Aarti Steel Nigeria Ltd.
MIGA has issued guarantee coverage in the amount of $11.4 million to Rockland Steel Trading (P) Limited of India and to the State Bank of India. The guarantees cover $0.45 million of Rockland Steel’s equity investment in Aarti Steel (Nigeria) Limited (ASNL), and $10.9 million of non-shareholder loans made by the State Bank India to ASNL. The MIGA guarantees provide coverage against the risks of transfer restriction, expropriation, and war and civil disturbance.
Aarti Steel Nigeria Limited has constructed a greenfield manufacturing plant for steel galvanizing in Ogun State. The new facility has a manufacturing capacity of 50,000 tons a year, with a provision to expand this capacity, and produces galvanized steel coils, galvanized plain steel sheets, and galvanized corrugated (roofing) steel sheets. When the facility is fully online, it is expected to be the largest local manufacturer, employing about 200 individuals onsite, with an additional 1,000 individuals expected to be employed indirectly in the provision of support and ancillary services. The plant uses piped compressed natural gas as its main energy source. Natural gas will be used to produce electric power for captive consumption through a gas generator, as well as for all heating and melting furnaces. This approach will avoid the emission of CO2 and also supports the government’s policy of using gas for productive purposes instead of flaring. Flaring and venting of natural gas in oil wells is a significant source of greenhouse gas emissions.
Nigeria’s increasing wealth and population is driving market demand for galvanized plain and galvanized corrugated steel sheets. Galvanized corrugated sheets are used as roofing material on nearly all houses in Nigeria and the surrounding region. The plain metal sheeting will also be used in a variety of industries including agricultural implements, consumer durable goods, hardware for domestic and industrial construction, railways, and machinery manufacturing. The project will also bring modernized and efficient processes to Nigeria’s relatively weak manufacturing sector.
This project meets MIGA’s priorities of supporting South-South investments and investments in frontier markets. It is also consistent with the World Bank Group’s Country Partnership Strategy for Nigeria, which builds on the government’s strategy of promoting private sector-led growth, particularly in the non-oil sector.