FG, Chinese Investors Advance $2bn Ajaokuta Steel Restart Plan

The Federal Government is advancing a $2 billion plan with Chinese partners to restart Ajaokuta Steel Company and lift output toward Nigeria’s annual steel demand of about 10 million metric tonnes.

Joseph Tegbe, Director-General and Global Liaison for the Nigeria-China Strategic Partnership, said in Abuja that negotiations have moved into technical and financing details after years of failed attempts to reopen the plant. He said the current framework is designed to return production at Ajaokuta without transferring ownership of the asset.

Ajaokuta, established in 1984 with installed capacity of 1.3 million metric tonnes per year, has remained largely idle for decades because of legal disputes, failed concessions and policy reversals. Tegbe said the Tinubu administration is now trying to close those gaps through one coordinated structure involving the Ministry of Steel Development and management of the steel complex.

Nigeria currently consumes around 10 million metric tonnes of steel yearly but produces only about 1.2 million metric tonnes, most of it from scrap recycling, according to Tegbe. He said this output profile is not enough for a country seeking to expand manufacturing, construction and heavy industry, especially with known iron ore reserves in Itakpe and parts of Kogi and Niger states.

He said nearly 10 Chinese companies were engaged before a preferred investor was selected. The preferred firm, he said, sent roughly 20 engineers to inspect Ajaokuta for two weeks at its own cost. The team reportedly found old and worn equipment but said the main physical structure remains usable with rehabilitation.

Tegbe said the investor believes a rolling mill can begin operation within six months from commencement, while phased upgrades continue on wider parts of the complex. Under the proposal, the Chinese side would provide financing for rehabilitation and expansion, then recover investment through an output-sharing model.

He said this is not an asset disposal agreement. “They are not going to own Ajaokuta. Nigeria still owns Ajaokuta. What we are doing is production sharing,” Tegbe said.

Under terms still being negotiated, he said the investor could take as much as 60 to 70 per cent of output in the early years as repayment. That share would then reduce over a five- to 10-year window until Nigeria takes full production control.

Defending the structure, Tegbe said, “For us, it is better to own 10 per cent of a working factory than 100 per cent of a non-functional one.”

He also said the government is moving to resolve long-standing operational disconnects between Ajaokuta and upstream ore assets. Previous concession design separated key ore and steel facilities, creating supply and accountability gaps. According to him, new talks are focused on integrating iron ore feedstock, especially from Itakpe, with steel processing under one holding arrangement.

“The Nigerian government has had to pay compensation to people that took over those plants in the past and did nothing with it. We still have to pay them when they terminate it. That is one of the errors we’ve made, which Mr. President is correcting today,” Tegbe said.

He added, “So what we have done now is work with the minister of steel, and managing director of Ajaokuta Steel Company in Kogi State. We are all coordinated. What we are doing basically, is first of all, bring the two companies under one holding company.”

Beyond plant rehabilitation, Tegbe said transport and port infrastructure must be fixed to support steel logistics at scale. He listed the rail corridor from Warri Port through Itakpe to Ajaokuta, road links and inland waterways as priority routes for moving raw materials and finished products.

“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.

On ore quality concerns, Tegbe rejected claims that Nigeria’s iron ore grade cannot support competitive steel output. He said some Chinese facilities process lower-grade ore and then upgrade it through beneficiation. In his words, “I have seen plants in China using iron ore with purity as low as 14 per cent. With beneficiation, it can be upgraded.”

If approvals are completed by mid-year, he said rolling mill operations could return by December or January. He said early restart would signal that broader industrial-scale steel revival is now feasible.

“For Ajaokuta, all we need to do is start. Once the agreements are signed and the rolling mill begins, that will signal the rebirth of steel production in Nigeria,” Tegbe said.

He said training and local capacity development are part of the deal framework. The plan includes sending hundreds of Nigerian engineers to China for specialised training in steel operations, maintenance and production management, with participant selection tied to technical qualifications.

“We must ensure knowledge transfer. We cannot allow a situation where we cannot maintain what we build,” he said.

Tegbe placed the Ajaokuta talks inside a wider Nigeria-China industrial agenda covering steel, agriculture, logistics and value addition. He said the broader policy target is to reduce import dependence, create jobs, stabilise foreign exchange earnings and improve Nigeria’s trade position.

He said bilateral trade is around $23 billion, with only about $2 billion coming from Nigerian exports and more than $20 billion from imports from China. Government, he said, wants total trade to rise to $40 billion in five years while pushing Nigerian exports to at least $15 billion.

“Those are the kind of pillars and foundations that we need to be able to push our trade policy with China from $23 billion to $40 billion in five years time with a trade rebalancing of at least 15 billion dollars being exported from Nigeria. I’m not talking about non-oil exports. If we do that, we’re moving from being a developing country to a developed country,” he said.

He added: “We must stop exporting raw products. Value addition is critical if we are serious about industrialisation.”
Industry analysts say the project’s success will depend on contract discipline, transparent milestones, and steady ore-to-factory integration. For government, the immediate test is whether this round can move from negotiation into real output after decades of false starts at the national steel asset.