Amanze Chinonye
The Federal Government has stepped up high-level negotiations with Chinese investors to revive the 42-year-old Ajaokuta Steel Company, unveiling a proposed $2 billion investment anchored on a production-sharing model aimed at restoring large-scale steel manufacturing in Nigeria.
Director-General and Global Liaison of the Nigeria-China Strategic Partnership, Joseph Tegbe, disclosed the development in an exclusive interview with BusinessDay in Abuja, describing the emerging framework as a “game-changing” strategy to reposition the long-dormant steel complex as the backbone of Nigeria’s industrialisation drive under President Bola Ahmed Tinubu’s administration.
$2bn Investment, Production-Sharing Model
Built in 1984 with an installed capacity of 1.3 million metric tonnes per annum, Ajaokuta has remained largely non-operational for decades due to legal disputes, failed concession arrangements and policy inconsistencies.
Join our WhatsApp ChannelTegbe said the preferred Chinese investor selected after engagements with nearly 10 firms has already deployed about 20 engineers to Nigeria for a two-week technical assessment conducted at its own cost. The team concluded that although much of the equipment is outdated, the core infrastructure remains structurally viable.
“They told us that within six months of commencement, a steel rolling mill can begin operations,” he said.
Under the proposal, the Chinese partner will raise the $2 billion financing subject to approval by China’s National Development and Reform Commission and recover its investment through a production-sharing arrangement rather than asset acquisition.
“They are not going to own Ajaokuta. Nigeria still owns Ajaokuta. What we are doing is production sharing,” Tegbe clarified.
Under the sliding-scale structure being negotiated, the investor may initially take between 60 and 70 per cent of output as repayment. That share would decline to zero over a five- to 10-year period, leaving Nigeria with full production control.
“For us, it is better to own 10 per cent of a working factory than 100 per cent of a non-functional one,” he added.
The immediate plan is to restart the existing 1.3 million metric tonne rolling mill before scaling production towards Nigeria’s estimated annual steel demand of 10 million metric tonnes.
Currently, the country produces only about 1.2 million metric tonnes, largely from recycled scrap.
“Even the 1.2 million metric tonnes produced locally is largely scrap-based. That is not sustainable when we have significant iron ore deposits in Itakpe and other parts of Kogi and Niger States,” Tegbe said.
READ ALSO : Nigerian Govt To Probe Ajaokuta Steel N33bn Electricity Debt Amid TCN Disconnection
Supply Chain Integration, Trade Rebalancing
Tegbe acknowledged that past structural decisions including the separation of iron ore assets from the steel plant created inefficiencies that undermined operations. He said the government is now working to integrate the iron ore supply chain, particularly from Itakpe, under a unified holding structure coordinated by the Ministry of Steel Development and plant management.
He also disclosed plans to upgrade supporting infrastructure, including rail links from Warri Port through Itakpe to Ajaokuta, road networks and inland waterways.
“When Ajaokuta was designed, there was a loading port. We need to dredge and upgrade Warri Port so that larger vessels can berth. Steel production requires an integrated logistics ecosystem,” he said.
Addressing concerns over the 34–44 per cent purity level of Nigeria’s iron ore, Tegbe dismissed claims of commercial unviability, noting that beneficiation can significantly upgrade ore quality and that some Chinese plants operate with even lower-grade inputs.
If final approvals are secured by mid-year, he projected that rolling mill operations could resume by December or January.
Beyond plant rehabilitation, Tegbe said a key pillar of the partnership is technology transfer. Plans include sending hundreds of Nigerian engineers to China for specialised steel production training, with candidates selected based on relevant technical expertise.
“We must ensure knowledge transfer. We cannot allow a situation where we cannot maintain what we build,” he said.
He positioned the Ajaokuta revival within a broader Nigeria–China industrial cooperation strategy aimed at reducing import dependence, boosting value-added exports and correcting trade imbalances.
Bilateral trade between both countries currently stands at about $23 billion, with Nigerian exports accounting for roughly $2 billion and imports from China exceeding $20 billion. The government, he said, is targeting $40 billion in trade within five years, with at least $15 billion representing Nigerian exports.
“We must stop exporting raw products. Value addition is critical if we are serious about industrialisation,” Tegbe said.
The renewed negotiations mark one of the most structured attempts in years to finally operationalise Ajaokuta and reposition Nigeria’s steel sector as a catalyst for broader economic transformation.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
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