The Federal Government has entered into an agreement with Premium Steel and Mines Limited (PSML) to resuscitate and fully reactivate the defunct Delta Steel Company at Ovwian-Aladja, Delta State with over $1.3 billion committed to the project.
The agreement between the National Iron Ore Mining Company (NIOMCO), Itakpe and PSML is planned to establish the framework for the rehabilitation and upgrading of the long dormant integrated steel plant.
The deal involves PSML investing more than $1.3 billion in raw-material exploration and exploitation, as well as the rehabilitation and modernisation of the steel mill.
The company plans to ramp up the factory to its installed capacity of one million tonnes of liquid steel per annum and expects commercial operations within 18 to 24 months, provided sustainable iron-ore supplies can be secured.
The Federal Government is touting the discovery as a significant step toward reviving Nigeria’s steel industry and reducing the country’s dependence on imported steel products.
Minister of Steel Development, Prince Shuaibu Abubakar Audu, said the revival was in line with the Renewed Hope Agenda of President Bola Ahmed Tinubu and the administration’s efforts to boost domestic manufacturing, generate jobs and grow Nigeria’s industrial capacity.
The ministry said the project will generate about 5,000 direct jobs and more than 20,000 indirect jobs.
It is also to contribute to Nigeria’s objective of generating 10 million tonnes of liquid steel annually by 2030.
Access to iron ore and other raw materials needed for sustained manufacturing is one of the main elements of the deal.
The project, according to the government, would contribute to the reactivation of NIOMCO at Itakpe and the development of Ajabanoko iron ore resources, thereby making the supply chain for the Delta Steel plant more dependable.
The revival is also projected to stimulate freight circulation on the Central Rail Line and improve utilisation of the Delta Steel Company jetty, which might enhance linkages between mining areas, the steel plant and industrial consumers.
The Delta Steel plant was commissioned in 1982 as an integrated steel plant with installed capacity of one million tonnes of liquid steel per annum.
But the factory could not run to the specified capacity and ultimately it stopped working as an integrated steel plant.
The Federal Government then explored privatisation as part of efforts to bring private finance into the facility. It was privatised in 2005 and was sold to Premium Steel and Mines Limited by the Asset Management Corporation of Nigeria (AMCON) in 2015.
The mill has been mostly idle since 2015, making the recent deal one of the biggest such efforts in years to restore its original industrial role.
The new arrangement must deliver real mining development, rehabilitation of plants, commercial production and sustainable jobs within the specified time frame, the Federal Government said.
A resurrection of Delta Steel would be a boon for Nigeria, helping the indigenous steel industry, underpinning construction and manufacturing and reducing strain on foreign currencies required to buy in steel and helping the country’s wider industrialisation objectives.
The challenge for the government and PSML will now be to make good on the financial promise and turn that into actual production. Reliable iron-ore supply, power, infrastructure and logistics are likely to be key to the project’s success.
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