Business

Despite N4trn Investment, Hope Dims For Ajaokuta Steel Take-Off

Published

4 years ago

April 25, 2022

The completion of the remaining two per cent of work on the 43-year-old Ajaokuta Steel Rolling Mill, as promised by the federal government, has been ruled out this year, despite a $10 billion (about N4.155 trillion) worth of investment, Daily Trust reports.

A geologist, Professor Ibrahim Garba, said the plant’s chances of taking off are slim because it was predicated on a low-grade iron ore, an important raw material needed for the smooth operation of the rolling mill.

Prof. Garba, who served as the 14th vice-chancellor of the Ahmadu Bello University, Zaria, and also former vice chancellor of the Kano State University of Science and Technology, Wudil said it is doubtful if the steel plant will work for Nigeria.

Our correspondent reports that the professor had worked on secondment at the Federal Ministry of Mines and Steel Development, Abuja as Director-General, Nigeria Mining Cadastre Office.

He spearheaded the development and implementation of the Mining Cadastre System in Nigeria.

Prof. Garba’s verdict on the Ajaokuta Steel Mill came in the wake of renewed efforts by the federal government to salvage the plant which is almost completed.

Recall that the Minister of Mines and Steel Development, Olamilekan Adegbite, had said that the project was thwarted by the outbreak of the COVID-19 pandemic and the ongoing Russia-Ukraine war.

The minister, who disclosed this to State House reporters recently, said President Muhammadu Buhari had approved the release of $2m for the conduct of a technical audit to ascertain the condition of the facility before restarting the work.

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He said as demanded by Russian contractors, “Arrangements were being made to commence the process but COVID-19 came and put a halt to all activities, causing a force majeure.”

However, the force majeure (unforeseeable circumstances that prevent someone from fulfilling a contract) that the minister attributed as the reason for the project’s delay has been described by experts as a weak defence for the many years the project has taken without being completed.

‘Plant unlikely to function’

Prof. Garba in an interview with Daily Trust warned that the Ajaokuta plant may never work because the quality of iron ore in Nigeria is very low.

Because of this, Nigeria had to rely on Guinea’s high-grade iron ore to blend before milling the steel.

He said, “People keep saying that for every government that comes, the minister will collect billions and put it there, the money will disappear and nothing worked.

“This is because Ajaokuta was conceived at the time when we knew little about the issues. The main iron ore deposit for Ajaokuta is at Okene, in one place called Itakpe and the entire deposit is only 300 million tons, which is small and of very low quality of like 35 per cent, when you need about 50 – 60 per cent to have very efficient steel production.

“At that time, what the Nigerian government did was, having known that the Russians built it for us knowing that the iron ore was poor, they went to Guinea and arranged with one big mine in Guinea that produces very high-grade iron ore.

“In fact, Nigeria took up shares in that mine, so that they can be bringing high-grade iron ore into Nigeria to blend with our low grade to produce the steel,” the professor said.

“That is why they constructed the Alaja in Warri, by the seaside so that when importing the iron ore from there, you come to Alaja and use gas through one technology they called Direct Production and produce steel.”

According to him, this product could then be moved by rail from Itakpe to Warri, which explained the purpose of that railway line between the two towns.

“You bring the iron ore from Guinea, bring it up to Ajaokuta and blend with our own. You see, what it means is that if you need about 50 – 60 per cent iron ore, which means if the rock that contains the iron ore is 60 per cent, you have to remove all the remaining 40 per cent. And, if you have 40 per cent, you have to remove about 65 per cent as waste, and you are going to use the same energy to process these two grades of iron ore.

“So, that means you will not be making money because the people that are producing the steel are producing it from higher-grade iron ores, which means your cost of production will be very high, so you cannot compete.

“That is why for iron ore, we know we have vast amounts of it, but of low grade. We have some that are of high grade around Lokoja, but they have some components that are not wanted and very difficult to remove,” he further explained.

Only advanced technology will save the day

According to Prof. Garba, the Chinese have developed a technology of eliminating unwanted things in that iron ore.

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“So we are hoping that if we get some sense, we can actually develop those iron ores through the new technology and begin to produce steel.

“But, as of now, we cannot list iron ore as a comparative advantage in Nigeria because of this low-grade issue and so on.”

Ministry upbeat

But a source in the ministry debunked the claim on low-grade iron ore, claiming that Nigeria has high-grade iron ore to make the industry work at full capacity when completed.

The source, who did not want to be quoted, declared that if there are people who “Have evidence that Nigeria imports iron ore from Guinea, they should tender it.”

