Revival of steel plants signals Nigeria’s commitment to industrial revolution

Amid oil price lows and falling productivity in Nigeria’s manufacturing sector, a turnaround of the country’s steel complexes and iron ore mining sites will signal government’s seriousness with actualising the National Industrial Revolution Plan.

Declining government revenue and  growth in gross domestic product without jobs have forced Muhammadu Buhari and his cabinet ministers to look inwards with a view to diversifying the economy through manufacturing, agriculture and mining.

Nigeria’s industrial plans are targeted at economic expansion through steel, agro-allied industry, light manufacturing, mining and solid minerals.

Steel plants and the iron ore sub-sector, typically create two million jobs along the value chain, experts say. The pharmaceutical industry in Nigeria alone, including its value chain, creates one million jobs, according to Okey Akpa, chairman, Pharmaceutical Manufacturers Group, of the Manufacturers Association of Nigeria. The iron and steel sector is a much larger sector, requiring much more hands.

Kayode Fayemi, minister of solid minerals, said last  week that the Federal Government will soon unfold its blueprint for the rehabilitation of the Ajaokuta Steel Company and the National Iron Ore Mining Company, Itakpe, in Kogi State.

“Our mission is to ensure that this plant works. We are studying how some countries succeeded in building several plants many years after we had started our own. What did they do right and what did we do wrong to find ourselves at the present situation?” Fayemi asked, after conducting an inspection tour of the facilities last Monday.

Fayemi’s statement is seen as a commitment by government to revive the under-performing steel complexes and iron ore sites around the country. Ajaokuta Steel has milked the country of over $5 billion in investments, yet the plant only serves as a repair station for companies’ plants and bolts.

In June this year, Premium Steel & Mines, owned by Sunil Vaswani and other investors, acquired Delta Steel Company Limited, known as Aladja Steel, from the Asset Management Corporation of Nigeria (AMCON) in an undisclosed deal. But this is yet to fully take off.

BusinessDay gathered that there has been an intractable legal tussle between Ajaokuta’s concessionaire and the Federal Government. The majority of machinery and equipment of manufacturing firms are obtained from steel complexes, implying that a revival of this sub-sector will reduce import of machinery and relieve pressure on the naira and foreign reserves. 

”Government should work towards the speedy removal of all impediments to the full privatisation and operation of the steel complex,” said Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN).

“Over 85 percent of manufacturing equipment are developed from iron and steel industry. The Federal Government established the Ajaoukuta Steel Complex Limited (ASCL) and other rolling mills in the country with a view to creating a solid industrial base, as well as a national engineering culture for the economy. But this is becoming a pipe dream,” Jacobs said earlier.

Closely trailing the Ajaokuta Steel Complex is the Aluminium Smelter Company, located in Akwa Ibom State, which like Ajaokuta, is caught in a legal war between the concessionaire and the Federal Government.

Oluyinka Kufile, chairman, Basic Metal, Iron and Steel Group of the Manufacturers Association of Nigeria (MAN), and chairman, Qualitec Industries Limited, said that this is frustrating aluminium producers and is preventing them from getting ingots, a basic raw material, locally.

“We need that resolved. Aluminium Smelter Company needs to be re-started so that we can get ingots for local roofing sheets manufacturers,” Kufile told BusinessDay in an interview.

China and Japan are the first and second largest producers of steel in the world, with 65 million tonnes (MT) and 17.4 MT as at February 2015.

India has overtaken the United States as the third largest producer, with capacity of 14.56 MT within the period under review.

The steel sector encompasses makers of primary and secondary aluminium products, cold rolled coils, wire rods, enamel ware, galvanised iron and steel, nail and wire, steel pipes and steel.

“Past efforts in promoting industrial development in Nigeria have failed due to lack of focus on technological learning at the plant, sectoral and industry level,” said the United Nations Conference on Trade and Development in a report released December 16.

ODINAKA ANUDU