Nigeria seeks steel growth from untapped iron ore reserves

Nigeria is sitting on approximately three billion tonnes of iron ore reserves, but the country’s long-delayed steel ambitions remain tied to more than just the availability of raw materials. The National Steel Raw Materials Exploration Agency says further exploration, credible geological data, funding and reliable off-takers are needed to turn the country’s mineral wealth into steel, jobs and industrial growth. DAMILOLA AINA writes

for decades, Nigeria has talked about the enormous mineral wealth beneath its soil. Iron ore, coal, limestone, gold, lithium and tin have all been identified as resources capable of supporting industrial growth.

But identifying mineral deposits is not the same as building factories, creating jobs or developing an industrial economy. That is the challenge facing Nigeria’s long-delayed steel development programme.

President Bola Tinubu has repeatedly stressed that identifying natural resources, including iron ore, coal, limestone, gold, lithium and tin, is not enough to build factories or create jobs. He has also condemned the exploitation of Africa’s critical minerals and called for an end to the practice of extracting raw resources, such as iron ore, for export without adding value.

The President is advocating a united African approach to ensure that the continent derives greater value from its mineral wealth through local processing, job creation and technology development.

Against this backdrop, the National Steel Raw Materials Exploration Agency says Nigeria has about three billion tonnes of unused iron ore reserves that could provide raw materials for steel production at the Ajaokuta Steel Complex in Kogi State when the plant becomes operational.

However, the agency says further exploration, laboratory testing, modern geological data and adequate funding remain necessary to properly establish the quality, quantity and commercial viability of the country’s mineral resources.

The Director-General of the agency, Kolawole Ogunbiyi, made this known recently in Kaduna while speaking on the availability of raw materials for the steel industry.

He said, “To adhere strictly to the presidential pronouncement, the National Steel Raw Materials Exploration Agency has announced that it has three billion tonnes of unused iron-ore reserve expected to serve as raw material for the production of steel at the Ajaokuta rolling complex in Kogi State, when the plant finally comes on stream”

According to him, the country has sufficient raw materials to support steel production, particularly iron ore from Itakpe, but more work is required to fully establish the reserves and prepare the entire value chain.

He described Itakpe iron ore as the flagship of Nigeria’s steel raw materials, saying its quality and quantity had been subjected to laboratory tests.

He said, “When the Federal Government resolved to invest and develop the steel sector, and harness its potentials, what was very significant was the source of raw materials, and that was how NSRMEA was established to explore and determine the quality and quantity of raw materials available in Nigeria for the iron and steel industry.”

Ogunbiyi said iron ore constituted about 95 per cent of the raw materials required for steel production, while limestone and coal made up the remaining five per cent.

He explained that the government had conducted aeromagnetic surveys to identify areas with high prospects for iron ore deposits and guide decisions on the location of steel plants.

“In the designed plan for exploration and building of the steel plants, the Federal Government had effective collaboration with the Russian government, which came in and worked with geologists in this agency, leading to identifying the iron ore in Itakpe owned and mined by National Iron-Ore Mining Company,” he said.

The DG described the Itakpe deposit as important to the steel industry because of its quantity and relatively low level of impurities. He, however, noted that the steel value chain could not be completed with iron ore alone, stressing the importance of limestone and coal.

According to him, limestone resources are currently being licensed to cement manufacturers because the Ajaokuta steel plant has yet to commence full operations.

The situation reflects one of the major problems confronting Nigeria’s mining and steel industries: the country has mineral deposits, but many of the resources remain disconnected from industrial users.

Ogunbiyi said the iron ore at Itakpe could not be fully mined because there were no sufficient off-takers, particularly the Ajaokuta steel plant, which was designed to receive a significant portion of the raw materials for steel production.

“When the initiative to develop the steel sector was put together, they were all given responsibilities; the steel raw materials agency was to explore, while Itakpe was to mine and give to Ajaokuta for steel production,” he said.

The original plan was for the various agencies and steel plants to operate as parts of an integrated industrial system. The exploration agency was expected to identify and establish the raw materials. The mining company was to extract the iron ore, while Ajaokuta was expected to process it into steel.

But the failure of the steel plant to operate at full capacity has affected the entire chain. Ogunbiyi said the country’s steel development plan had also involved cooperation with Russia to conduct exploration and collect samples for testing.

The objective was to determine whether locally available coal could meet the requirements for steel production and power generation.

“There is coal in Obi-Lafia in Nasarawa State; it is found in large quantity, but the impurities must be extracted because the less ash content, the better for production. However, we have to establish the mineral quality of the coal so we can reduce importation of coal to Nigeria, so we are asking the government to help us to commence the in-seam exploration of coal in Nasarawa State, Nigeria,” he said.