Daily Trust recalled that in the second week of this month, the minister of mines said that a local company in partnership with a British firm had offered to execute the technical audit of the Ajaokuta Steel plant at no cost to Nigeria without preconditions.

He disclosed this in a press release signed by his Special Assistant on Media, Ayodeji Adeyemi in response to claims that the Ajaokuta steel plant had been handed over to a British company for rehabilitation.

Minister Adegbite explained that when the technical audit is completed, the result would be shared with all interested investors and potential partners interested in Ajaokuta Steel Plant resuscitation, which they would use to enter their submission bids.

How FG invested over $10bn in 3 decades

While some experts argued that the billions of dollars spent on the project could have been used to develop industries for other minerals with more comparative advantage, others felt that Nigeria has been losing billions of dollars in revenue and job creation for the last 35 years.

Findings revealed that for the period that the project has lingered, the federal government had sunk over $10bn to start milling.

The project, which as far back as 1994 had reached 98 per cent completion, has the capacity to provide direct employment for 10,000 technical staff and indirectly 500,000 unskilled upstream and downstream employment, when in operation.

Sadly, till date, with all these huge investments, the multi-billion-dollar project has not produced a single steel product that can contribute to the development of Nigeria.

The integrated plant was envisaged to have multiplier effects on all sectors of the Nigerian economy such as the industrial, agriculture, transport and construction sectors, among others.

The steel plant was designed to produce 1.3 million tons of liquid steel per annum in phase one, with a built-in capacity to expand its production to 2.6 million tons of flat iron and steel products in its second phase. The plan for phase three was to produce 5.2 million tons of various types of steel products, including heavy plates.

The steel plant complex also has a highly sophisticated assemblage of 43 different plants made up of a web of complex iron, cable and machinery of different sizes and functions. Findings revealed that out of the 43 plants, 40 are already completed and can produce independently.

Also, Ajaokuta Steel has the capacity to become a major producer of industrial machinery, auto-electrical spare parts, shipbuilding, railways and carriages.

How much is Nigeria losing?

Despite these facts, the moribund company had continued to receive regular budgetary allocations and disbursements in the past six years, despite being idle.

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Reports say the government allocated a total of N20bn to the idle steel company between 2015 and 2021. Also, based on the 2022 budget details, the federal government had allocated N4.2bn to the Ajaokuta Steel Company Limited for the fiscal year.

The details show that N3.9bn was allocated to cover personnel costs, N186.9m for capital projects implementation, while N75.3m will be expended on overhead.

Under personnel costs, the federal government allocated N3bn to salaries and wages, while N924.6m was designated for allowances and social contributions.

Similarly, the sum of N97.2m was allocated for the provision of water facilities, N59.3m for the maintenance of power facilities and N30.5m for lighting, safety and security.

Nigeria’s peers making billions from steel

The foundation stone of the Ajaokuta Integrated Steel plant was laid in 1980 by a former President of Nigeria, Shehu Shagari, on 24,000 hectares of sprawling green-field landmass. It was envisaged to serve as the bedrock of Nigeria’s industrialisation.

The steel company, built by a Russian company called TyazhpromExport on 800-hectares has four different types of rolling mills inside the plant.

South Korea, which started its steel construction around the same time as Ajaokuta Steel, now has a revenue base of over $60bn per annum and employed over 65,000 staff. According to a World Steel Association (WSA) report, South Africa and Egypt produced 6.1 and 5m tons of steel in 2016. And while South Africa is the 22nd on the list of countries on steel production, Egypt is the 27th.

China, the world’s largest steel producer, topped the chart with a production of 808.4m tons, representing about 50 per cent of global steel output for 2016.

Why successive govts attempt to concede Ajaokuta

In an attempt to revamp the company, in June 2003, former President Olusegun Obasanjo conceded Ajaokuta Steel to Messrs SOLGAS ENERGY of the USA on a 10-year tenure; in August 2004, the federal government terminated the SOLGAS agreement due to non-performance.

Again, an Indian company, Global Steel Holdings Limited, won the concession of the Ajaokuta Steel Mill for a 10-year period but the agreement was revoked after the federal government accused the firm of asset stripping, a development that led to a court case between the two parties.

The federal government announced in 2016 that the legal dispute had been resolved, after it reportedly ceded the National Iron Ore Mining Company, Itakpe, to Global Steel for the remaining concession period, in line with an agreement reached during mediation talks. However, the resolution has since turned contentious. In 2016, President Muhammadu Buhari fulfilled his campaign promise on Ajaokuta Steel by settling out of court the legal bottleneck surrounding the companies.

