Friday, July 12, 2013

Nigeria-China Relations: Sinosteel Eyes $6bn Nigeria Deal

Friday, July 12, 2013
(REUTERS) - Chinese state-owned metals trader Sinosteel was in talks to take over a state-owned steel mill in Nigeria and expand its capacity to 5.6 million tons from 1.3 million, Nigeria’s mining minister said yesterday during a visit to Beijing.
The steel mill sale and upgrade would mean investment into Nigeria of about $6 billion (R60.1bn), Minister of Mines and Steel Development Musa Mohammed Sada said.
Sinosteel did not confirm or deny the talks when contacted.
Nigeria, Africa’s largest crude oil producer, is looking to China for cheap funding to help it move up the value chain from exports of raw materials, a goal that has been hampered by woeful infrastructure.
A delegation of more than a dozen ministers led by President Goodluck Jonathan is visiting China this week to solicitloans for infrastructure, which Finance Minister Ngozi Okonjo-Iweala said last week could amount to $3bn.
“We have had discussions with Sinosteel… We would hope they will be able to reach some agreement and transfer the management to them,” Sada said.
The government holds 80 percent of the mill, with the remainder held by employees and the local community.
Nigeria was delineating its iron ore deposits with a view to opening bids by the end of the year, he added.
“We have a steel programme to produce steel within the country, but the size of the deposits we have of iron ore is more than what we can consume locally, so there is also [a need for] infrastructure development,” Sada said.
During the visit, the Export-Import Bank of China agreed to lend $500 million to Nigeria to build airport terminals in Lagos, Abuja, Port Harcourt and Kano. The 20-year loan was at a 2 percent interest rate with a 30 percent local content provision, Aviation Minister Stella Oduah said.
“It’s free money, so we’re happy,” she said.
China has made several cheap loans to African nations in the past few years as it competes with Western powers such as the US for access to the continent’s abundant natural resources and growing market for imported goods.
Nigeria is seeking Chinese help to develop petrochemicals, metals smelting, roads and port infrastructure and even add cold-storage capacity at airports for exports of fresh agricultural products, to maintain economic growth that has averaged 7 percent a year for the past five years – but which economists say has been too dependent on crude oil.
China and Nigeria signed a framework agreement between the China Development Bank and Nigeria’s First Bank, details of which were not provided, as well as accords covering visas, cultural exchange and economic and technical cooperation.
The lending is part of a $7.9bn external borrowing plan approved by Nigeria’s national assembly last year as the government seeks to increase cheaper external borrowing and limit domestic debt.
Chinese companies are already active in road building, mining and construction in Nigeria, all of which require more steel.
-------Lucy Hornby from Reuters
Post a Comment