Nigeria has entered into a $1.2 billion agreement with Chinese state-owned engineering firm, CNCEC, to revive a critical gas processing plant linked to the country’s aluminium production.
This was disclosed by the Minister of Petroleum Resources (gas), Epkerikpe Ekpo, on Monday, according to a report by Reuters.
Ekpo revealed that the contract was signed with BFI Group, the core investor in the Aluminum Smelter Company of Nigeria (ALSCON), marking a significant step towards restarting the dormant smelter in Akwa Ibom after years of inactivity caused by legal disputes and financial challenges.
The deal will see CNCEC resuscitate the 135 million standard cubic feet per day gas processing plant at the smelter, which has the capacity to produce 300,000 tons of aluminium annually.
The Minister also mentioned that the plant’s revival will enable Nigeria to develop various stages of aluminium production, positioning the nation as a leading aluminium producer in Africa and on the global stage.
Once operational, the plant is projected to produce one million tons of aluminium annually and generate up to 540 megawatts of electricity, contributing significantly to the country’s industrial and energy sectors.
Backstory
Nairametrics reported earlier this year that ALSCON’s Managing Director, Dmitriy Zaviyalov, revealed that restarting the plant would require a $500 million investment.
- The funds would be allocated towards reviving dormant equipment and acquiring power-generating sets to address energy challenges.
- During a visit to President Bola Tinubu at the State House in Abuja, ALSCON Chairman Alexey Arnautov reiterated the critical need for the investment.
- According to a statement by Ajuri Ngelale, Special Adviser to the President on Media and Publicity, Arnautov emphasized that deploying $500 million within a defined timeline could significantly improve the company’s operations and contribute to Nigeria’s industrial growth.
What you should know
The Aluminium Smelter Company of Nigeria (ALSCON), established in 1997, ceased operations in 2000. In 2007, United Company RUSAL (UC RUSAL), a Russian conglomerate, acquired an 85% stake in the plant, leaving the Nigerian government with the remaining shares.
- After acquiring ALSCON, RUSAL undertook modernization efforts, boosting the facility’s annual production capacity to 193,000 tonnes of aluminium. However, operations were suspended in March 2013 due to unreliable gas supply, rendering production economically unfeasible.
- Despite various government initiatives to restore operations, progress has been limited.
- In July 2023, Vice President Kashim Shettima engaged UC RUSAL and other stakeholders during the Russia-Africa Summit to deliberate on reactivating the plant