Nigeria Wants Private Money in Steel, Even If Its Senate Doesn't

(Bloomberg) -- Nigerian President Muhammadu Buhari’s administration hopes recent private mineral deals will discourage lawmakers from demanding that the government should spend billions of dollars to resuscitate projects that failed.

In one of the larger deals, African Natural Resources & Mines Ltd., a local company with ties to Nigeria’s biggest steel producer, African Industries Ltd., discovered iron ore in Kaduna State. It plans to develop it into a $600 million integrated steel and ore company.

“Government wants, in this sector, to be more an enabler and a regulator than a participant,” Nigeria’s Mines and Steel Development Minister Abubakar Bawa Bwari said in an interview. “We don’t want to put in money there. We want everything to be private-sector driven.”

Buhari’s executive and the country’s lawmakers have been at odds this year, causing delays in appointments at the central bank and the approval of the nation’s budget. When Buhari promised to diversify Nigeria’s oil-dependent economy and create millions of jobs in a country with widespread poverty, he said the private sector would help develop farming and mining. Lawmakers, on the other hand, argue that projects like Ajaokuta Steel Co., that’s been largely idle for about four decades, should be owned by the government because the selling price may be too low, and previous private concessions failed.

The Senate on Thursday approved a bill that requires the government to spend $1 billion to complete Ajaokuta Steel. That amount could be doubled if the Senate also endorses a resolution that the government must recover Nigeria’s National Iron Ore Mining Co., or NIOMCO, from a concessionaire, and prepare it for operation. Ajaokuta Steel and NIOMCO have been dogged by ownership disputes and incomplete infrastructure.

“We made a lot of mistakes in the past, putting so much money in Ajaokuta and getting nothing out of it,” Bwari said.

The government is in the process of granting “duty waivers” for African Natural Resources & Mines Ltd. to import equipment needed to construct the iron ore and steel plants in Kagarko, Kaduna, he said.

The government is moving ahead to complete Ajaokuta Steel’s infrastructure requirements and will then select an investor to take it over, probably in the first quarter of 2019, according to Bwari. The government has completed a rail link to the steel plant, and dredged the River Niger to start receiving barges, he said

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