Those men in grimy garbs you see in your neighbourhood daily, rummaging your trash bin for items of interest are not the dregs of the society you think they are. If you care to know, these supposedly dregs of the society, who sift scraps from trash bins, are growers of the economy. ‘How?’ you may want to ask. The items they sift from your bins are transformed into ‘gold’ elsewhere, where tons of such scraps are found in gigantic heaps.
The items in question are disused plastics, iron and steel scraps as well as aluminium scraps. Across metropolitan Lagos, you find centres where these scraps are sold to collectors who in turn sell them to recycling companies. Such centres are also found in towns across the country. The scraps end up in plants where they undergo transformation. One of such plants is African Foundries Limited (AFL), Ogijo, Ogun State. Ogijo belongs to the steel industry cluster that spreads from Odogunyan in Ikorodu, Lagos State, to the Ogun State’s Ogijo.
At African Foundries, the towering heaps of scraps in question are a sprawling sight to behold. Their titanic size will beat your imagination. You begin to wonder how scrap collectors were able to put them together. African Foundries is 100 percent dependent on scraps. The scraps are made into billets, which are in turn made into sizes of iron rods consumed by the construction industry. The steel company manufactures iron rod sizes from 8mm to 32mm and under full international certifications such as ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, and NIS 117:2004 of international certification by RINA (Registro Italiano Navale), MEET IFC and World Bank Guidelines.
Huge gap
A kilogramme (kg) of steel sells for N20. There is huge potential for this business, going by Nigeria’s per capital consumption for steel and aluminium. The annual per capita consumption of steel in the country is about 10kg. Corresponding world average in respect of this metal is 130kg. So, there is huge gap to fill. Sure, there is a huge gap to be filled, Sanjay Kumar, African Foundries CEO, said during that memorable facility tour of the Ogijo plant by a select team of newsmen on Tuesday.
According to him, in 1999, steel demand in Nigeria was 900,000 metric tons and this has risen to 1.250 million metric tons this year. And he added, “Export potential exists. Today, it’s a proud and pleasant moment for us to announce the breakthrough achievement in export business of about 5000 metric tons of thermo mechanically treated (TMT) rebars steel of international standard to Ghana in the first instance.”
Thermo mechanically treated steel can be described as new-generation-high-strength steel, having superior properties such as weldability, strength, ductility and bendability and meeting highest quality standards at international level.
Birth and growth of AFL
African Industries Group, the parent company of AFL, started steel manufacturing in Nigeria in 1999. It commissioned its first steel plant in Ikorodu, Lagos State in 2004 and named it African Steel Mill. This unit that was started with a 5-ton capacity induction furnace has today transformed into one with a production capacity of 200,000 tons per annum. In 2011, the second steel, the African Foundries Limited, Ogijo, the plant in focus and flagship of the group, was commissioned with a production capacity of 500,000 tons of steel billet. This plant has a state-of-the-art continuous rolling facility, one of the biggest TMT producing mills in Nigeria.
According to Kumar, “the quality of TMT produced at this unit is exactly the same as an international producer in all respect,” and that its Abuja
Steel Mills, with a capacity of 150,000 tons per annum, located in Suleja, would soon be commissioned. The Group has invested N20 billion in steel production in Nigeria to date.
FG’s metal policy
The Federal Government’s metal policy is geared towards the need to develop a vibrant metal sector where government will play the role of sole administrator and regulator, the private sector as owner-operator with a view to enabling the country become a major regional and world producer of aluminium and steel products. It is envisaged that this will lead to a production target of 500,000 tons of primary aluminium and 12 million tons of steel products by the year 2020.
Contending forces
Local steel manufacturers claim they suffer a hike in the cost of production of up to $350 per metric ton, since they have to rely on imported billet as the main input after locally available scrap metals are shipped away illegally to other countries. They say this results in the loss of approximately $350 million every year. This was the view of an ex-chairman of the Basic Metal Iron and Steel Fabricated Metal Products Sectoral Group of the Manufacturers Association of Nigeria (MAN), Abhayanath Jha, way back in 2011.
