By Nduka Orjinmo.
Nigeria agreed a gas deal that moves it closer to reviving a giant steel plant that hasn’t produced any metal since being built half a century ago.
The agreement with the state-owned Nigeria National Petroleum Co in July will provide Ajaokuta Steel Co with as much as 50 million standard cubic feet of gas per day as feedstock for a power plant servicing the metals complex.
That resolves a key request investors have demanded for years, managing director Nasir Naeem Abdulsalam said.
“We have had several different investors across different countries ask the same question: ‘How do we get the supply of gas?” said Abdulsalam, who was appointed in April 2025 to revive the facility.
“Without gas, you can’t operate the steel plant. You can’t operate the independent power generation that we have there. The steel plant and all its components are all powered by gas.”
Originally conceived in 1979, the Ajaokuta plant was built by Soviet-era engineers on the banks of the Niger River, about 200 kilometres south of the capital, Abuja.
Despite more than $8 billion of public investment being sunk into it over the past five decades, it’s yet to produce any steel and has become a symbol of wasteful mega projects in the West African nation.
The complex was intended to help Africa’s most populous nation reduce its dependence on oil and industrialise by tapping its vast iron-ore deposits to produce as much as 5 million tons of metal a year.
Tinubu’s steel production target
Nigerian President Bola Tinubu, who’s embarked on a series of reforms since coming to power in 2023, has set a crude-steel production target of 10 million tons annually by 2030.
With its furnaces not running, engineers at the facility have fabricated a modular blast furnace that’s currently moulding manhole covers, poles and rail tracks for a small section of the Nigerian market.
While “all options are on the table” to get the mill to start producing, a decision has been made to seek partners that can operate and finance the project over a 10 to 15-year period “and make returns to the government”, mirroring a strategy that has been adopted to revive Nigeria’s moribund oil refineries, Abdusalam said.
The project has attracted potential investors from the US and China who’ve carried out technical assessments, he said, declining to identify them.
The interested parties “have spoken to the fact that it is possible to revive the furnaces within six to seven months, and the others parts of the facility within two to three years”, he said.
Previous efforts to revive the plant failed.
Russian investors, including Tyazhpromexport, which built the original facility, have tried twice. Japan’s Kobe Steel Ltd and India’s Ispat Industries Ltd have also had no luck.
“It’s all noise,” said Yusuf Ochejah, the Russia-trained secretary general of Nigeria’s metallurgical society and a former assistant director at the mill.
The blast furnace system at the factory has never worked, nor has the steel-making section ever been tested, he said. “Any potential investor will have to put in so much resources to get anything out,” Ochejah said.
© 2026 Bloomberg.