The objective of the study was to confirm the overall level of potential market demand for the cast steel product that Kogi intends to produce from the Agbaja Cast Steel Project.
The study results will be fed into the definitive feasibility study (DFS), which will amongst other things determine the sizing of the Agbaja Cast Steel Project’s processing facility.
Kogi’s chairman Don Carroll said: “With the completion of this very positive market study we are delighted to have taken another step on the ongoing journey to the completion of the definitive feasibility study for the Agbaja Cast Steel Project.”
Agbaja iron ore can produce high-quality steel
Fastmarkets confirmed that based on bulk sample process work undertaken last year by Mintek/Tenova, the Agbaja iron ore produced a high-quality steel product.
The product has a 99.61% iron grade with minimal impurities – 0.0939% carbon, 0.003% manganese, 0.015% silicon, 0.0194% phosphorus and under 0.0632% sulphur.
Demand exists for products within local Nigerian market
An extensive review of Nigerian and regional steel demand was also undertaken by Fastmarkets.
Fastmarkets forecasts a long-term average billet price over the period from 2019 to 2030 of US$476 per tonne with a range of US$428-513 per tonne.
Fastmarkets noted that this was a conservative estimated compared to UK-based CARES prices.
Local market can handle new production
Based solely on forecast market demand for steel billets Fastmarkets considers the Nigerian market has a capacity to handle additional new billet production of up to 1.5 million tonnes per year (tpy).
Fastmarkets also recommended export markets in Cameroon and Ghana be considered with forecast market capacity of 100-250,000 tpy.
Notably, Fastmarkets recommended that planning of the Agbaja Project take into account a potential phase II to cater for additional output in a demand upside scenario.
Regarding offtake agreement, Fastmarkets considered that it would be premature for Kogi to sign binding off-take agreements with prospective customers.
Nevertheless, Fastmarkets did broach the subject with the companies that they identified as potential key customers.
There was interest shown by these parties and a willingness to discuss off-take options more seriously at a future date.