However, the federal government signed a modified concession agreement with GINL to enable the firm to retain the National Iron Ore Mining Company, Itakpe. The modified seven-year concession agreement was signed on August 1, 2016, while the federal government took over Ajaokuta Steel.

While the federal government was planning to re-concession Ajaokuta Steel again, stakeholders in the Nigerian Metallurgical Society urged it to complete the remaining two per cent and operate the plant for a few years before concessioning it.

DAILY TRUST

Related Topics:Ajaokuta Steel Featured Investment

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Business

Why Petrol Remains Expensive Despite Dangote Refinery’s Local Production

Published

18 hours ago

September 16, 2026

Trends Admin

Why Petrol Remains Expensive Despite Dangote Refinery’s Local Production

Nigeria’s emergence as a major local refining hub has reduced the country’s dependence on imported petroleum products, but it has not insulated consumers from rising petrol prices, with the cost of crude oil, international market conditions, refinery economics and downstream distribution continuing to influence pump prices.

The development has renewed debate over why Nigerians are still paying relatively high prices for Premium Motor Spirit (PMS) despite the operation of the Dangote Petroleum Refinery, Africa’s largest refinery.

The refinery recently increased its petrol gantry price to N1,350 per litre, from N1,265, amid higher crude oil prices and rising replacement costs in the downstream market. The increase has subsequently put pressure on marketers and filling stations to adjust their pump prices.

Dangote Group President Aliko Dangote has explained that domestic refining does not automatically mean petrol will be priced independently of the international oil market because crude remains the principal raw material for refining.

The refinery therefore remains exposed to the cost of crude oil, whether the feedstock is sourced locally or imported.

This is particularly important because Nigerian crude is commercially linked to international benchmarks. As a result, producing petrol domestically removes some import-related costs but does not eliminate the underlying value of the crude used to manufacture the product.

Recent developments also show that the availability and cost of Nigerian crude oil remain central to the economics of the Dangote refinery.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that 53.7 million barrels of crude oil and condensate were supplied to local refineries between April and June 2026, representing 97.4 per cent performance under the Domestic Crude Supply Obligation (DCSO).

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At the Dangote refinery, producers offered 68.1 million barrels against the facility’s requirement of 63 million barrels during the second quarter. The refinery eventually accepted 52.6 million barrels, equivalent to about 78 per cent of the volumes offered to it.

The figures indicate that the issue is not simply whether crude is available in Nigeria, but also the commercial terms, grades, logistics and timing involved in supplying it to the refinery.

Dangote has previously raised concerns about the cost and competitiveness of some domestic crude supplies. A portion of the refinery’s crude intake has at times been imported, while the company has continued seeking ways to secure sufficient Nigerian crude at competitive prices.

The refinery’s access to domestic crude has, however, improved considerably.

Dangote secured at least 16 million barrels of Nigerian crude for October delivery, equivalent to about 520,000 barrels per day and representing most of the refinery’s 700,000-barrel-per-day capacity.

The October supply includes allocations from the Nigerian National Petroleum Company Limited (NNPCL) as well as additional crude purchased through tenders.

The refinery received an average of about 565,000 barrels per day of Nigerian crude in August, nearly twice its average intake in 2025.

The increased domestic supply could reduce the refinery’s exposure to imported crude, but it does not necessarily mean petrol prices will fall immediately.

The reason is that the cost of crude is only one component of the final price of petrol.

Other factors include refining costs, financing, storage, transportation, depot charges, distribution and retail margins. Exchange-rate movements can also affect costs linked to dollar-denominated purchases and other imported inputs.

The removal of the petrol subsidy has further changed Nigeria’s fuel-pricing structure. Rather than having the government absorb a large portion of the difference between market costs and the regulated pump price, consumers are now more directly exposed to changes in market conditions.

Consequently, movements in global crude prices can affect locally refined petrol just as they affect imported products.

The recent rise in the Dangote refinery’s petrol price demonstrates this relationship. The refinery’s latest adjustment reflected rising crude prices and increased replacement costs faced by refiners, importers and depot operators.

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The relationship between global prices and domestic petrol prices has also worked in the opposite direction when crude prices declined.

Earlier in the year, the Dangote refinery reduced its petrol price as international crude prices eased, illustrating how changes in the global market can be transmitted to locally refined products.

The refinery is also increasingly becoming a participant in the international refined-products market rather than solely a supplier to Nigeria.

