FG, African Finance Corporation Sign Landmark $1.3 Billion Alumina Deal

Project to contribute $1.2bn to GDP annually, over $25bn to Nigeria’s economy 

Set to generate $8bn in foreign exchange earnings

Emmanuel Addeh and Folalumi Alaran in Abuja 

Africa Finance Corporation (AFC) and the federal government through the Solid Minerals Development Fund (SMDF)  have signed a Memorandum of Understanding (MoU) to jointly fund  three projects: a $1.3 billion alumina project, a comprehensive geoscience mapping exercise, and an investment vehicle to realise the goals.

Alumina is a white solid that is a major constituent of many rocks, especially clays, and is found crystallised as corundum, sapphire, and other minerals.

The MoU, a statement from the ministry said, is the climax of talks between AFC and SMDF to jointly fund the construction of a $1.3 billion alumina refinery, estimated to generate 1 million tonnes bauxite ore per annum, utilising a modern Bayer-process flowsheet with an on-site gas-fired cogeneration plant for steam and power. 

The Minister of Solid Minerals Development, Dele Alake, at the signing ceremony, described it as a landmark deal, poised to transform the mining sector and increase its contribution to the nation’s Gross Domestic Product (GDP), a statement by the Special Assistant on Media to the  Minister of Solid Minerals Development, Segun Tomori, said.

The facility is designed for approximately 20 years of operation at 95 per cent utilisation, with total alumina output projected at 19 million tonnes over the project’s horizon. 

In her remarks, SMDF Executive Secretary, Hajia Fatima Shinkafi expressed delight at the historic feat, stating that  it represents the agency’s largest funding project since its inception.

“We are very proud and honoured to facilitate this phenomenal milestone, which is quite unprecedented since the inception of SMDF. It is a $1.3 billion CAPEX. SMDF has come of age to be able to sit here and sign this deal with AFC. I thank the AFC for collaborating with us to boost the value addition policy of my boss, Dele Alake”, Shinkafi added 

Expected to be Nigeria’s largest mining-sector private investment and a landmark foreign direct investment, the project will contribute $1.2 billion to GDP annually, over $25 billion to the national economy across its lifecycle, and generate $8 billion in foreign exchange earnings. 

Initial feasibility studies conducted by AFC and SMDF, it said, have confirmed the project’s competitiveness and commercial viability, validating the ministry’s efforts to position Nigeria as a globally competitive minerals destination.

This initiative delivers on the ministry’s priority of generating big data on specific minerals, de-risking exploration for international investors, and unlocking the full potential of Nigeria’s minerals.

AFC and SMDF also agreed to set up a joint strategic investment vehicle to accelerate the development of identified exploration assets across Nigeria, to drive rapid exploration, development, and production of selected exploration leases upon the execution of a successful exploration campaign. 

Permanent Secretary of the ministry, Farouk Yabo, during his remarks commended the initiative, stating that it is a testament to the transformative leadership of the minister. He emphasised that the project has the potential of putting Nigeria on the global map, expressing commitment of the ministry bureaucracy to support the project and other reforms of the minister which he stressed has repositioned the sector.

Commending the AFC and SMDF for their commitment to executing the priorities of the seven-point agenda through the deal, Alake noted the significant gains delivered by the ministry’s reform programme, which has secured the investment environment, modernised the regulatory framework, and established a world-class mineral licensing regime that is now attracting serious private sector capital.

Demonstrating the federal government’s resolve to accelerate the development of the mining sector, the minister confirmed that he had granted all necessary approvals to fast-track the AFC–SMDF investments. 

Alake directed the relevant agencies under the ministry to ensure the seamless processing and grant of all requisite permits, titles, and regulatory clearances to support the timely execution of the partnership’s investment programme.

While SMDF boss, Shinkafi signed on behalf of the federal government, Franklin Edochie, Deputy Director & Head, Metals & Mining of the African Finance Corporation (AFC) signed on behalf of the AFC while  President/CEO, AFC, Samaila Zubairu and the minister witnessed the ceremony.