The most prominent market for iron ore and steel for Australia is China, which takes 80 per cent of our iron ore exports.

But there are other market opportunities, and one that may not be front of mind is Nigeria.

One small cap focused on this particular market is Kogi Iron (ASX:KFE), which has 145sqkm of mining and exploration leases in Nigeria.

Kogi won its most recent mining lease earlier this week and owns a total of four as well as one exploration licence.

Managing director David Turvey says his company will become the first integrated steel producer in Nigeria.

“Many say the Nigerian system is corrupt, it doesn’t work, but we have licences and valid assets,” he told Stockhead.

“It’s the best iron ore deposit in Nigeria, the only one in fact and it’s taken us six to eight years to get to that resource.”


Helping Nigeria industrialise

While many Africa-focused miners export to foreign markets, all Kogi’s iron ore will be made into steel that will exclusively serve the domestic market, which right now is reliant on foreign imports.

“That’s why the industrialisation is low – they’re paying too much money for scrap steel but that gives us the ability to slightly beat that cost to the industry and provide them with sustainable materials – right now they don’t have that,” Turvey said.

“They [Nigeria] are a price and supply taker but we’ll be a consistent supplier.

“We did a [pre-feasibility] study on exporting iron ore. It does not make sense and isn’t profitable. Our actual advantage is that this is a domestic import replacement steel project.

“Our project is to have our iron ore that we own, produce steel (like Whyalla). It’s not that common – most other ports import iron ore. We’ll be an integrated source for steel.”


Good working relationship  

Nigeria is seen as a country with high sovereign risk. But Turvey told Stockhead the government was working with them. He also pointed out that Adani’s long wait to start a mine in Queensland meant first world countries like Australia were not immune to sovereign risk.

“What we’re doing is working with them – the administration and communities,” Turvey said.

“I find security of tenure is critical globally, it’s often bought up as an environmental and community issue.

“Look at Adani – they had a right to mine but it got stopped by politicians, whereas Nigeria’s process of conversion is better than Australia.”

Read More: You can’t pretend sovereign risk doesn’t exist but one PE fund says it is manageable