According to Jha, “to produce a ton of steel you would only need 10 percent billet if you have sufficient scrap metal inputs to make up for the difference.” He explained that the lack of locally available scrap metals, which costs only about $250 per ton, forces manufacturers to rely on the importation of billets, which cost as much as $700 per ton, therefore resulting in a significant hike in the cost of steel production to the detriment of the manufacturers and the nation’s economy.
The problem still exists today, across the metals industry generally. For instance, four front-line aluminium rolling mills in Nigeria are facing challenges and have cried out to the government.
The four include Tower Aluminium plc, First Aluminium plc, Qualitec Aluminium Industries Limited, and Aloy Aluminium Limited. They are faced with the problem of competing with unchecked importation of cheap aluminium raw materials from Asia and South Africa, and export of scrap aluminium they need for recycling in their plants is an additional problem for them. Jinesh Dugad, group managing director, Tower Aluminium, for instance, said: “We need 2000 metric tons of scrap iron for our operations per annum but get only 1000 metric tons.” Others complain of dearth of scrap aluminium too.
Export of scrap metal is on the Federal Government Export Prohibition list, but it is being smuggled out of the country with impunity. Only recently, 17 Indians and their collaborators were apprehended by the Nigeria Customs Service (NCS) for their alleged involvement in the attempted illegal export of four container loads of aluminium scrap valued at over $470, 000. The arrest of the Indians came on the heels of an earlier detention of a Chinese and a Nigerian trader for their bid to export a container-load of scrap metal through one of the seaports in Lagos. The four containers in question were intercepted while they were being conveyed into the port.
Big business opportunity
A level of scrap scavengers has a big business opportunity in scavenging abandoned or disused second hand cars. Most Nigerians still opt for used cars. This is dictated by Nigerians’ level of income, as per capita income is about $1600.
According to C.O.A Agbo of the Department of Mechanical Engineering, University of Nigeria, Nsukka, in a paper titled ‘Recycle matersials potential of imported used vehicles in Nigeria,’ about 50,000 vehicles valued above $2,000 each were exported to Nigeria from the US in 2008, based on various social sources compiled by Export Trader.
And according to Aminu Jalal, director-general, National Automotive Council, vehicles imported annually into the country are worth N487 billion, and a total of 80,000 new and 200,000 used vehicles were imported into Nigeria in 2008 alone.
“Nigerians mainly import low-end, eight-to-ten-year-old vehicles valued below $5,000; flooded, damaged and stolen cars, are imported,” said Vadym Kozub, director of development for Export Trader. All sorts of abandoned, discarded, wrecked, ruined, or worn out vehicles that cannot be repaired and put back into service, otherwise called ‘end-of-life vehicles,’ are found in Nigeria, said Agbo. “They have value as a source of used parts, scrap material and other material for recycling and repair work. Motor vehicles are the number one recycled consumer product in the United States,” he said.
He explained further: “Nearly 90 percent of automotive aluminium is recovered and re-cycled. Although this aluminium represents less than 10 percent of the average motor vehicle by weight, it accounts for roughly half of the vehicles value as scrap. Auto recyclers supply more than one-third of all ferrous scrap (iron and steel) to the US scrap processing industry. When manufacturers use scrap iron and steel instead of virgin ore, they reduce air and water pollution by more than half during the manufacturing process.”
It is therefore bigger business venture going for disused vehicles, and even aircraft and ships. For instance, reports have it that Aayu Steel Mills may realise over N480 million from the ongoing dismantling of over 60 disused aircraft in the nation’s airports. The company is engaged by the Federal Airports Authority of Nigeria to clear disused aircrafts from airports in the country. The aircraft whose purchase price was valued at $2.4 billion (N379bn) were given a scrap value of N800, 000 each. After dismantling of the abandoned aircraft, according to Basiru Haruna, logistics officer of Aayu Steel Mills, the parts would be taken to our mills for recycling into aluminium for inward use.
SIAKA MOMOH
