FG signs agreement with Russian Consortium to rehabilitate Ajaokuta steel plant

The Nigerian government has signed an agreement with a Russian Consortium Company for the rehabilitation, completion and operation of the Ajaokuta Steel Plant and National Iron Ore Mining Company in Kogi State.

Salamatu Jibaniya, head of the press and public relations department of the Ministry of Steel Development, disclosed this in a statement on Friday.

According to the statement, the agreement was signed by Minister of Steel Development Shuaibu Audu when he led a Nigerian delegation to Moscow, Russia, on a working visit.

“The federal government of Nigeria through the Honourable Minister of Steel Development, Prince Shuaibu Abubakar Audu who led a Nigerian delegation to Moscow, Russia from 14th – 21st September 2024, on a working visit, has signed a Memorandum of Understanding (MoU) with the original builders of Ajaokuta Steel Plant Messrs, Tyazhpromexport (TPE) and members of their consortium namely; Novostal M and Proforce Manufacturing Limited for the Rehabilitation, Completion and Operation of Ajaokuta Steel Plant (ASP) and National Iron Ore Mining Company (NIOMCO) in Kogi State, Nigeria,” the statement said.

It explained that the call was accepted by the Russian Federation when a consortium led by Messrs TPE visited the steel plant in Ajaokuta and the iron ore mining site at Itakpe in August 2024 for preliminary inspections leading to the invitation for the signing of the Memorandum of Understanding.

Mr Audu said this is a bold step towards creating a sustainable base for the industrialisation of the Nigerian economy, noting that the revival of the steel sector will also reduce the importation of steel products into Nigeria, which is estimated at over $4 billion annually and will help save scarce foreign exchange.

During the visit, the statement said the Nigerian delegation met with the Deputy Minister of Industry and Trade of the Russian Federation, Alexey Gruzdev and the consortium led by TPE assured the Nigerian delegation of the readiness of the consortium to meet the expectations of the MoU with the Nigerian government.

In his remark, the Permanent Secretary, Ministry of Steel Development, Chris Isokpunwu, affirmed the commitment of the Nigerian government to revamp the Ajaokuta steel project and national iron ore mining company.

The President of Metallurgical Holding, “Novostal – M” Demchenko Ivan Ivanovich assured the delegation of their readiness to submit a detailed proposal for the project after the comprehensive audit of the plant.

The General Director of Messrs TPE, Egorov Sergei Anatolevich and the Group Managing Director of Proforce Manufacturing Limited, Adetokunbo Ogundeyin, assured the Nigerian delegation of their commitment to the project because of its critical role in the overall economic development of Nigeria and requested the provision of an enabling environment by the Nigerian government.

“The parties expressed their optimism that the full implementation of the MoU will facilitate the revival of both Ajaokuta Steel Company Limited and National Iron Ore Mining Company and could create over 500,000 direct and indirect jobs for Nigerians and increase the size of the economy by billions of dollars thus contributing immensely to President Tinubu’s desire to grow the economy to over $1trillion by 2030,” the statement said.

Ajaokuta Steel’s chequered history

The steel company, located in Kogi State, was built between 1979 and the mid-1990s, but it has become moribund.

In September 2022, the Nigerian government agreed to pay $496 million to settle an Indian firm’s claim over the facility. The dispute followed the federal government’s revocation in 2008 of an agreement that handed control of the steelworks and the National Iron Ore Mining Company to the Indian firm. In cancelling the deal, the Umar Yar’adua administration said the terms of the concession at the time were not favourable to the country.

In December 2022, the government said 11 companies had indicated interest in taking over the steel company on a concession basis. Three of the 11 bidders are Russian companies, the then Minister of Mines and Steel Development, Olamilekan Adegbite, said while listing his ministry’s achievements.

Upon assuming office in August last year, Mr Audu promised to revive the steel company.

He added that he would set a roadmap for the development of the steel sector, aggressively pursue the completion of Ajaokuta Steel company, and enact the required bills to regulate the sector.