Kashim Shettima, Nigeria’s vice president, said on Sunday that President Bola Tinubu planned to rely on the Ajaokuta Steel Complex to create 500,000 jobs.
Ajaokuta Steel has been a Nigerian attempt to boost industrialisation in the country for four decades. It was initiated by President Shehu Shagari in 1979. This steel processing plant became a point of reference for subsequent heads of state to make promises and bold statements.
Typically, Tinubu’s administration added Ajaokuta Steel to its list of promises at a political campaign rally of the All Progressives Congress (APC) for the Kogi State governorship election in November.
This political promise now has to be taken with a pinch of salt, for it is a promise made too frequently and for so long.
FIJ examines the origin of Ajaokuta Steel, the expense of delayed progress, the place of steel in world economics and the possible completion of Ajaokuta.
WWW.SEARCHNG.NG – Search on Sells.ng Nigeria's First Ecommerce Shopping Search Engine ...For More About This Post: FLASHBACK: Full Text of Ibrahim Babangida’s 1993 Annulment Speech
AJAOKUTA STEEL: A SIMPLE ORIGIN STORY
Ajaokuta metal steel factory in 1994. PHOTO CREDIT: Ilya Volkov
Nigeria had its earliest conceptions of a steel industry a few years before the country’s independence in 1960.
Between 1960 and 1966, Prime Minister Tafawa Balewa and President Nnamdi Azikwe invited steel industry experts from around the world to conduct feasibility studies on steel production.
America, British, Canadian and German teams came to Nigeria in that period, but it was soviet experts who won the attention of Nigerian leaders.
Nigeria and the Union of Soviet Socialist Republics (USSR) signed a technical and economic cooperation agreement. Afterwards, Soviet experts conducted a feasibility study on the establishment of an iron and steel plant in 1967.
In 1968, Soviet geological experts investigated and reported Nigeria had high prospects for richer iron ore and coal deposits.
Nigeria contracted TYAZHPROMEXPORT (TPE), a Russian company, to provide specialised equipment to carry out further geological surveys in 1970. By 1973, enough iron ore deposits were found around the Kabba-Okene-Lokoja region in the Koton Karfe axis of present-day Kogi State.
TPE submitted a detailed project report on a feasible Nigerian steel industry in 1977.
On September 19, 1979, Ajaokuta Steel Company Limited (ASCL) was one of the few steel companies established and incorporated as Limited Liability Companies (LLCs) under Section 2 of the National Steel Council Decree No. 60.
WWW.SEARCHNG.NG – Search on Sells.ng Nigeria's First Ecommerce Shopping Search Engine ...For More About This Post: FG to Lose N96m During Railway Workers’ Three-Day Warning Strike
WHY IT TOOK 40 YEARS TO FAIL
Ajaokuta Steel plant
After Shagari laid the foundations of Ajaokuta Steel on those 24,000 Kogi hectares in 1980, the building moved swiftly. By 1983, Shagari’s government had completed 84 percent of Ajaokuta Steel plants. In fact, the Light Section Mill and the Wire Rod Mill were commissioned earlier than their scheduled dates in 1983 and 1984.
What took four years to reach 84 percent completion took ten years to complete 14 percent worth of the steel plants. At 98 percent completion in 1994, Ajaokuta Steel went into hibernation.
It has yet to commence steel production operations to date, though the company mills and fabricates iron rods.
An on-site Al Jazeera report conducted in 2018 showed that Ajaokuta Steel remained moribund. At the time, the federal government had promised that the steel plant would commence operations in about 18 months (2020).
Sumaila Abdul Akaba, Ajaokuta Steel Company’s administrator, told Al Jazeera that all the plants were in good condition.
“The quality of the plants is still intact. But as at now, what we’ve done is to start to re-engineer the plants, refurbish, and try to make them work,” Akaba said in 2018.
“We have the light mills that produce iron rods that are 100 percent available. Very soon all the plants will be in full operations.”
