The Federal government of Nigeria has disclosed that it is expecting an annual output of one million metric tonnes of steel from its $1.5 billion steel plant in Kaduna.

This was disclosed by the Minister of Finance, Budget and National Planning, Mrs Zainab Shamsuna Ahmed while inspecting the steel plant facility at the African Natural Resouces and Mines Limited in Kaduna.

READ: Why Ajaokuta Cannot Make Steel

READ: CBN restricts forex for milk import to Nestle, Chi, Friesland, 3 others

According to The Punch, Mrs Zainab Ahmed during the inspection of the facility said that the $1.5 billion steel plant which is now nearing completion, would produce one million metric tonnes of steel annually. She emphasized that the facility is critical to the nation as it is tactical to the looming steel revolution in Nigeria.

READ: Maize Scarcity: Premier Feeds, Crown Flour, 2 others import 262,000MT of Maize

What you should know

The $1.5 billion steel plant built by African Resources and Mines Limited, a subsidiary of African Industries Group (AIG) is at an advanced stage of completion.

The plant which is billed to commence the first phase of production in the mining of Iron ore, and production of Direct Reduced Iron in a matter of months is expected to produce one million metric tonnes of steel annually.

(READ MORE:FG to provide support to Aviation investors)

Why this matters

This development is expected to resuscitate Nigeria’s steel industry which has been lifeless for a while, and help put an end to the importation of steel in Nigeria. This will also reduce the pressure on the Nation’s foreign reserve, and bolster the foreign reserve of the country.

It is expected to boost domestic steel production and attract foreign investors’ participation in the industry, especially auto producers around the world.

However, the facility will create employment opportunities for Nigerians both directly and directly and indirectly.

READ: House of Representatives oppose concession of Ajaokuta Steel Plant

What they are saying

Alok Gupta, the Group Managing Director of AIG, said the firm would be mining iron ore to produce direct reduced iron, which would enable the company to produce higher-grade steel more efficiently.

He explained that the investment by the company in the Nation’s steel industry will dramatically increase domestic production, and this will have multiple effects on the Nigerian economy.

READ: CBN moves to reduce cassava derivatives import worth $600 million  

READ MORE:FG slashes 2020 budget by N318 billion, sends to NASS

The Minister of Finance emphasized that the recent investment in the steel industry by AIG which is about to yield gains both for the company and the economy will attract the auto industries of the world to come into Nigeria and produce cars in Nigeria for Nigerians, and other countries in West Africa.

READ: Kachikwu advocates refineries repair as petrol landing cost reaches N180 per litre

Bottomline

The investment of AIG in the steel industry is expected to drive the country towards steel independence, and pave the way for Nigeria’s steel revolution and the development of the automobile industry in the nation.

Explore Data on the Nairametrics Research Website

Download the Nairametrics News App

Gold remained under pressure at the pre-opening of London’s trading session on Monday. The pressure seen on the precious metal is largely attributed to the U.S dollar rebounding and expectations growing for the U.S. Congress passage of the latest stimulus deal ahead of the Nov. 3 presidential election.

At the time of writing, gold futures prices traded around 1,905/ounce remaining above the $1,900/ounce. The U.S dollar Index was steady in Asia’s trading, up 0.8%.

U.S speaker, Nancy Pelosi, has set a Tuesday deadline for its lawmakers in passing the deal and is hopeful that such a deadline could be met. President Trump also renewed an offer to increase the stimulus deal package.

READ: Gold prices up as U.S dollar value drops

Quick Fact: Global Investors buy the hard safe haven asset mainly to hedge against inflation and for wealth preservation.

• Humans are emotionally and physically drawn to gold.
• Gold traders, global investors also consider buying gold as a way of diversifying risk, via using futures contracts and derivatives

In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on major prevailing fundamentals affecting the precious metal’s prices.

READ: Gold prices shoot up, U.S dollar drops

“Gold prices were pushed down to US$1,900/ounce on Friday, primarily by good retail sales data, which showed sales rising 1.9% m-o-m, above expectations of 0.8%.

“That would seem to suggest that gold could be sensitive to the degree regarding more or less monetary accommodation from the US Federal Reserve, where more robust data will elicit a less dovish response from the central bank.

READ: Ripple owners say XRP will be worth $100

Near term, direction defaults back to the US dollar and US equity market movement. Gold has found a friend in the Yuan, which is holding the US dollar “safe -haven “ambitions in check.

Fiscal policy support has been a critical support factor for gold, and if there is one sure thing, the stimulus is coming.”

READ: London Stock Exchange seals $5billion Borsa Italiana sale

Last month, reports making the news confirming Saudi Arabia’s Finance Ministry budgeting oil prices to be around $50 a barrel for the next three years.

This was according to analysis of the kingdom’s fiscal plans by Goldman Sachs Group Inc. The investment bank said; “Using our own estimates for the breakdown of government revenues, we calculate that the numbers presented in the budget statement are based on an average oil price of around $50 a barrel between 2020 and 2023”. Although $50 is less than what Saudi Arabia needs to balance its budget, it is in line with global realities.

READ: Fuel prices: Information Minister defends President Buhari’s comparison of Saudi with Nigeria

In their weekly outlook, OCBC Bank expects “Brent to trend from $40-$43/barrel, as we head ever closer to the US Presidential elections”. Brent has been trending in the range for the past few months. Prices have been supported by hurricane in the U.S and the Gulf of Mexico and OPEC+ compliance levels which have restricted supply. However, what has limited an increase is capped demand and an increase in Covid-19 cases.

READ: Standard Chartered further supports fight against COVID-19 with $50 million assistance fund

This is in addition to what Goldman Sachs said as they assessed what a Joe Biden win will mean for Oil as it will increase costs for the shale patch and will likely result in a weaker U.S. dollar. The investment bank expects a Biden Administration will tighten regulation, taxes, methane restrictions, and new drilling for the oil industry, which will raise the cost of U.S. shale production, leading to “shale supply headwinds.”

READ: Where is oil headed in the short term?

With Libya restarting its biggest oilfield, Sharara, oil supply seems to be coming online with the lifting of force majeure at the Sharara oilfield. A Libyan source told the Reuters news that initial output at Sharara would be 40,000bpd, with total production in the country at 355,000bpd.

READ: Goldman Sachs misses Q1 profit projection, drops by 46%

Conclusively, it appears that coronavirus relief aid negotiations and stimulus in the US seem to be weighing in on market sentiment and making it difficult for crude oil to attract investors. Although winter is approaching which means more heating and demand for oil, it is tough for oil prices to reach $50.