The Nigerian mining sector made another giant stride over the weekend as Chart and Capstone Integrated Limited and a Chinese firm, Sinomach-He, signed a memorandum of understanding (MoU) on the proposed $1 billion (N1.6 trillion) iron ore-to-steel project planned in Kogi.

In a statement released on Sunday, the MoU was presented to the Minister of Solid Minerals Development, Dele Alake, by the Chief Executive Officer (CEO) of Chart and Capstone Integrated Limited, Abel Edijala.

Under the agreement, according to the statement, Sinomach-He will serve as the master contractor, utilizing its expertise in engineering, procurement, installation, commissioning, and training for the project.

Edijala then showered encomiums on the minister for his role in implementing an efficient licensing process “free of red tape and corruption”.

“We applied for an exploration license for our iron ore mining project at the Mining Cadastral Office, and we did not need to see anybody before our application was approved within a reasonable period,” Edijala was quoted as saying.

“This shows that the system you have put in place is fair and works for all. I must commend you for this.”

Commenting on the project, Edijala said the model involves the supply of steel from the iron ore site to the manufacturing plant, which will expand to meet the industrialization needs of the Nigerian economy.

He posited that the project would require tax waivers for the importation of equipment and tax holidays during the initial phase to manage macroeconomic fluctuations and achieve its targets.

In his words, the Vice-Manager of Sinomach-He, Hou Encai, emphasized the company’s readiness to commence the project, noting that the state-owned firm, established in 1958, has over 15,000 employees, including 2,000 engineers, to support its operations.

He revealed the company is involved in mining, iron production, steel rolling, steel manufacturing, and infrastructure construction, and it supplies 80 percent of the steel required by the Chinese economy.

“In mining, we have the technology on how to excavate the ores from the earth. We can evaluate the iron ore potential of any site and tell you what the feasibility of mineral extraction is on a site,” he said.

“Secondly, we have the equipment needed, including excavators and drilling machines for mining iron ore. For transportation of iron ore from the site to the factory, my group produces the trucks,” Hou said.

In his remarks, Alake assured the companies of the government’s cooperation to expedite the project’s completion.

The minister lauded the project as a major breakthrough in the government’s drive for local value addition in the solid minerals sector.

Alake said the government has reversed the pit-to-port policy, where mining companies exported raw minerals, focusing instead on local extraction and value addition.

The minister said the shift is the most effective way to create jobs for youths, facilitate skills transfer, and improve the trade balance between the country and its trading partners.

To promote local value addition, he said his ministry introduced a requirement for mining license applicants to include plans for processing raw minerals as a condition for approval.
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“The trade balance between Nigeria and China is over one billion dollars in favor of China because the minerals imported from Nigeria are essentially in raw form.

“Once Nigeria starts to export finished or semi-finished value-added mineral products to China and other trading partners, our balance of trade will be more favorable, and our foreign exchange earnings will improve.

“With aggressive local value addition and the revenue from it, the prospects of reducing our debt burden in the nearest future is possible,” Alake said.

Other attendees at the meeting included He Lixiong, Executive Secretary-General of the Working Committee for Overseas Cooperation of the China Association of Small and Medium Enterprises; Innocent Okonkwo, Chairman of the Belt and Road Africa Economic Initiative; Li Ke, General Manager of Sinomach-He Overseas; and Deng Shiyuan, Senior Project Manager.