Iron ore is an important commodity currently in high demand, due to population and infrastructure growth in developing countries, especially Nigeria.

The underdeveloped mining of iron ore in Nigeria has led the nation to import the mineral which can be produced locally. This development is expected to lead to an increase in the price of the commodity, as the nation relies solely on imported iron ore.

Why is the increase imminent

A surge in steel consumption is certain, as the world emerges from its pandemic-induced slump. This is set to drive iron ore to an unprecedented high as the biggest miners struggle to keep up with the frenzied pace of demand.

An Estate Surveyor and Developer, Tunji Lawal, told Nairametrics that expectations are that benchmark prices can get to $200 a ton – topping the record $194 hit more than a decade ago.

According to him, this is happening as Chinese steel producers ramp up production in defiance of government attempts to rein in output to control the industry’s carbon emissions.

He said, “That’s tightening an iron ore market that hadn’t fully recovered from a supply shock more than two years ago.

Iron ore prices could go higher in the short-term and exceeding $200 a ton is definitely possible and that will also push the price up in Nigeria. The price here, which is about N325,000/ton (8mm), is bound to go northward and may increase by N100,000 within a month.”

He added that the increasing demand had been boosting steel prices from Asia to North America.

The hike is not limited to steel, as other building materials are also expected to rise further.

Meanwhile, Dangote Cement, which increased from N2,600 to N3,800 barely a month ago, stands at N4,000/bag and still counting. The price may rise over N4,000 depending on market forces.

Lafarge Cement and BUA Cement also increased from N2,400 and N2,250 to N3,600 and N3,250 respectively, within the same period. Their prices may also rise further.

Tunde Oluwole, a fellow of the Nigerian Institute of Builders, explained that the development was caused by high-interest rates, inflation, increasing exchange rate and scarcity of forex in the country.

He said, “The increasing prices in Nigeria is a result of the combined effects of high-interest rates, devaluation of the naira, inflation, and non-effective distribution network of the materials.”

What you should know

The mining of minerals in Nigeria accounts for only 0.3% of its gross domestic product, due to the nation’s overdependence on its vast oil resources.

China accumulated a majority of the global iron ore imports in 2019, with a 69.1% share of total global imports. Japan followed behind distantly with a 7.5% share of iron ore imports.

Heirs Oil & Gas (HHOG), the leading African integrated energy company, has announced the appointment of Osayande Igiehon as Chief Executive Officer, effective May 4, 2021, together with a distinguished non-executive board, bringing together leading industry figures, with considerable global and regional experience.

Heirs Holdings Limited’s (HH) portfolio company, HHOG, completed the acquisition of OML17 in January 2021, in one of the largest oil and gas financings in Africa in more than a decade, with a financing component of US$1.1 billion. The transaction represents a further implementation of the HH Group strategy of creating the leading integrated energy business in Africa. Through a series of strategic portfolio holdings, HH is executing this strategy. Most recently, affiliate company, Transcorp made a US$300 million acquisition of Afam Power, increasing the Group’s installed electricity generating capacity to 2,000MW.

Mr. Igiehon, who joins from the Royal Dutch Shell (Shell), where he was previously a Vice-President with the Group in the Hague, Netherlands. He brings over twenty-seven years of experience and expertise in the oil and gas sector with Shell, where he held a series of senior management positions. Mr. Igiehon previously served as Chairman and Chief Executive Officer of Shell Gabon, where he led the successful turnaround of the operational, safety and financial performance.

HHOG is also pleased to announce the appointment of the following distinguished private sector and senior industry leaders to the Board:

• Tony O. Elumelu, CON is the Chairman of Heirs Holdings, the United Bank for Africa (UBA), Transnational Corporation of Nigeria (Transcorp), and Founder of the Tony Elumelu Foundation.
• Sally Udoma who previously served as general counsel for Chevron Europe, Eurasia, and the Middle East Exploration and Production. Previously, she was general counsel for Sasol Chevron Consulting Limited and managing counsel at the London Legal Service Centre for Chevron Global Upstream and Gas. She has also served as general counsel and general manager for Chevron Nigeria Limited.
• Anil Dua is a founding partner at Gateway Partners Limited, a private equity fund specialising in dynamic growth markets including Africa, the Middle East and Asia. Prior to this, Mr. Dua worked for over thirty-five years with Standard Chartered Bank in Asia, Africa, Europe and the US, where he held various roles including Regional CEO West Africa and Regional Head of Origination and Client Coverage, Africa.
• Ahmadu Kida Musa who previously served as Deputy Managing Director of Total Exploration and Production Nigeria Limited, has over thirty-two years of experience in the Oil and Gas industry and brings considerable expertise in Nigerian oil and gas.
• Stanley Lawson currently serves on the board of Transnational Corporation of Nigeria Plc. He is Managing Partner at Financial Advisory & Investment Consultants Ltd. Dr Lawson previously occupied the position of Group Executive Director-Finance & Accounts at Nigerian National Petroleum Corp.
• Samuel Nwanze is the Chief Finance Officer at Heirs Oil and Gas. Prior to this he was the Chief Investment Officer at Heirs Holdings responsible for investment and capital management.

Commenting, Mr. Igiehon stated:

“HHOG represents an extraordinary opportunity, to create Africa’s first true integrated energy company, with a mission to ensure that Africa’s natural resources are directed toward value creation in Africa, powered by sustainable, robust and abundant African energy. I am excited to join the Heirs Oil and Gas leadership team and look forward to the opportunity to transform the energy sector, purposefully address Africa’s energy needs and improve the lives of people across Africa.”

The Chairman of the Board, Tony O. Elumelu, CON, stated: “I am delighted to welcome our new board members. We are building a role model institution for African businesses and our investment in human capital is a further strong demonstration of our intent. The regional and global expertise of our board members will serve to further drive value creation to our continent, as we execute our goal of becoming Africa’s largest, indigenous, integrated, energy company.”

Heirs Oil & Gas is a leading African, indigenous owned, integrated energy company, headquartered in Nigeria, whose assets include Nigerian oil block OML17, with a current production capacity of 30,000 barrels of oil equivalent per day and 2P reserves of 1.2 billion barrels of oil equivalent, with an additional 1 billion barrels of oil equivalent resources of further exploration potential.

Heirs Oil & Gas (HHOG) is jointly owned by Heirs Holdings, the leading African strategic investor and affiliate company Transnational Corporation of Nigeria Plc (Transcorp), Nigeria’s largest publicly listed conglomerate.