Nigeria has entered into a $1.2 billion agreement with China National Chemical Engineering Corporation (CNCEC), a state-owned Chinese engineering firm, to revive a critical gas processing plant that supports the Aluminum Smelter Company of Nigeria (ALSCON). The deal marks a significant milestone in the country’s efforts to restart the dormant aluminium smelter in Akwa Ibom state, a key asset in Nigeria’s aluminium production and energy sectors.
Key Details of the Agreement
The contract, signed with the BFI Group, the core investor in ALSCON, is aimed at resuscitating a 135 million standard cubic feet per day (mmscfd) gas processing plant. This plant has the potential to power the smelter, which has the capacity to produce 300,000 tons of aluminium annually once fully operational. The Nigerian Minister of Petroleum Resources, Epkerikpe Ekpo, emphasized that the revival of the plant is critical to Nigeria’s long-term goal of becoming a leading aluminium producer in Africa and on the global stage.
Once operational, the plant is expected to ramp up production to 1 million tons of aluminium per year, contributing significantly to the country’s industrial sector. The revival will also enable the generation of up to 540 megawatts of electricity, which will bolster Nigeria’s energy sector, addressing the country’s power generation challenges.
Reviving ALSCON
The Aluminium Smelter Company of Nigeria (ALSCON) was established in 1997 but ceased operations in 2000 due to a combination of legal disputes and financial difficulties. In 2007, the Russian conglomerate UC RUSAL acquired an 85% stake in the smelter, while the Nigerian government retained the remaining 15%.
Under UC RUSAL’s management, efforts were made to modernize the plant, which saw its annual production capacity increase to 193,000 tons. However, the plant’s operations were suspended in 2013 due to a lack of reliable gas supply, which made production economically unfeasible. Despite efforts by the Nigerian government and various stakeholders to revive the plant, progress had been slow until this new agreement with CNCEC.
Investment and Strategic Importance
In previous discussions, ALSCON’s Managing Director, Dmitriy Zaviyalov, stated that it would require an investment of approximately $500 million to restart the plant, which would go toward repairing dormant equipment and addressing energy supply challenges. During a visit to President Bola Tinubu in 2024, ALSCON Chairman Alexey Arnautov stressed that investing the necessary funds within a set timeline would significantly improve the plant’s operations and contribute to Nigeria’s industrial growth.
The new agreement with CNCEC aligns with Nigeria’s broader strategy to develop and diversify its industrial capacity. By revitalizing ALSCON, Nigeria aims to enhance its aluminium production capabilities, which is not only a vital part of the country’s industrial development but also crucial for meeting global demand for aluminium, a key material used in various industries, from construction to electronics.
Broader Implications for Nigeria
The revival of ALSCON and the associated gas processing plant is expected to have far-reaching impacts on Nigeria’s economy, including:
- Industrial Development: By boosting aluminium production, Nigeria can position itself as a major player in the global aluminium market, contributing to the growth of related sectors such as manufacturing and construction.
- Energy Generation: The 540 MW of electricity to be generated by the plant will help alleviate Nigeria’s chronic power supply issues, supporting the national grid and enhancing the country’s energy infrastructure.
- Job Creation: The resumption of operations at ALSCON is expected to create thousands of jobs, both directly and indirectly, in the surrounding regions, contributing to economic growth and poverty reduction.
- Boost to Chinese-Nigerian Relations: This agreement further strengthens the growing economic ties between Nigeria and China, with CNCEC playing a key role in the country’s industrial revival.
Challenges and Future Outlook
While the agreement represents a positive step, the challenges of managing the smelter’s operations, securing a stable gas supply, and ensuring long-term financial sustainability remain. Previous attempts to revive ALSCON have faced setbacks, and there is skepticism about whether the plant can operate at full capacity without overcoming key logistical and financial obstacles.
Nevertheless, the deal signals renewed optimism for Nigeria’s aluminium sector, offering a promising pathway to industrialization and increased energy production. If successful, the project could have transformative effects on Nigeria’s economic landscape, helping it to diversify away from oil dependence and build a more robust, industrialized economy.
