China’s Sinosteel in talks to acquire Ajaokuta Steel Mill

[Mirror]

Chinese stateowned metals trader Sinosteel, is holding discussions with the Federal Government concerning the takeover of Ajaokuta Steel Mill and expanding its capacity to 5.6 million tonnes from 1.3 million tonnes per annum.

Minister of Mines and Steel Development Musa Mohammed Sada told Reuters yesterday in Beijing that the deal would mean investment of about $6 billion coming into Nigeria.

Sinosteel did not confirm or deny the talks about which particular steel mill was being considered but given the capacity mentioned, the steel mill in question appears to be Ajaokuta which has a design capacity of 1.3 million tonnes.

Nigeria is looking to China for cheap funding to help it move up the value chain from exports of raw materials, a goal that has been hampered by woeful infrastructure.

A delegation of over a dozen ministers led by President Goodluck Jonathan is currently in China soliciting loans for infrastructure that Finance Minister Ngozi Okonjo-Iweala said last week could amount to $3 billion.

"We have had discussions with Sinosteel... We would hope they will be able to reach some agreement and transfer the management to them," he said. The government holds 80 per cent of the mill, with the remainder held by employees and the local community.

Nigeria is delineating its iron ore deposits with a view to opening bids by the end of the year, he added

"We have a steel programme to produce steel within the country, but the size of the deposits we have of iron ore is more than what we can consume locally, so there is also (a need for) infrastructure development," Sada said.

During the visit, China Exim Bank agreed to lend $500 million to Nigeria to build airport terminals in Lagos, Abuja, Port Harcourt and Kano. The 20-year loan is at a two percent interest rate with a 30 per cent local content provision, Aviation Minister Stella Oduah said. "It's free money, so we're happy," she said.

China, the world's most populous country and second-largest economy, has made several cheap loans to African nations in the past few years as it competes with Western powers like the United States for access to the continent's abundant natural resources and growing market for imported goods.

Nigeria is seeking Chinese help to develop petrochemicals, metals smelting, roads and port infrastructure and even add cold-storage capacity at airports for exports of fresh agricultural products, to maintain economic growth that has averaged seven per cent a year for the past five years – but which economists say has been too dependent on crude oil.

National Mirror