Ademola Aderemi
It was one project designed to announce Nigeria to the world as an industrial giant in Africa and a veritable global player in iron processing and steel manufacturing.
Since its establishment in 1979, however, and with billions of dollars sunk into the project, Ajaokuta Steel Company Limited situated in Ajaokuta, Kogi State, has never really taken off. It has remained moribund 40 years after its birth.
But right now, fresh hope beckons for the company. Many are optimistic that the situation might dramatically change soon, and the company would roar to life. Next month, the Federal Government is expected to sign a memorandum of understanding with a Russian company, MetProm Group, to revamp of the complex.
This was one of the high points of the meeting between Nigeria’s President Muhammadu Buhari and Russian President, Vladimir Putin, in Sochi, Russia, in October. At the meeting, the Russians signified their intention to revive the comatose project after four decades. MetProm Group is expected to complete the steel complex and put it into operation.
Built on a 24,000-hectare site, the Ajaokuta Steel Company Limited complex is not just the largest steel mill in Nigeria, the facility’s coke oven and plant for by-products are even larger than all the refineries in the country.
Ajaokuta Steel Company Limited was incorporated in 1979 and programmed as a metallurgical processing plant and engineering complex, with other auxiliaries and facilities. It was designed to generate industrial and economic activities that would help transform Nigeria into an industrialised nation. The steel plant was integrated with the steel rolling mills in Itakpe (Kogi), Aladja (Delta), Osogbo (Osun) and Katsina (Katsina State).
The company states on its website: “The project was embarked upon as a strategic industry, a job creator and a foreign exchange saver and earner. It was envisaged that the project would generate a myriad of socio-economic benefits and increase the productive capacity of the nation through its linkages to other industrial sectors. It would provide materials for infrastructural development, technology acquisition, human capacity building, income distribution, regional development and employment generation.
“While the project would directly employ about 10,000 staff at the first phase of commissioning, the upstream and downstream industries that will evolve all over the nation will engage not less than 500,000 employees.”
The concept of Ajaokuta was to produce 1.3 million tonnes of steel annually in the first phase. This was to be reviewed to 2.6 million tonnes in the second phase, while 5.2 million tonnes were to be produced in the third phase.
The plant has a 68-kilometre road network, and is designed to accommodate 24 housing estates, a seaport and a 110 megawatts power generation plant. If operational, Ajaokuta Steel Company Limited has the capacity to take as many as one million Nigerians out of the labour market.
Forty years on, however, Ajaokuta is not even fully built. Three quarters of the vast complex has been abandoned. Over the years, as government and private investors exchange ownership, a thick fog of confusion pervaded the complex. Until December 2017, not a single sheet of steel had been produced in the facility.
The construction of Ajaokuta by Russian company, Tyazhpromexport, commenced in 1979. At the time, the country was literally invaded by thousands of engineers and other technicians from Russia. But the excitement did not last, as the expatriates started to leave, owing to the inability of the Nigerian government to meet its financial obligations.
Between 1979 and 1983, former President Shehu Shagari developed the complex to 86 per cent, and, by 1994, the complex reached about 98 per cent. But succeeding administrations failed to continue the project.
In 2004, the company was taken over by India’s Ispat Industries Limited. But between then and 2008, when the Federal Government revoked the concession, the company did not fabricate any product, in spite of the Federal Government pouring billions of dollars into the project.
Right now, stakeholders are optimistic that the dark days of Ajaokuta are coming to an end. Many are optimistic that the new agreement with Russia might give Nigeria’s biggest steel plant a fresh breath.
In August 2016, after eight years of negotiations, the Federal Government signed a renegotiated concession with Global Steel Holdings Ltd for the Nigerian Iron Ore Mining Company (NIOMCO), Itakpe. The agreement ensured that the ownership of the Ajaokuta Steel Complex reverted to the Federal Government. The agreement effectively freed the company from all contractual impediments that had stalled its completion for decades.
Last year, for the first time ever, the light mills at Ajaokuta were finally put into operation to commence small-scale fabrication and production of iron rods.
Also complete now is the Itakpe-Warri-Ajaokuta railway, which had been vandalised and left in a state of disrepair. In 2016, the Federal Government awarded contracts to the China Civil Engineering and Construction Company and Julius Berger to complete the railway, and test runs commenced in November 2018.
Many stakeholders have also expressed hope that the recent agreement between Nigeria and the Russian Export Centre (REC) on the resuscitation of the Ajaokuta Steel Company is a welcome development.
Minister of Mines and Steel Development, Olamilekan Adegbite, said the Russians would come with funding for the completion of the Ajaokuta project from the REC.
The REC is described as a state-owned development institute established by the Russian government to support the development of the non-commodity exports industry/sector. It was established on June 29, 2015. The REC Group incorporates the Russian Agency for Export Credit and Investment Insurance and Eximbank of Russia to offer comprehensive integrated services to export-oriented companies.
The Russian engineering and construction group, it was gathered, would undertake the necessary work to bring the facility into operation. Besides the state-owned Russian Export Centre, financing would also be sourced from the Cairo-based African Export-Import Bank.
Adegbite said Ajaokuta’s output would go some way to realise President Buhari’s plans to encourage local production and diversify the economy away from oil, from which Nigeria gets 90 per cent of its earnings.
The company, it is said, can feed the railways with spare parts from its foundries and supply materials required for manufacturing automobiles and other aspects of the automotive industry, among others.
Many people have said the Federal Goverment’s decision to revive the company was a good move that would yield a lot of positive fruits.
Kogi State governor, Yahaya Bello, said his state would benefit immensely from the revitalisation of the Ajaokuta Steel Company Limited. He said the company’s revival would go a long way to boost the state’s economy and help in solving issues of unemployment as well as limiting the state’s reliance on Federal Government allocations.
“The effort of President Muhammadu Buhari in reviving the lost glory of the steel company is an attestation to the fact that he is a promise-keeper who sought the good interest and development of the Confluence State,” he said.
The minister has said that once the deal is concluded in January, it would take about two years to complete the blast furnace. The furnace is the major component of the facility, which will turn domestic iron ore into liquid steel. While that process is on-going, some of the facility’s smaller manufacturing units might be put into operation, using imported steel billets.
Sole administrator of the company, Abdul Akaba Sumaila, who said the company was about 90 per cent ready, said as many as 10,000 technical workers would be employed immediately the company begins operations.