Industrial activity at the Ajaokuta Steel Company is scheduled to resume full swing at the Light Section Mill before the end of the year following the arrival of the of semi-finished casting metals often called billet.
The purchase of the metals kicks off the execution of the first phase of the proposed $1.3 billion reactivation plan by Reprom Nigeria Ltd in partnership with Ukrainian investors.
This joint-venture is a by-product of the memorandum of understanding entered with the federal government for the completion of the billet conversion project required to operate its thermal power plant and produce iron rods in commercial quantities
As a result, out of the $1.3 billion needed for the rehabilitation of the mill, the sum of $678 million will be expended on restoring peripheral infrastructure with the remaining $513 million for core integrated machinery.
Speaking to newsmen on the arrival of billets, Attah Achimugu, the chief executive of Reporm, said the rolling mills are set to produce large quantities of rods and angle bar for domestic and export use.
Attah expressed, “One of the major items we have been waiting for to enable us light the blast furnace are the billets, which have started arriving at the company. We will continue to stockpile the billets until we have appreciable quantity of not less than 5000 before we can join hands with the management of Ajaokuta Steel Complex to light the furnace to commence commercial production.
He also revealed that materials earmarked for the commencement of activities at the plant will be sourced both locally and internationally through coalitions with the Greener Nations Foreign Economic Corporation with an annual production capacity of 1.3 million metric tonnes as the target.
On the global scale, China still maintains a huge lead as the world’s largest producer of steel with Japan and the United States in third and fourth positions. Although Turkey’s crude alloy output increased by 21.3% to 16.4 million metric tonnes a few years ago, India is expected to rise to second position with its boom in industrialization.
With the international steel industry recording an increase in the amount of metals produced by 3.6 percent with a steady jump from 1.35 billion metric tonnes in 2007 to a record high of 1.6 billion metric tonnes at the end of the last quarter of 2013, as well as the near absence of viable competition on the continent, experts propose this as a practical time to kick-start local steel manufacturing and trade.
The demand forecasted by the World Steel Association, a conglomeration of alloy manufacturing nations and companies, reveals that the driving force in metallurgical consumption is nested mainly in developing markets like Africa where 72 percent of its quality metal are purchased from countries like India.
This is indicative of the huge market opportunities available for investors in the sector where, at present, less than two percent of the world’s entire steel is produced in spite of the huge iron ore, manganese and carbon deposit.
Although concerted efforts are being made to revive the industry in light of the fiscal benefits that can be generated from steel exportation, the rationale behind resuscitating the moribund project commissioned in 1979 by the Shehu Shagari administration has been called to question as the technology embedded in the complex has been labeled ‘outdated’ by prospective investors.
In response, Isah Onobere, the sole administrator of the plant while speaking with journalists during a recent facility visit refuted these claims, insisting that the model operating with the basic oxygen blast furnace installed at Ajaokuta is as viable now as it was almost three decades ago.
Isah said, “The total world crude steel production as at December 2012 was 1.5billion tonnes and 70 per cent was produced through the basic oxygen furnace technology, the blast furnace, so if as at December 2012 the world crude steel production of about 70 per cent was achieved through this technology then the technology in Ajaokuta remains the most acceptable and applied technology in iron making process which has the capability of processing even the least acceptable grades of iron ore and it’s quite flexible in operation.”
The Ajaokuta Steel Complex which is made up of the light, medium and structural section was conceived in 1958 after a feasibility study on the size and marketability of the nation’s iron ore deposits was commissioned by the colonial administration.
Nine years after the study began the United Nations Industrial Development Organization certified the country as a probable steel market. Soon after bilateral agreements between the Soviet Union, Nigeria and subsequently the German- Austrian Consortium were signed when large iron ore deposits were found in Agbaja [Abuja], Itakpe [Kogi] and Udi [Enugu].
Plans to commence the construction of the rolling mill was put in motion in 1971, leading to the establishment of the Nigerian Steel Development Authority (NSDA), under Decree No.9 as part of governments efforts to actualize it’s backward integrated steel plant project.
Although the NSDA was dissolved by the federal government in 1979, metamorphosed into nine organizations including the Delta Steel Company, Aladiga and the Ajaokuta Steel Project, Ajaokuta.
Both plants became operational in 1982 but have continued to function at very low capacities owing to government’s minimal development willpower, high cases of corruption and policy inconsistencies.
In 2003, the administration under President Olusegun Obasanjo concessioned the Kogi-based plant to Solgas in a deal that fell through. Barely a year later, a fresh agreement was reached with the Global Infrastructure Holding Limited (GIHL) – an Indian company – to the tune of $300 million.
The contract was cancelled by the President Umaru Yar’Adua led government over GIHL’s inability to meet the terms of the agreement. As a result of the rift between the company, indigenous workers and federal government, legal issued were raised at the London Court of Arbitration.
Accusations trailing GIHL include cases of theft and illegal exportation of company assets as well as long-standing administrative inefficiencies. The case is yet to be concluded.
Following the stall in the process, Deziani Alison-Madueke, the then minister of mines and steel development announced the federal government’s plan to revive segments of the mill through the investment of N650 million. However, less than a fortnight later, she was re-assigned to head the ministry of petroleum resources.
Six years after the court battle with GHIL, President Jonathan and his team recovered the non-functional complex after the Indian investor agreed to forfeit its $1 billion demand for damages allegedly accrued while operating the plants.
As part of the Transformation Agenda, last year the plant was re-concessioned in March to Reprom Nigeria Limited in partnership with investors from the eastern bloc.
At present, the mill pays a monthly wage bill of N228 million and has a staff strength of 2,900, most of whom have remained the company’s employ for over thirty years. Even though full-scale milling processes are yet to begin, it is reported that these worker’s have served to protect the rolling mill from vandalism and theft.
With over 2 million jobs provided by the steel industry worldwide, it is expected that the resuscitation will create career opportunities for the teeming population of unemployed graduates across the country.
Rita Ohai
