[ANALYSIS] Reconciling discordant tunes on the Ajaokuta steel complex



For the umpteenth time, the federal government assured Nigerians last month that the Ajaokuta steel complex would become operational before its mandate expires in 2023. The Minister of Mines and Steel Development, Olamilekan Adegbite, who said this at a forum in Abuja, repeated a promise made in 2019, 2020 and January 2021.

The majority of Nigerians believe that the non-completion of the complex is a major contributor to the economy’s continued backwardness in terms of infrastructure, manufacturing, job creation and exports.

A report commissioned by the Global Steel Association found that the steel industry transforms iron ore into a range of products that are sold for a total annual value of $ 2.5 trillion.

It employed more than six million people worldwide in 2017, and the “added value” of its production processes amounted to nearly $ 500 billion. The steel industry’s productivity per worker exceeds $ 80,000, three times the average for all sectors of the world economy.

“For every dollar of value added by labor within the steel industry itself, an additional $ 2.50 of value-added activity is supported in other sectors of the global economy, through procurement. raw materials, goods, energy and services. In addition, for every two jobs in the steel sector, an additional 13 jobs are supported throughout its supply chain, meaning that in total, some 40 million people work within the global supply chain of the steel industry, generating more than $ 1.2 trillion in added value. This economic activity extends to several sectors and countries, well beyond the main steel production sites.

Steel is also a key component in the work of many other industrial sectors, which produce items essential to the functioning of the wider economy, including hand tools and complex factory machinery; Trucks, trains and planes; and countless objects used by people in their daily lives, from cutlery to cars. Steel is also used in the construction of houses and other buildings, bridges, pylons and transmitters.

The report also estimated that the industry facilitated an additional $ 1.2 trillion in value-added production in 2017, and supported an additional 49 million jobs globally. Nigeria’s initial quest for economic development through manufacturing and infrastructure was signaled in the 1960s when a feasibility study for steel production was awarded to the Soviet Union as part of an agreement cooperation. This ultimately led to the discovery in 1973 of the requisite quality and quantity of iron ore for steelmaking in Itakpe, Ajabanoko and Oshokoshoko, all in present-day Kogi State.

The government then incorporated Ajaokuta Steel Company Limited in 1979, after which construction began.

It reached 98 percent completion in 1994, with 40 of the facility’s 43 factories built. The Ajaokuta steel complex occupies 24,000 hectares of land. About 42 years later, the project remained at a 98 percent completion level in 1994, three-quarters were reportedly abandoned and abandoned. There were also allegations that a former dealership wiped out essential parts of the plant.

In essence, Ajaokuta may not be at the 98% completion stage anymore than it was in 1994 due to vandalism.

In 2003, Solgas of Japan was granted the concession right for the plant, but the plant was quickly canceled and reassigned to Global Holding Infrastructure Limited (GHIL) of India for a period of 10 years. Following allegations of massive asset stripping and company cannibalism with little improvement, President Umar Ya’Adua terminated the deal with GHIL after three years. The company proceeded to arbitration, which lasted eight years. Between 2008 and 2016, Nigeria and the GSHL fought before the International Court of Justice in The Hague and the International Court of Arbitration in London.

In August 2016, the then Minister of Mines and Steel Development, Dr Kayode Fayemi, said Nigeria and the company had agreed to an out-of-court settlement of the case. He revealed that an amended agreement had been signed which allows the concessionaire to take over the National Iron Ore Mining Company (NIOMCO), Itakpe and manage it for the next seven years as the balance of the 10 years originally contained in the terminated contract. . , thus freeing the country to retrieve Ajaokuta and complete it. Ajaokuta has 43 units, 40 of which have been completed. However, the three remaining components – the blast furnace, which is the heart of any steel plant, the coke oven and the steelmaking workshop making up the two percent – are the very heart of the plant.

Years of neglect mean many units in the steel complex could be old and obsolete, according to an expatriate steelmaker, but he adds that the main stumbling block to its operation is the oxygen plant which is not in place. .

“If you want to run this factory, you have to get all the systems in order. Everything for me is messed up, but the main problem is the oxygen plant, which is not finished. The blast furnace needs oxygen to operate.

Some company staff also attributed its non-functionality to a faulty blast furnace although one of the best in the world, which did not perform in testing.

A steelworker and trade unionist in the steel industry, Mr. Okeshola Tajudeen said in an interview: “If you want to talk about bodily systems – the head, the legs and the like – and you refuse to put your heart, will it work? The blast furnace is considered the primary unit of the plant. As a trade unionist, he also believes that there is a conspiracy theory and / or international politics behind the failure of the factory’s blast furnace.

“The first test that was done on the iron ore here, the percentage was low. But thanks to the enrichment, it improves the quality, there was a great improvement and it made it better than foreigners.

He argued that the 98 percent was not such that you can start the operation. The two percent are the blast furnace and other ancillary plants that are not ready. Despite this fact, the federal government continued to assure impatient Nigerians that the plant would be commissioned before administration ended.

Following the failure of two concessions, the federal government decided in 2017 to sell the plant.

An aide to Fayemi said the government would no longer spend additional money on the project. Since 1979, nearly $ 5 billion has been spent on the plant while still requiring $ 1.21 billion to start production. Some experts argue that this new amount required to revitalize the plant is $ 813 million more than what was needed 17 years ago for its completion. Of this new fund, $ 513 million is needed to complete the construction of the steel plant and $ 700 million for the construction of external infrastructure.

However, at a meeting in 2019, President Muhammadu Buhari and Russian President Vladimir Putin agreed to hire Russian experts to carry out the project.

Russia was to send experts to Ajaokuta and audit the company to determine what is required. In May 2020, FG inaugurated the Ajaokuta Presidential Project Implementation Team led by Federation Government Secretary (SGF) Boss Mustapha with the Minister of Mines and Steel Development as Chairman. alternate. Its mandate is to prepare and submit periodic work plans and to draw up the terms of concession contracts with a view to relaunching the company. Even with that, the government went ahead and secured funding from AFREXIM Bank as well as the Russia Export Center for the $ 1.46 billion with which to revamp the project.



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