The facility generated $1.82 billion in net profit during the first half of 2026, on revenue of more than $13 billion, reversing a $476 million loss recorded in 2025.

The refinery has expanded exports of jet fuel, diesel and gasoil, with the company becoming a significant supplier to international markets during disruptions to global fuel supplies.

The development demonstrates the commercial reality of operating a large refinery: refined products can be sold into domestic or international markets depending on market conditions, prices and demand.

For Nigeria, the refinery nevertheless represents a major structural change in the downstream petroleum sector.

The country previously relied heavily on imported refined petrol despite being a major crude oil producer. Increased domestic refining means more crude can be converted into petroleum products within Nigeria, reducing dependence on imported finished products and potentially improving energy security.

The refinery is also expected to expand its capacity further, with plans to increase refining capacity to 1.4 million barrels per day over the next three years.

The larger capacity could increase domestic availability of refined products and strengthen Nigeria’s position as a regional supplier.

However, greater refining capacity by itself does not guarantee permanently cheaper petrol.

For consumers, the crucial issue is how efficiently the entire petroleum value chain operates—from crude production and supply to refining, transportation, storage and retail distribution.

The Domestic Crude Supply Obligation is intended to improve access to Nigerian crude for local refineries. Increased domestic crude production and stronger commercial arrangements between producers and refiners could further improve the reliability of supply.

There are also efforts to address logistics and supply challenges, including proposals for crude-swap arrangements designed to match domestic refiners with local producers and potentially reduce delivery times and logistical complications.

If such measures improve the reliability and competitiveness of domestic crude supply, they could strengthen the economics of local refining.

For now, however, Nigerians remain exposed to a combination of global crude oil prices, domestic crude supply costs, exchange-rate pressures and downstream distribution expenses.

This means that the biggest benefit of the Dangote refinery may not necessarily be an immediate collapse in petrol prices, but a reduction in Nigeria’s dependence on imported refined fuel, greater domestic refining capacity and the potential to retain more value from the petroleum chain within the country.

The immediate challenge remains translating those structural gains into greater petrol price stability and affordability for households, businesses and transport operators.

As Dangote increases its intake of Nigerian crude and moves towards higher utilisation, the cost and reliability of its feedstock will remain critical to the price of petrol in Nigeria.

The latest developments therefore suggest that local refining has changed Nigeria’s fuel supply landscape, but it has not disconnected petrol prices from the international oil market.

Why Petrol Remains Expensive Despite Dangote Refinery’s Local Production

Auto

Jetour Targets Abuja Market with X70 PHEV as Nationwide Expansion Gathers Pace

Published

1 day ago

September 15, 2026

Trends Admin

Jetour Targets Abuja Market with X70 PHEV as Nationwide Expansion Gathers Pace

Jetour Nigeria is taking its hybrid SUV offensive to Abuja, with the X70 Plug-in Hybrid Electric Vehicle (PHEV) set to headline the three-day Jetour Experience from September 22 to 24 as the automaker accelerates its drive to expand its footprint and capture a larger share of Nigeria’s fast-evolving mobility market.

The Abuja showcase, coming on the heels of a strong Lagos edition that generated significant consumer interest, test drives and sales enquiries, is designed to bring Jetour’s latest technologies closer to customers in the Federal Capital Territory and neighbouring states.

The event at Maha Event Centre, Area 8, will give prospective buyers and auto enthusiasts the opportunity to test-drive the X70 PHEV and other Jetour models while interacting with product specialists and experiencing their technology, safety features, performance and comfort firsthand.

According to the company, expanding the showcase to the Federal Capital Territory was a direct response to rising demand from residents in Abuja and neighbouring states.

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To bolster buyer confidence, Jetour Nigeria—the country’s sole authorised distributor—backs the X70 PHEV with a five-year or 150,000-kilometre warranty.

The distributor operates through an accredited nationwide dealer network, including: Elizade Nigeria Limited,
New Era Auto Vehicle Services Limited, Kojo Motors, Germaine Auto Centre, Tab Autos Limited, R.T. Briscoe Motors, and Mandilas Autos.

The X70 PHEV pairs a 1.5-litre turbocharged engine with a 19.43kWh battery and a dedicated hybrid transmission. Designed to balance performance with fuel efficiency, the vehicle supports fast, slow, engine, and regenerative braking charging options—reducing reliance on external charging infrastructure.

