Making Ajaokuta steel project a reality

Making Ajaokuta steel project a reality

Monday, June 16, 2014 3:48 pm

Ajaokuta Steel Rolling Mill

Ajaokuta Steel Rolling Mill

By Sani Adamu, News Agency of Nigeria (NAN)

By all accounts, the present administration appears fully prepared to complete the hitherto moribund Ajaokuta steel project in Kogi.

The idea behind a steel project in Nigeria started in 1958, when the colonial administration commissioned a feasibility study on iron ore deposits in the country.

In 1967, a United Nations Industrial Development Organisation (UNIDO) survey identified Nigeria as a potential steel market; which led to the signing of a bilateral agreement between the defunct Soviet Union and Nigeria.

The Soviet steel experts that conducted a feasibility study confirmed the availability of raw materials and recommended further geological surveys.

They also recommended the Blast Furnace/Basic Oxygen Furnace (BF/BOF) process, capable of producing 570,000 tonnes of rolled products per annum.

In 1971, an extra-ministerial agency, the Nigerian Steel Development Authority (NSDA), was established by Decree No.9, to focalise efforts required to actualise a steel plant in the country.

Besides, the discovery of large deposits of iron ore at Itakpe in 1972 by the Soviet aero-magnetic survey team, catalysed the formal signing of a global contract in 1975, with Tiajpromexport (TPE), a Soviet state-owned firm, for an integrated steel plant of 1.3 million tonnes of long products.

However, the actual work on the Ajaokuta Steel Company commenced in 1979 during the administration of Alhaji Shehu Shagari.

Record, however, showed that the Ajaokuta steel plant was inaugurated in 1983 when it had achieved almost 95 per cent completion, with most of its vital rolling mills, including light, billets, wire rod, medium section and structural mills, operational.

However, since its inauguration in 1983, the plant has been embroiled in managerial inaptitude and controversy, ranging from allegations of obsolete machines and outdated blast furnace model.

Despite its initial completion, the plant had suffered years of neglect under successive administrations.

In 2005, the efforts by the President Olusegun Obasanjo’s administration through the concessioning of the plant to Global System Steel Holdings Limited (GSHL), an Indian firm, also failed to revive it.

The agreement was terminated in 2008 by the late President Umaru Yar’Adua’s administration.

This, perhaps, underscores the decision of President Goodluck Jonathan to reactivate the plant and ensure its final completion.

Three years down the line, available records showed that work on the critical sections of the massive steel complex had been completed and ready for operation.

Acknowledging the progress made so far, Mr Musa Sada, the Minister of Mines and Steel Development, said that the Federal Government had also signed a memorandum of understanding (MoU) with some private firms to facilitate its completion.

He, however, said that the investors were trade partners and not core investors.

Sada, who spoke during a working tour of the company, said that the investors would be engaged on a short-term basis to operate the completed facilities.

He said that the new approach was to avoid past mistakes in appointing management teams to handle the plant.

According to him, the move will save vital components of the plant and machines from further deterioration, stressing that the workers are among the best trained in the industry.

The minister said that reviving the steel plant was necessary in view of its crucial role towards the attainment of the country’s industrial revolution.

Nonetheless, the National Iron Ore Mining Company Ltd (NIOMCO), says that the Ajaokuta Steel Company will require about 2.3 million tonnes of iron ore concentrate to enable it start production.

Malam Abubakar Ibrahim, the Sole Administrator of the company, said this in Itekpe, Kogi, during a 3-day facility inspection tour of the plant.

He said that with adequate supply of iron ore, the steel company could produce more than 1.3 million tonnes of steel annually.

Ibrahim, however, said that in order to meet the iron ore requirement of the Ajaokuta Steel Company, NIOMCO must also be able to produce and process seven million tonnes of raw iron ore annually.

He also said that in order to guarantee 15 to 20 years of uninterrupted iron ore production, sufficient amount of iron concentrate must be stockpiled at both Itakpe and Ajaokuta.

“At that level of production, our in-house study has shown that the operating cost per tonne shall be about N7,000, which means that a net monthly operating income of about N228 million shall be realised at current world market concentrate price of N16,000 per tonne,” Ibrahim said.

He identified lack of appropriate storage facility for explosives and shortage of serious suppliers of the iron ore concentrate as some of the challenges confronting the company.

However, Sada allays such fears, noting that the Federal Government is doing everything possible to ensure that NIOMCO bounces back.

Sada also said the recent launching of National Industrial Revolution Plan by the government would address such challenges.

Interestingly, Vice-President Namadi Sambo also restated government’s commitment to make the plant functional within the shortest possible time.

Sambo said that President Jonathan had also directed the National Council on Privatisation (NCP) to restore life to the steel industry through the speedy revival of the company.

“Very soon, I want to assure you that the promise Mr President gave sometime in Kogi that the Ajaokuta Steel Industry will be brought back to life will be actualised.

“I want to categorically state that all the encumbrances to the progress of the project have been removed by Mr President,’’ he said.

The vice- president spoke at the foundation laying ceremony of Kogi House in Abuja.

To justify the huge investment, the Ajaokuta Steel Company also said it would collaborate with Industrial Training Fund (ITF) to train 1,000 youths in each of the 36 states of the federation.

Mr Isah Joseph, the Sole Administrator of the company, said that the youths would be trained at its Metallurgical Training Centre (MTC) in Ajaokuta on various skills beginning from the third quarter of this year.

According to him, the programme will go a long way to empower the youths.

“It is our plan that training will commence at MTC under the African Centre for Human Capital Development (ACHCD) arrangement in the third quarter of 2014.

“A memorandum of understanding (MoU) was signed with the ITF to actualise the skills acquisition programme of the Federal Government.

“The training of 1,000 youths per state in artisanal skills was worked out for the MTC,’’ he said.

Joseph said that the 36,000 youths would be trained on carpentry/joinery, mechanical/machining, electrical installations and wielding, among others.

He said since inception in the 1970s, the company was conceived as a project that would lead Nigeria to industrialisation.

“The project, however, had history occasioned by an inter-play of forces that has made the integrated inauguration of the steel plant elusive till date.

“The bane of Ajaokuta Steel Company over the years has mainly been poor funding.

“Capital allocation to the project has remained a mirage for a number of years.

“Added to this is the case instituted against it since 2008 by its erstwhile concessionaires, which is in the process of being definitively concluded through mediations, courtesy of Mr President,’’ he said.

The sole administrator said the detractors of the project had continued to canvass for its sale.

He stressed that the plant was a strategic and rugged national investment, designed to last for several generations with minimal conservation efforts.

Joseph said that privatising the company at this point would scuttle the dreams of the founding fathers.

According to him, it will also amount to disservice to the nation and generations yet unborn.

“The technical audit of the plant by the international and local experts attests to its sound health, courtesy of the patriotic efforts of the staff,” he said.

Industry watchers, nonetheless, applauded the efforts made by the Jonathan administration to revitalise the ailing company, in order not to waste the huge investment made by successive governments.

“The dream of making Ajaokuta an industrial hub of the country is coming up slowly; the journey is still far, but it must be a reality,” says an observer. (NANFeatures)

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