Nigeria is happening to Ajaokuta
In an article that was published in a national daily very early into the Buhari administration, I referred to the Ajaokuta steel project in these words: “In Nigeria, it has taken more than 30 years, and counting, and we have not finished building the Ajaokuta Steel Plant!”
Seven years later, as the Buhari administration turns its last corner, it would seem that the Ajaokuta steel project is still very much a pipe dream. A project that was conceived almost a half-century ago and intended as a critical foundation stone for Nigeria’s industrialisation remains jinxed and has refused to take off.
In March this year, the government admitted that it could no longer revitalise the plant in 2022 as it had earlier pledged, citing the impact of COVID-19 and the Russia-Ukraine war as the reason.
It further went on to say that the mill is not likely to be completed by the administration before it leaves office in 2023. The Ajaokuta saga seems set to continue well into the foreseeable future.
Meanwhile, Nigeria’s imports of iron and steel amounted to $1.18 billion during 2020, according to the United Nations COMTRADE database on international trade. The trouble with our steel sector faithfully mirrors the one in our petroleum sector, where refineries idle away while Nigeria spends billions of dollars annually importing refined petroleum products.
Out of curiosity, I decided to see how well (or poorly) other developing countries are doing with the development of their steel sector, and here is some of what I found out about the Brazilian steel sector. The country has 31 steel factories run by 12 different business groups. The total installed capacity is 51 million tonnes of crude steel and actual production is 36.2 million tonnes, of which 11 million tonnes is exported to over 100 countries. The sector employs a workforce of some 117,000 personnel.
One of the major steel companies, Usiminas, said to be engaged in steel production and related activities recorded revenues of about $6.9 billion in 2021.
Usiminas has an installed capacity of producing 9.5 million tons of crude steel. The company also operates in the logistics sector through a stake in logistic company MRS Logística. The Usiminas industrial complex is the largest plain steel complex in Latin America and one of the top 20 in the whole world.
As I ponder these findings, I cannot help but imagine how different and how much better lives would have been in Ajaokuta, Itakpe and environs, if only Nigeria did things with more honesty, seriousness and focus.
In South Africa, the country’s metal industry represents a large, well-developed sector that relies on a vast array of raw materials. The metals sector represents approximately a third of the manufacturing sector and is globally known for its quality and quantity.
South Africa is ranked 21st among the crude steel producers in the world and first within the African continent, with steel-consuming industries contributing 600 billion rand ($44 billion) to the country’s GDP.
Steel has been one of the prolific sectors in South Africa, and helped to drive that country’s industrial take-off.
While imported steel products continue to impact the viability of the South African steel industry, each tonne of steel produced domestically adds to the national economy, creates jobs and provides value through beneficiation.
The country’s biggest steel producer is ArcelorMittal South Africa, which is majority-owned by Luxembourg-based ArcelorMittal SA.
ArcelorMittal SA is a multinational steel manufacturing corporation headquartered in Luxembourg City. It was formed in 2006 from the takeover and merger of Arcelor by Indian-owned Mittal Steel. ArcelorMittal is the second largest steel producer in the world, with an annual crude steel production of 78.5 million metric tonnes as of 2018. It is ranked 197th in the 2022 Fortune Global 500 ranking of the world’s largest corporations.
The inability of Nigeria to establish an integrated steel industry will continue to affect the economy negatively for a long time to come. It is impossible to be a heavy-industry manufacturer without a steel industry that actually produces steel.
Steel production should have been a crucial strategic competency for Nigeria had we done right and completed Ajaokuta.
Corruption and incompetency have sadly kept us from developing a strategic industry that is inevitably linked to our economic development.
Kayode Garrick is a retired diplomat and served as Nigeria’s Ambassador to Brazil between 2005 and 2010