The federal government of Nigeria has finalised a $1 billion agreement for iron ore with China, representing a crucial advancement in enhancing domestic value creation within the solid minerals industry. This announcement was made by Kehinde Bamigbetan, the Special Adviser to Dr. Oladele Alake, Nigeria’s Minister of Solid Minerals Development. The agreement, executed on behalf of Kogi State, represents a notable advancement in the administration’s initiatives to transform the country’s natural resources industry. The agreement was formalised in Beijing amid President Bola Ahmed Tinubu’s recent visit to China, during which Nigerian leaders and business executives engaged in discussions with their Chinese counterparts.
Dr. Oladele Alake assured the Chinese promoters, Chart and Capstone Integrated Limited of Nigeria and Sinomach-He of China, of the federal government’s dedication to accelerating the project’s implementation. He expressed his belief that the project will be essential for the country’s efforts to diversify its economy, offer employment opportunities, transfer skills, and enhance Trade relations with global partners. A major element of this agreement is the abandonment of Nigeria’s former pit-to-port approach. Under this old system, Mining companies could Export raw minerals directly abroad.
Foreign firms must present local processing plans to get mining licenses.
He pointed out that the revised plan prioritises enhancing local value, ensuring raw minerals are refined domestically before exportation. This strategy improves the trade balance, lowers Unemployment by promoting domestic employment opportunities, and enhances the country’s Revenue from foreign exchanges. Alake stressed that companies must submit comprehensive proposals for local Mineral processing before receiving mining licenses. He pointed out that the existing trade deficit exceeds $1 billion in favour of China, primarily due to the country’s export of unrefined minerals that offer minimal added value.
Alake is confident that the initiative will address the disparity as the nation exports refined or partially refined mineral items. He also anticipates that the country will be in a stronger situation to decrease its national debt and enhance its foreign currency reserves through proactive local value enhancement. At the core of this agreement lies a Memorandum of Understanding (MoU) involving Chart, Capstone Integrated Limited from Nigeria, and China’s Sinomach-He. While delivering the MOU to the Minister, Chief Abel Edijala, who serves as the Chief Executive Officer of Chart and Capstone Integrated Limited, commended the efficient procedures implemented by the existing administration.
Edijala stressed the need for government tax waivers on mining equipment.
Furthermore, he noted that his company acquired an exploration permit from the Mining Cadastral Office, avoiding the usual bureaucratic challenges that frequently delay business activities. Edijala mentioned that this initiative will channel iron ore from Kogi State directly to a Steel production facility, which is anticipated to support the expanding national industrial sector. However, Edijala emphasised the importance of governmental assistance through Tax waivers on imported mining machinery and tax breaks in the early stages of the project. Such benefits would enable the initiative to achieve its objectives despite economic fluctuations, protecting its Sustainability in the long run.
On the Chinese side, Sinomach-He, a government-owned company founded in 1958, will serve as the primary contractor for the initiative. Vice Manager Hou Encai highlighted the firm’s proficiencies in mining, iron manufacturing, steel processing, and constructing infrastructure. He pointed out that Sinomach-He fulfils about 80 percent of China’s steel requirements, contributing years of industry knowledge to the project in the region. Hou explained the firm’s ability to assess iron ore prospects, perform feasibility assessments, and provide essential mining machinery, such as excavators and transport trucks.
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As the Memorandum of Understanding outlines, Sinomach-He manages the project’s engineering, procurement, installation, and commissioning stages. The firm will train local employees, promoting skill development and long-term sustainability. The federal government has thoroughly assessed the partnership, with Ambassador Gbadebo Afolabi, Nigeria’s Consul-General in China, affirming that the embassy carried out proper due diligence on Sinomach-He. Afolabi characterised the Chinese firm as reliable for this investment, indicating a strong belief in the project’s success. On the other hand, the agreement between the two nations marks a crucial step forward in increasing local value creation within its solid minerals industry.