• Wednesday, July 24, 2024
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Moves to plug $3.3bn metal imports gather momentum

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The metal industry is beginning to receive positive signals as the Federal Government intensifies plans to reduce annual import of basic metal (including aluminium), iron and steel, which is valued at $3.3 billion.

The Federal Government is spearheading a move to bring in investors that will develop bauxite, iron ore and other essential minerals that serve as raw materials in the industry. The move is aimed at increasing access to raw materials for the local industry and reducing overdependence on imported materials in the sub-sector. It is also targeted at increasing capacity utilisation in the industry, which currently stands at 52.3 percent, Real Sector Watch has gathered.

Industry players see this as a step in the right direction, as they say the sub-sector, if given more than a passing attention, will add fillip to Nigeria’s quest for economic diversification.

“The government now wants the local industry to have the capacity to produce steel from iron ore as well as grow engineering and production facilities to strengthen the economy,” Oluyinka Kufile, vice-chairman, basic metal, iron and steel group of the Manufacturers Association of Nigeria (MAN), and chairman, Qualitec Industries Limited, told Real Sector Watch in an exclusive interview.

“A committee has already been set up on this. The committee will carry out a survey and will make create investment room for international bidders who will be willing to obtain mining licences,” Kufile says.

The chairman of Qualitec Industries Limited further says that government has assured local manufacturers that efforts are on gear to bring in first-class companies to mine bauxite to produce large quantities of alumina, which are basic raw materials for aluminium production.

According to him, the government has also assured them of plans to create the right atmosphere to bring in smaller smelter companies to serve local aluminium makers.

For the steel sub-sector, Kufile says government has what is called the steel fund, which will be given to genuine investors in the industry at about a single-digit percent interest rate.

Analysts say developing local raw materials has become imperative following the recent restriction placed by the central bank on local manufacturers from accessing dollars from Retail Dutch Auction Scheme (RDAS), where dollar to naira exchange rate is $/N168. Manufacturers who regularly import raw materials and machinery have been asked to access dollar from the inter-bank market, where dollar to naira exchange rate hovers between $/N182 and $/N187.

According to a key stakeholder in the industry, who chose not to be quoted, the recent move by the Federal Government shows that the sub-sector is truly part of the National Industrial Revolution Plan (NIRP), but cautions that government should go beyond rhetoric by implementing stakeholder agreements that involve reducing influx of substandard finished products and export of billets as well as raw materials needed by the local industry.

While urging that Ajaokuta Steel Company fully begins as promised, the stakeholder says he has some misgiving that the industry will be given the attention it needs in the first and second quarter owing to the government’s focus on general elections. He points out the need to re-start Aluminium Smelter Company, which supplies ingots to local roofing sheets manufacturers.

During a pre-commissioning visit to Cold Steel Rolling Mill Complex belonging to Kam Industries Nigeria Limited in Ilorin, Kwara State, last October, Olusegun Aganga, minister of industry, trade and investment, had said that the Federal Government had set up a committee that would ensure that the basic metal, iron and steel sub-sector and other our industries had access to affordable finance at the lowest possible interest rates.

Earlier in Abuja, Aganga had told stakeholders that plans had been concluded to develop and implement a comprehensive Backward Integration Policy (BIP) for the sub-sector to make the country a net exporter of iron-ore and reduce the dependence of the country on imported steel so as to help boost the boost the automotive industry.

But Robin Neville, managing director, First Aluminium plc, had told Real Sector Watch, in an exclusive interview, that developing the basic metal sub-sector must involve checking importers who bring in sub-standard products from Asia, especially China, which fall short of minimum international standards, as well as improving the infrastructure, notably power supply.

 

Odinaka Anudu