Uncertainties still surround Ajaokuta steel project

*Ajaokuta Steel Complex.

*Ajaokuta Steel plant

14 August 2016, Lagos – Even in the light of the recent agreement between the Federal Government and Indian firm, Global Steel Holdings Limited, that frees Ajaokuta Steel Complex from all contractual contraptions, EVEREST AMAEFULE and IFE ADEDAPO write that it is too early to assert that Nigeria’s industrial revolution will now take off

Nigeria has been picking scrapes of metals for its industrial plants despite the fact that it is endowed with large deposits of solid minerals from which can be formed all sorts of metals.

The General Manager/Human Resources Manager at Tower Aluminium Nigeria Plc, Mr. Wale Fatolu, told one of our correspondents that manufacturers of steel products sourced for raw materials within the country by picking scraps which they often gather and smelt.

In terms of quality and quantity, the Tower Aluminium boss said the scraps were not adequate.

Fatola said, “The quality we get from the scraps is not sufficient and the quantity is not adequate.  As a result, the business of aluminium is shrinking in Nigeria. Manufacturing of aluminium is shrinking. Today, Tower Aluminium is the only company that can melt aluminium. The smelter is expensive to maintain and the raw materials are not available.

“For the foreigners in this sector, it is cheaper for them to import semi-finished products and process it. Is that what will help us as a nation? No. In other words, we are financing employment in other nations to our detriment. That is why most of the companies are reducing manpower.”

Fatolu lamented that the Federal Government-owned Aluminium Smelter Company of Nigeria in Ikot Abasi which was meant to supply aluminium raw materials to manufacturers had been left to rot for many years.

According to him, the country has the capacity to produce up to 300,000 metric tonnes per annum from the smelter, a quantity higher than the capacity of smelters in other African countries.

He said, “Ghana has 200 metric tonnes capacity of smelter and Cameroon has 600 metric tonnes of smelter. Abu Dhabi and Dubai have a capacity of 1,200 metric tonnes of smelter. Ghana aluminium smelter works perfectly and so we buy from Ghana, Cameroon and other places. Their own are functioning. Why is our own not functioning?”

Fatolu said the story of ALSCON is not very different from the story of the Ajaokuta Steel Complex, a view he shares with Mr. Cyril Azobu, a partner at PricewaterhouseCoopers.

Azobu described Ajaokuta as a huge infrastructural investment that had been allowed to waste due to poor government policy and lack of political will to make it function.

According to him, the best decision the government can make is to privatise the facility and ensure that private investors that are into the business of steel rolling operate the facility.

He said, “Ajaokuta is a steel rolling company. What they do is to take the ore and role it into steel. It can serve as raw material for the manufacturing sector for fabrication. The problem of Ajaokuta is primarily political. It is in complete neglect and it has not been in the right hands. We are not maximising the infrastructure investment that we have made in that steel company. It is a huge and massive problem.”

Ajaokutasteel.com describes the steel complex as Nigeria’s leading steel company.

It said, “Guided by a philosophy to produce safe, sustainable steel, it is the leading supplier of quality steel products in all the major economic sectors including construction, packaging and wire drawing/nail making industry. ASCL operates in all the major markets in Nigeria and employs about 3000 people.

“Ajaokuta will take full advantage of the ECOWAS treaty and the Export Expansion Scheme of the Federal Government of Nigeria to expand its market base to the whole of the West African Sub-region and beyond.”

For a multibillion dollar company that was established by the regime of President Shehu Shagari (1979-1983) to say that it would take advantage of the Export Expansion Scheme of the Federal Government tells one story – the dream had been in the pipeline. In fact, it had been a drain pipe through which the resources of the nation had been wasting.

Unable to get the Ajaokuta complex working, the Federal Government under President Olusegun Obasanjo had given out the steel complex in concession to Global Steel Holding Limited, an Indian firm, in a process that was dogged with unending controversy. The company also won the concession of Nigerian Iron Ore Mining Company, Itakpe, located in Kogi State as Ajaokuta.

Some years later, the government was piqued that the Indian firm was not adding value to both Ajaokuta and Itakpe. In fact, the government accused the Indian firm of assets stripping.

By 2008, the government of the late President Umar Yar’Adua cancelled the concession given to the GSHL, a move the company resisted by going to the Court of International Arbitration London. As the arbitration process dragged for the next eight years, the assets of the companies deteriorated.

It is in the light of the deprivations that the nation’s economy had suffered in the absence of a viable steel industry typified by Ajaokuta that many Nigerians have hailed the recent out-of-court resolution between the Federal Government and the GSHL.

For the resolution to happen, the GHSL had to abandon its quest for arbitration. To get off its hands from Ajaokuta, the government had to allow it to retain the operation of Itakpe.

Minister of Solid Minerals Development, Dr. Kayode Fayemi, said Ajaokuta was a key factor in the quest of the current administration to diversify the economy. Ajaokuta had indeed been held as the backbone for Nigeria’s industrial revolution. Many therefore believe that industrialisation has eluded the nation because Ajaokuta had remained a pipedream.

He added, “Since the overall interest of our government is the complete revival of the steel industry, one area that is not covered by this agreement but which is germane to this revival is the relationship between the owners of the Delta Steel Company, Aladja and the concessionnaires at Itakpe mines.

“As I understand it, while the Federal Government has negotiated guaranteed supply from Itakpe Iron Ore Mines to the Ajaokuta Steel Plant, it may be advisable for the two private companies involved to negotiate a similar agreement in accordance with global best practice,” he said.

Speaking on the new agreement, Vice-President Prof Yemi Osinbajo hailed the mediation process that led to the resolution of the problem.

“It is a tragedy of immense proportion that we have both Ajaokuta Steel Complex and NIOMCO and couldn’t get anything out of them for years,” he said.

Osinbajo who said making the entities to work was a top priority of the administration urged the GSHL to keep to the various timelines in the agreement in the spirit of mediation.

There are some Nigerians, however, who think that the Ajaokuta and Itakpe controversy are far from being over. One of such people is the Kogi-born economic rights campaigner, Natasha Akpoti.

To her, the GHSL neither has the financial muscle nor the moral history to keep to agreements. She is telling everyone that cares to listen that the best strategy is to verify the financial investment claims of the Indian firm and see it off the Nigerian steel sphere completely.

Now, will the Nigerian industrial revolution begin? It is too early to be so optimistic.

 

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