Kogi Iron Ltd (ASX:KFE) believes there are strong market fundamentals for cast steel product from its proposed Agbaja project in Nigeria and has engaged Metal Bulletin to carry out an independent market report.
This report will form part of a bankable market feasibility study for the project.
‘First mover’ opportunity
The company has previously identified that Nigeria and its steel market represent a significant ‘first mover’ opportunity.
It is the most populous country in Africa with the largest GDP and a growing middle class and educated workforce.
READ: Kogi Iron ore concentrate from Agbaja Cast Steel Project in Nigeria is suited to pig iron and billet uses
Nigeria imported over 6.8 million tonnes of steel products in 2017 and has a number of operating rolling mills across the country.
There is no domestic supply of billet to feed these internal mills, which currently use scrap and recycled steel.
Discussions with management of mills
Kogi has had discussions with management of a number of the operating mills and has gained an understanding of the potential customers’ quality and volume requirements.
This has given the company great confidence that its cast steel product will be well received by these steel mills and more broadly across the West Africa region.
The Agbaja Cast Steel Project has now reached the stage where Kogi must formalise this knowledge into a bankable market feasibility study.
“Important step in development plan”
Kogi’s chairman Dr Ian Burston said: “We are pleased to be at the stage where we can initiate such an important step in the project development plan.”
Metal Bulletin will carry out an independent strategic assessment out to 2030 and will provide a full bankable market feasibility document for the project.
This will be within the context of local and key global market and price trends for sponge iron (DRI/HBI), ferrous scrap, billets and rebars.
Key financing requirement
Kogi understands from its advisors that this document will be one of the key requirements of project finance lenders and Export Credit Agency providers.
Metal Bulletin will also provide input on likely competition to the Agbaja project and advice on likely tariff and regulation changes that could affect the project.