Nigeria’s ambition to develop a competitive steel industry using its coking coal resources will depend on far more than mineral deposits. Experiences from Tanzania, Mozambique and Nigeria’s own long-running Ajaokuta Steel Project illustrate that abundant resources alone cannot sustain a viable steel industry without coordinated investment in power, transport infrastructure and long-term project financing.
Tanzania’s Mchuchuma coal project, located near the Liganga iron ore deposit in the country’s Njombe Region, highlights the challenges of developing integrated mining and steel projects. The venture, established under a 2011 agreement between the National Development Corporation (NDC), which holds a 20% stake, and China’s Sichuan Hongda Group, has faced years of delays due to financing constraints and infrastructure gaps. Hongda’s interest has since been transferred to entities associated with China’s state-owned Shudao Investment Group, reflecting changes in the project’s investment structure rather than its abandonment. The project includes plans for a 600-megawatt coal-fired power plant and a 220-kilovolt transmission line to support mining operations and supply electricity to Tanzania’s national grid. Despite this integrated design, development has remained slow, underscoring that beneficiation alone has not been sufficient to make the project commercially viable.
Mozambique’s Moatize coal basin offers a contrasting example of the importance of enabling infrastructure. While operators introduced dry-processing technologies to reduce water consumption during coal preparation, the basin’s commercial expansion gathered pace only after the completion of the more than 900-kilometre Nacala Logistics Corridor, which links the coalfields through Malawi to the deep-water Port of Nacala. The rail and port network significantly improved export capacity and helped attract broader private investment in mining, logistics and related infrastructure, demonstrating that transport systems must be developed alongside processing capacity.
For Nigeria, these experiences carry important lessons. The Obi-Lafia coalfield in Nasarawa State is regarded as one of the country’s most prospective sources of coking coal, but its commercial development will require reliable electricity, efficient transport links and integrated logistics in addition to mining investment. Achieving this will demand close coordination between the federal and state governments as well as private investors.
Nigeria’s experience with the Ajaokuta Steel Project provides an equally important cautionary tale. Conceived as the foundation of the country’s industrialisation strategy, the complex has remained largely idle for decades despite substantial public investment. Analysts have consistently cited inadequate supporting infrastructure, unreliable power supply, weak transport links and financing challenges among the factors that have hindered its completion and commercial operation.
The broader lesson from these African experiences is that successful coal-to-steel industrialisation depends on careful sequencing and coordinated investment. Processing facilities cannot operate competitively without dependable power, efficient rail and port infrastructure, and sustainable long-term financing. Countries that combine strategic public participation with experienced technical partners while investing in enabling infrastructure are generally better positioned to attract private capital and build resilient industrial value chains. As Nigeria seeks to revitalise its steel industry, these lessons suggest that infrastructure, financing and policy coordination will be just as important as the country’s mineral wealth.
