the global iron and steel market.