He stressed that the country could not rely on assumptions when dealing with strategic industrial minerals. “We have a standard laboratory, you must have all these, because if you go to the field to search for a particular material, for you to know how viable the material is, you must subject it to laboratory test and if it falls within the threshold of steel production, then we carry out detail exploration to establish its reserve to determine its viability of the project,” Ogunbiyi said.

This is where the agency says funding has become critical. The NSRMEA requires more resources to expand field exploration, improve its laboratory capacity and acquire modern technology, including drones capable of covering large areas during geological surveys.

For Ogunbiyi, the availability of raw materials should not be allowed to become an excuse for the failure of Nigeria’s steel industry. He said the Minister of Steel Development, Prince Shuaibu Audu, had been engaging international partners to support the revival of steel production in Nigeria.

He also called for greater collaboration with experts and technology-driven foreign investors to develop the sector and connect Nigeria’s steel industry to the global market.

The Federal Government has also identified improved geological data as a major requirement for attracting foreign direct investment into mining and mineral processing.

This task formed the Early-Stage Mineral Exploration and Research Grant Endowment initiative in a fresh push to accelerate mineral exploration, support research institutions and promote local processing of Nigeria’s vast mineral resources.

This programme is expected to provide catalytic funding for explorers, universities and companies involved in critical minerals development, while addressing longstanding financing gaps that have hindered the growth of the mining sector.

Speaking during his address at the launch, the mines and steel minister, Dele Alake, described the programme as a strategic intervention under the Federal Government’s reform agenda aimed at repositioning the solid minerals sector as a major contributor to economic diversification and industrial development.

The minister said EMERGE would operate through three strategic streams designed to address the critical gaps within the mining value chain. “This brings me to EMERGE and to why it matters so much. EMERGE works through three streams. The Exploration Stream funds the grassroots, early-stage work that finds and proves new mineral deposits.

“The Critical Minerals Stream funds both the search for the minerals that the global energy transition demands and the processing technologies that allow us to refine them here in Nigeria.

“The Research and Development Stream funds the geoscience and mineral-processing research that underpins all of this. It is this combination, and the Critical Minerals Stream in particular, that begins the real domestication of our value chains because, for the first time, we are funding not only the digging but also the science of turning what we dig into finished, higher-value products on Nigerian soil.”

Through its Early-Stage Mineral Exploration and Research Grant Endowment programme, the government is seeking to unlock more than $750bn in estimated untapped mineral wealth by reducing the risks associated with mineral exploration and encouraging investment in the sector.

The programme focuses on minerals including iron ore, limestone, coal, gold and lithium.

For investors, the question is no longer simply whether Nigeria has minerals.

The more important questions are how much of each mineral exists, where the deposits are located, what their quality is and whether the resources can be commercially mined.

However, an industry expert who spoke on condition of anonymity, as he was not authorised to speak on the matter, said the distinction between probable and proven reserves was critical to attracting serious investors.

“There is a difference between probable reserve and proven reserve. People speculate a lot. The proven reserve is what investors want. The probable reserve is guesswork. Everyone is talking about it, but they have not been able to prove it,” the expert said.

The expert said Nigeria needed to provide reliable geological data if it wanted to attract long-term investment into the mining sector.

“We appreciate what the government is doing. We have a lot of minerals in this country. Investors want to come, but they want real data, not that we would give them guesswork. Once you mislead them, they back off. So the government has to put out the real data, and it must be genuine,” the expert added.

The issue is particularly important for the steel industry, which requires a continuous and reliable supply of raw materials.

Nigeria’s steel development plan had envisaged integrated plants in Kogi and Delta states, using different technologies and raw material concentrations to support a diversified steel market.

The objective was to create an industrial base capable of supplying steel for construction, manufacturing, infrastructure and other sectors of the economy. But the success of that plan depends on more than the existence of iron ore deposits.

It requires proven reserves, functioning mines, reliable power, processing facilities, technology, investment and industrial consumers capable of buying the finished products.

This is why the NSRMEA says exploration must continue. The agency’s position is that Nigeria cannot develop a competitive steel industry by relying on old geological information or unverified estimates of mineral wealth.

The country must continue to explore, test and establish its reserves. For Nigeria, the revival of the steel industry therefore begins long before iron ore enters a furnace. It begins with the quality of the geological data, the reliability of the reserves and the ability to connect the resources to mines, factories and markets.

Until that chain is completed, billions of tonnes of iron ore may remain valuable in the ground but unavailable to the industrial economy.

And as Nigeria seeks to move away from an oil-dependent economy, the success of its mineral strategy will depend on whether it can turn geological potential into proven reserves, raw materials into steel and mineral wealth into jobs and industrial growth.