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Fresh hope as Russia, Afrexim Bank plan $1.4bn investment in Ajaokuta Steel

...FG intensifies surveillance on illegal minerals exports

There is fresh optimism in government circles that Nigeria’s moribund Ajaokuta Steel Company may soon be revived with the latest interest shown in the complex by the Russian government and AfreximBank.
Olamilekan Adegbite, minister of mines and steel development, confirmed that the Russian government and AfreximBank have made investment commitments of $1.4 billion geared towards revitalising the steel company whose construction commenced about 42 years ago.

“Afrexim is putting in $1 billion for the project and the Russians are putting in $460 million on the line. We now have about $1.4 billion for the project,” Adegbite said in an exclusive interview with BusinessDay in Abuja.

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“The beauty of this proposal is that it does not involve Nigeria putting money; the project will pay for itself. It is taking a while because of government-to-government and the protocols and bureaucracies involved. It is worth it and we will get it right. Afrexim is bringing the money, the Russians are bringing in the technical expertise and we are bringing in the mineral resource which we have,” he said.

This is coming after several attempts made in the past to get the steel plant running failed to achieve the desired results, but Adegbite said the story is changing and that the renewed interest in the project is a fallout of President Muhammadu Buhari’s October 2019 visit to Russia at the Russia-Africa summit.

The minister, who said steel was produced from Ajaokuta in the past but with imported billets, expressed hope that the Ajaokuta Steel Company would start full-scale activities before the expiration of President Buhari’s tenure in 2023.

He said “activities have been ongoing” to keep the steel company afloat ahead of the new investors’ takeover, adding, “We have been exchanging correspondences. In fact, there is a meeting coming up in March in Cairo at the headquarters of the Afrexim Bank who are the major financiers.”

This, he said, would be the first meeting after the president’s Russian visit in October last year.
“All the other materials that are required to make steel are available in Nigeria. Basically, what we have come to do is working with the Russians who are the original builders of the plant; we are going back to them to help us complete,” he said.

Ajaokuta Steel Company Ltd (ASCL) was designed and built by the Russian steel company,

TyazhpromExport, after signing a bilateral agreement with the Nigerian government on June 4, 1976. The steel plant was designed with a production capacity of 1.3 million tonnes of steel per year.

He said the deal essentially would have the Russian government nominate a body that has the engineering skills to complete the work and possibly, the same body would run and manage it for a number of years with a reasonable profit and revert it to Nigeria’s ownership on Complete, Manage and Transfer terms.
Adegbite said, however, that the Federal Government was mindful of the existence of some legal challenges, but assured that the legal challenges would be resolved before the company commences full-scale operations.

The Federal Government had been engaged in running legal battles with Global Steel Holdings Limited, an Indian firm involved in the botched concession of Ajaokuta Steel Company Limited, over the concession modification agreement which was said to have ceded the Nigeria Iron Ore Mining Company (NIOMCO) to the Indian firm. Nigerian government has insisted that it would not surrender the country’s sovereignty and ownership of both the Ajaokuta and NIOMCO.

“Yes, the legal issues are there, but now that the Russians who built the place have shown interest, all the legal issues will be resolved,” Adegbite said.

“It is a situation whereby a contract is given to somebody to perform and got terminated but not according to the rules. The corporate body went to arbitration. We are trying to extricate ourselves. It won’t affect the Russian deal. We are trying to do a cordinates settlement on that. The legal issue is being addressed by the Office of the Vice President,” he said.

He restated government’s efforts at formalising the activities of illegal miners as part of efforts geared towards employment generation and expansion of the revenue base, while pointing out that the Federal Government is already working with the World Bank to de-risk the sector.

“The government has set up Solid Mineral Development Fund of N250bn to support mining activities in the country. Within that, we carved out N2.5 billion for the artisanal miners with marching fund of N2.5bn also to the miners from the Bank of Industry. The problem we have had so far is the disbursement of such funds and that is dismal,” he said.

The minister also noted that the government is intensifying efforts in curbing the theft of Nigerian minerals through illegal routes and that there is a Presidential Surveillance Taskforce on Mining to address concerns of illegal exploration of the country’s mineral resources.


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