Nigeria’s effort to revive the $5 billion Ajaokuta Steel Plant continues to face longstanding challenges, including inadequate power supply, shortages of raw materials and poor transport infrastructure.
These constraints have undermined the country’s efforts to establish a viable domestic steel industry.
In July, the Federal Government announced a $1.5 billion to $2 billion deal with a Chinese firm to rehabilitate the plant in Kogi State.
“Our objective is clear: to secure strong technical and financial partnerships that can help us bring Ajaokuta Steel back to life. The facility has immense potential to catalyse industrial growth, boost local manufacturing, and generate thousands of direct and indirect jobs for Nigerians, the Ministry of Steel Development said in a statement.
According to the ministry, Nigeria spends an estimated $4 billion annually on steel imports.
However, during interviews with key industrial experts, BusinessDay found that the revival of the plant may not materialise until key issues with other value chains are sorted.
Stakeholders said successive efforts to revive Ajaokuta had not adequately addressed the supply chains and infrastructure needed to sustain production.
Industry experts say reducing dependence on foreign supplies will require more than restarting existing plants, it will require an integrated steel policy that coordinates power supply, mining, transport, processing and private investment.
BusinessDay checks show that the plant’s official company overview lists a thermal power facility comprising two 55-megawatt generators, totalling a combined installed capacity of 110 megawatts.
Abdullahi Kihausa, director of metals and mineral strategy at African Industries Group, told BusinessDay that Ajaokuta requires about 400 megawatts of electricity, compared with a stated captive generation capacity of 100 megawatts, implying a potential shortfall of 300 megawatts.
Nigeria’s national grid power distribution as at September stands at 4,379.07 megawatts.
Kihausa said the government needs to secure reliable electricity and involve private-sector companies with the technical capacity to address the plant’s challenges.
“Can the national grid provide the remaining power? It cannot adequately do so at the moment,” he said.
He added that Nigeria’s failure to establish a viable steel industry stemmed from its inability to treat steelmaking as an integrated value chain.
“The steel value chain covers everything from iron ore and other raw materials to processing, power, logistics, finished products and the market. If you neglect raw materials and focus only on processing, as we have done with Ajaokuta, you will not get anywhere.
“We talk repeatedly about Ajaokuta without paying enough attention to the raw materials needed to sustain production. Similarly, you cannot operate Ajaokuta without adequate power. You also need logistics to transport raw materials to the plant.”
“You cannot run Ajaokuta with budgetary allocations alone. The best approach is to identify competent private-sector companies with the necessary technical expertise, sign agreements with them, and support them in addressing some of these challenges.
“That is why we need a steel policy. Once a policy is in place, the government can clearly define its responsibilities and those of the private sector.”
He said an integrated approach was necessary because steel production depends on the availability of iron ore, other mineral inputs, electricity and transport links. Without these, investment in the plant alone would not guarantee sustained production.
Kihausa said Nigeria had not adequately developed the mining and transport arrangements required to supply the plant with raw materials.
“We are talking about raw materials, including iron ore. Iron ore is the only one for which we have established mines, while mines for other materials, such as limestone, dolomite and bauxite, have not been adequately established,” he said.
“We have also not established how these materials will be transported from the mines to the plant. So, how can production take place under these conditions?”
He called for a national steel policy and the establishment of a Steel Competitiveness Council to coordinate government agencies and private investors, set production targets and monitor implementation.
The proposed council, he said, should assign responsibilities and establish measurable milestones for investors and public institutions.
“When responsibilities are assigned to a private company, clear targets and timelines should be established. For instance, there should be specific deliverables after six months and one year,” Kihausa said.
“The government must also fulfil its own obligations. It cannot expect a private company to deliver results while failing to meet its own commitments.”
He said the policy should cover raw material supplies, power, financing, technical capacity and market access.
“If the government continues to treat Ajaokuta as an isolated project, nothing will change,” he said.
The ministry’s estimate of a $4 billion annual steel import bill highlights the potential market for domestic producers. However, local manufacturers must be able to compete on price, quality and supply reliability to capture a larger share of demand.
Steel is used in construction, manufacturing, transport equipment and machinery. Dependence on imported products exposes these sectors to foreign-exchange pressures and international supply-chain costs.
Ajaokuta was designed with an initial production capacity of 1.3 million tonnes annually, with provisions for expansion to 2.6 million and 5.2 million tonnes. Its prolonged delay has limited its contribution to domestic steel production and the industries that depend on steel.
Private investment is central to the latest efforts to expand the sector. Among the announced commitments is more than $1.3 billion for the rehabilitation and modernisation of the former Delta Steel Company, now known as Premium Steel and Mines Limited.
Another investment agreement involving Stellar Steel Company Limited concerns a planned steel facility in Ogun State.
In August 2026, the Federal Ministry of Steel Development announced that Premium Steel and Mines Limited had committed more than $1.3 billion to plant rehabilitation, modernisation and raw material development. The company aims to restore commercial operations within 18 to 24 months, subject to a sustainable supply of iron ore.
The project targets annual production of one million tonnes of liquid steel. The government also expects it to generate about 5,000 direct jobs and more than 20,000 indirect jobs, while supporting rail and maritime freight.
In October 2025, the government announced an investment agreement with Stellar Steel Company Limited, backed by Chinese parent groups, for a planned facility in Ogun State.
The project was presented as a phased development intended to expand local production and reduce dependence on imported steel.
However, like Ajaokuta, these projects’ success will depend on the availability of iron ore, supporting infrastructure and commercially viable operations.
Beyond power and raw materials, Kihausa said local producers need a policy framework that would help them compete with imported steel.
“If the government does not protect local producers, companies that manufacture steel in Nigeria will struggle to compete with imported products,” he said.
“If locally produced steel cannot compete in the market because imports are allowed without adequate safeguards, domestic production will not be sustainable.”
He called for a framework that combines private investment with financing, technical support and safeguards for local producers. Such measures, however, would need to balance the development of domestic capacity with competition, product quality and the costs faced by industries that use steel.
Isinmidun Loto, sole administrator of the National Iron Ore Mining Company, said the government could support the industry through infrastructure, incentives and measures to encourage local consumption of Nigerian-made steel.
“Government support does not necessarily mean giving companies money directly. It can involve providing essential infrastructure for steel production, including railways, electricity and other facilities needed to transport raw materials and finished products,” Loto said.
He also advocated better access to mineral-resource information and digital tracking systems to monitor the movement of materials through the supply chain.
“With digital tracking, it is possible to know when a product leaves a facility and when it arrives at its destination. These are some of the issues we need to consider,” he said.
Recycling also supplies raw materials to some Nigerian steelmakers, but experts said scrap metal alone would not meet all future demand. Expanding primary steel production would require reliable supplies of iron ore and other inputs.
The revival of Ajaokuta therefore depends on more than rehabilitating the plant. It requires a coordinated policy that secures electricity, develops mineral supplies, improves transport links and gives private investors clear responsibilities and measurable targets.
Without these measures, Nigeria risks continuing to spend billions of dollars on imported steel while its domestic production capacity remains underused.
Related News