Jetour’s rapid growth in the Nigerian market has earned both private and corporate patronage, driven by competitive pricing, high specification levels, and an expanding service footprint. The brand was named “Fastest Growing Auto Brand of the Year” at the 2024 Nigeria Auto Journalists Association (NAJA) Awards.

With the X70 PHEV leading the Abuja showcase, Jetour aims to deepen customer engagement and consolidate its position in the local automotive market.

Jetour Targets Abuja Market with X70 PHEV as Nationwide Expansion Gathers Pace

Business

Sanwo-Olu Joins Dangote as Historic N2.15tn Refinery IPO Opens on Nigerian Exchange

Published

2 days ago

September 15, 2026

Trends Admin

L-R: President, Aliko Dangote Group, Alhaji Aliko Dangote; Managing Director/CEO, Nigerian Exchange Group, NGX, Mr Temi Popoola; Governor of Lagos State, Mr. Babajide Sanwo-Olu and Executive Director, Commercial Operations, Dangote Group, Fatima Dangote, during the opening of Dangote Petroleum Refinery Initial Public Offer (IPO) at the NGX building, Marina, Lagos, on Monday, September 14, 2026.

Sanwo-Olu Joins Dangote as Historic N2.15tn Refinery IPO Opens on Nigerian Exchange

Lagos State Governor, Babajide Sanwo-Olu, on Monday joined business leaders, investors and capital-market stakeholders as the Initial Public Offering of the Dangote Petroleum Refinery and Petrochemicals formally opened on the Nigerian Exchange, NGX, in Lagos.

The landmark transaction, which could raise about N2.15 trillion, marks one of the biggest capital-market transactions in Nigeria’s history and gives Nigerians and other investors an opportunity to acquire a stake in Africa’s largest oil refinery.

Sanwo-Olu attended the opening ceremony at the NGX Group building in Marina, Lagos, where Dangote Industries President and Chief Executive Officer, Aliko Dangote, sounded the gong to formally commence the public offer.

The IPO comprises 4.1 billion ordinary shares priced at N525 each, with investors allowed to subscribe for a minimum of 10 shares, valued at N5,250. The offer will remain open until October 13, 2026.

The development represents a major milestone for Nigeria’s capital market, as the Dangote Refinery becomes the first refinery to be offered for public subscription on the Nigerian stock market in the 66-year history of the NGX.

The ceremony attracted an array of prominent figures from government, business and the financial sector, including NGX Group Chairman Umaru Kwairanga, NGX Group Managing Director and Chief Executive Officer Temi Popoola, Zenith Bank founder Jim Ovia, Coronation Group Chairman Aigboje Aig-Imoukhuede and Ooni of Ife, Oba Adeyeye Ogunwusi.

Also present were senior executives of Dangote Industries and representatives of the capital-market community.

Dangote described the offer as a “people’s IPO”, stressing that its primary objective was to broaden ownership of the refinery and allow ordinary Nigerians and investors across the world to participate in the wealth created by the massive industrial project.

According to him, the public offer was not primarily about raising funds for the Dangote Group, which he said already had substantial capital available for its expansion plans, but about democratising wealth creation.

The refinery is currently designed to process 700,000 barrels of crude oil per day, while Dangote Industries plans to expand its capacity to 1.4 million barrels per day over the coming years. Proceeds from the IPO are expected to support the refinery’s expansion and strengthen its capacity for future growth.

The public offer follows a $2.5 billion private placement earlier in the year, which attracted strong institutional interest. Reuters reported that the refinery is valued at about $47.6 billion, making the IPO one of the most significant equity offerings ever undertaken in Africa.

The refinery has increasingly become a strategic component of Nigeria’s energy security drive, reducing the country’s dependence on imported refined petroleum products while positioning Nigeria as a potential major exporter of refined products.

The opening of the IPO also comes at a time when the Dangote refinery has reported a sharp improvement in its financial performance. Reuters reported that the company recorded a $1.82 billion net profit in the first half of 2026, alongside revenue of more than $13 billion.

Dangote has also sought to make the offer accessible to ordinary Nigerians, with subscriptions available through digital investment platforms and other authorised channels. The minimum subscription of 10 shares means an investor can enter the offer with N5,250.

The NGX has described the transaction as an important development for the Nigerian capital market, particularly in broadening retail participation and deepening the investment culture.

For Lagos, where the refinery is located and where the historic IPO was formally launched, the development further reinforces the state’s position as Nigeria’s dominant commercial and financial centre.

With the offer running until October 13, investors will now determine whether the historic transaction achieves its N2.15 trillion target and establishes a new benchmark for public participation in Nigeria’s industrial sector.