FG, Firm Seal $400m Deal to Strengthen Nigeria’s Steel Production

The Federal Ministry of Steel Development and Stellar Steel Company Limited (a subsidiary of China’s Inner Galaxy Group) formally signed a US$400 million Joint Strategic Cooperation Declaration in Abuja on October 28 2025 for the construction of a modern steel plant in Ewekoro, Ogun State. 

✅ Key Details

• According to the ministry, the facility will be built in three phases, with the first phase expected to begin production by mid-2026. 

• The deal is part of Nigeria’s broader goal to produce 10 million tonnes of crude steel per annum by 2030. 

• The plant will among other things develop a localised iron ore supply chain to reduce import dependence, save over US$1 billion in foreign exchange annually, and create more than 2,000 direct and 20,000 indirect jobs across the steel value chain. 

• The ministry emphasised that the government will provide enabling infrastructure and policy support including inclusion of the firm’s logistics projects in the National Infrastructure Plan, fiscal incentives and regulatory facilitation. 

• The signing was endorsed by the Minister of Steel Development, Prince Shuaibu Abubakar Audu, and the Chinese delegation led by Mr. Li Shuang of Inner Galaxy. 

📊 Why It Matters

• The agreement signals a substantial foreign-direct-investment (FDI) commitment into Nigeria’s steel and heavy-industry sector, which has lagged for decades.

• By targeting a large scale plant and supporting infrastructure, the initiative could stimulate downstream manufacturing, construction, and strategic sectors—potentially positioning Nigeria as a regional steel hub.

• The emphasis on local supply chains, job creation and import substitution aligns with the government’s industrialisation agenda and efforts to diversify the economy away from heavy reliance on raw-material exports.

• By committing to green and energy-efficient technologies in steel production, the project also intersects with global trends around clean manufacturing and sustainability.

⚠ Areas to Watch / Challenges

• Implementation risk: buildings of this scale require timely delivery, operational efficiency and sustained government support. Delays or cost overruns could undermine outcomes.

• Ensuring that the jobs and local-skills-transfer promised are delivered in practice rather than remaining headline figures.

• Avoiding import-dependence under a new guise – the local supply chain commitments must be honoured, not just announced.

• Transparency and accountability: large projects often face governance risks, and public expectations are high given past industrial-sector disappointments.

• Infrastructure & logistics: the plant is located in Ogun State and will need reliable power, transport, raw material access, and regulatory stability for full success.

🧭 Conclusion

The $400 million deal between the Federal Government and Stellar Steel marks a major step for Nigeria’s steel sector revival. If executed effectively, it could foster significant jobs, industrial output, and import-substitution benefits. But as with all large-scale industrial deals, the proof will lie in delivery, not just in the signing ceremony.

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