Nigeria to assess revival of Ajaokuta steel mill with Russian support: minister

Nigeria plans to conduct a technical assessment of its stalled Ajaokuta Steel Mill project with Russian government support early in 2022, according to Olamilekan Adegbite, Nigeria's minister of mines and steel development.

The new tie-up with the original Russian building contractors of the works follows agreements made at the Russia/African Summit in October 2019 but that were then set back by the coronavirus pandemic, the minister told S&P Global Platts on the sidelines of the Mines and Money conference in London this week.

Adegbite said there was agreement on a road map, "the first step on which is a technical assessment or audit which should take place in the new year."

While the blast furnace technology used at the works is still considered adequate, the audit will highlight any equipment or processes that could have become obsolete during the more than 40 years the works project has been in existence, he said.

"We could also look at the possibility of installing electric arc furnaces," Adegbite said. The works' crude steel capacity is 5.2 million mt/year, he said.

Around 60 Russian and 100 Nigerian technicians will assess the future of the works, the minister said.

Economic diversification

Construction of the multibillion-dollar Ajaokuta mill, Nigeria's largest, was started by the Soviet Union in 1979 under a cooperation agreement with Nigeria. Although the mill was reportedly virtually finished by the mid-1990s, the project was allegedly mismanaged, lacked infrastructure and has never produced any steel. The Nigerian government now intends to boost mining industry development and sees the steel industry as a major pillar of economic diversification away from oil.

Ajaokuta Steel Mill is currently controlled by the Nigerian state after a previous private-sector company that planned to operate the site, India's Global Steel Holdings, had its concession terminated.

The Nigerian government's latest plans for the steelworks include bringing in new investors to take a percentage of the mill's equity, Adegbite indicated.

"We won't be doing concessions anymore," the minister said.

Gas infrastructure development

State-owned Nigerian National Petroleum Corp. said July 29 it remained on track to deliver a key gas pipeline that crosses the Ajaokuta region by next year, boosting regional infrastructure. The pipeline will transport 2 Bscf/day of natural gas to the domestic market and bolster Nigeria's economy, which has been hit hard by lower oil production.

NNPC group managing director Mele Kyari said at the time that the 614-km Ajaokuta-Kaduna-Kano (AKK) pipeline, which will transport gas from oil fields in the Niger Delta area to the north of the country, was also key to Nigeria's bid to deliver gas to Europe through the Trans-Sahara route.