Lagos – Nigeria has signed a landmark $1.2 billion deal with the Chinese state-owned China National Chemical Engineering Company (CNCEC) to revive a crucial gas processing facility, a strategic move aimed at reinvigorating the Aluminum Smelter Company of Nigeria (ALSCON) and positioning the country as a global leader in aluminum production.
The agreement, announced by the Minister of State for Gas, Ekperikpe Ekpo, via social media on Tuesday, underscores Nigeria’s ambitions to diversify its economy beyond oil dependency.
The gas plant, with a processing capacity of 135 million standard cubic feet of gas per day (MMSCFD), will provide essential energy for ALSCON’s smelting operations, which have been stalled for years due to operational and financial challenges.
Minister Ekpo highlighted the deal as a “significant investment” that will restore ALSCON’s operations and establish Nigeria as a top aluminum producer serving both domestic and international markets.
Once operational, the ALSCON plant is expected to significantly increase Nigeria’s annual aluminum output, potentially surpassing its historic production peak of 197,000 metric tons.
This would position the country as a major player in the global aluminum market, comparable to other leading producers such as Russia (3.6 million metric tons annually) and China (39 million metric tons annually).
The project is also set to contribute to Nigeria’s economic diversification efforts. The aluminum industry, with a global market value of over $160 billion, presents substantial opportunities for revenue generation and industrial growth. By tapping into this potential, Nigeria aims to reduce its reliance on crude oil, which currently accounts for over 80% of export revenue.
This agreement marks another milestone in the deepening economic ties between Nigeria and China. Since the 2016 visit of former President Muhammadu Buhari to Chinese President Xi Jinping, bilateral relations have flourished.
Over the past eight years, Chinese investments in Nigeria have exceeded $10 billion, encompassing key infrastructure projects such as railways, highways, and power plants. China is now one of Nigeria’s largest trading partners, with trade volumes reaching $26 billion in 2023.
The ALSCON revitalization project is part of a broader strategy by both nations to enhance industrial capacity in Nigeria. China’s involvement in the gas and aluminum sectors also aligns with its Belt and Road Initiative, which seeks to bolster global infrastructure connectivity.
The gas plant refurbishment and ALSCON’s subsequent reactivation are expected to create over 5,000 jobs, including direct employment during the construction phase and operational roles once the plant is fully functional.
Additionally, ancillary industries in logistics, transportation, and energy are likely to benefit, creating an estimated 15,000 indirect jobs. The project is projected to add approximately $150 million annually to Nigeria’s tax revenue and stimulate further investment in the country’s industrial sector.
Despite the promising potential, experts caution that the project faces several challenges, including financing, infrastructure gaps, and potential delays in execution. However, the government has expressed confidence in its ability to navigate these obstacles.
Minister Ekpo emphasized the importance of leveraging Nigeria’s abundant natural gas reserves, estimated at 206 trillion cubic feet, to drive industrialization and economic growth.
If successful, this project could signal a turning point for Nigeria’s manufacturing sector, establishing the country as a hub for aluminum production in Africa and beyond. By leveraging partnerships like this, Nigeria aims to enhance its global competitiveness and solidify its role as a leader in Africa’s economic transformation.