‘Very soon’ was meant to be 2020, but the plants did not reach full operations. Why?
Previous reports on Ajaokuta Steel all agree that the governments after Shagari grew disinterested in the steel industry project because Nigeria enjoyed massive revenues from crude oil. Nigeria could have completed Ajaokuta Steel at the turn of the century but the successive military governments did not prioritise it.
At the start of Nigeria’s fourth republic, President Olusegun Obasanjo planned to privatise Ajaokuta Steel. Obasanjo gave Messrs SOLGAS Energy, an American company, control of Ajaokuta in 2003 but terminated the 10-year concession contract for its poor performance in 2004.
Global Infrastructure Nigeria Limited (GINL), an Indian company, got a similar contract from Obasanjo around 2005. By 2008, President Umar Yar’Adua terminated the contract for not meeting expectations.
GINL took the federal government to arbitration court for not meeting the requirements of the clauses built into their contractual agreement. The legal battle put Ajaokuta Steel on hold till the federal government settled with GINL in 2016.
Two years later, the National Assembly approved $1 billion to complete Ajaokuta Steel. The company needed just $700 million.
Abubakar Bawa Bwari, Nigeria’s mines and steel development minister in 2018, said, “We want to make sure Ajaokuta is complete before the end of this administration.”
Ajaokuta Steel remains unfinished in 2023.
WWW.SEARCHNG.NG – Search on Sells.ng Nigeria's First Ecommerce Shopping Search Engine ...For More About This Post: Court Asks EFCC to Take Possession of Illicit Properties, Funds Traced to Kogi Gov’t
THE VALUE OF STEEL
A stack of steel tubes. PHOTO CREDIT: World Steel.
“Steel is the world’s most important engineering and construction material,” World Steel Association, the international industry association for steel-producing countries, stated on its website.
The value of steel is mostly tied to its sheer versatility. Steel is used in so many ways in applied engineering and manufacturing. It is used in every aspect of human life. Steel is present in automobile production, appliance manufacturing, cargo ships, aeroplanes, utensils, surgical scalpels, storey buildings and skyscrapers, mobile devices, and the list goes on.
Many grades of steel are easy to recycle, very durable, and use up relatively low amounts of energy during production when compared to other materials. There are also more than 3,500 grades of steel. These innovative lightweight steel saves energy and resources. Little wonder steel is such an important material in demand.
The largest economies have thriving steel production industries, China being the leading crude steel producer in the world. Countries earn decent revenue from steel depending on how much is produced.America’s annual steel revenue went from $20.275 billion in 2021 to $21.065 billion in 2022. According to the American Iron and Steel Institute (AISI), shipments from domestic steel mills in the US measured 89.5 million net tons (NT), while raw steel production was at 94.7 million net tons in 2022.
“The benefits of getting Ajaokuta Steel Complex working again are numerous. It would provide over 500,000 estimated jobs and more than $1.6 billion (N716 billion) in annual income to the Nigerian economy. Nigerians can rest assured that I remain committed to seeing this process to a logical conclusion before the end of my tenure in office,” Buhari said in a 2022 statement.
Buhari failed to complete the rejuvenation of Ajaokuta Steel, and its potential to return over N700 billion every year remains a waste for every year it stays inoperable.
WWW.SEARCHNG.NG – Search on Sells.ng Nigeria's First Ecommerce Shopping Search Engine ...For More About This Post: How Kogi House of Assembly Candidate ‘Stole N681m’ From Union Bank Accounts
WHEN CAN AJAOKUTA STEEL TRULY BE COMPLETED?
Ajaokuta has been almost completed since 1994. ‘Almost completed’ in 2023 does not particularly hold so much promise in that context. What would have cost $700 million in 2020 is currently estimated at $2 billion dollars. It really is not a question of ability; it is a test of will.
Previous administrations have approved more than enough funds to complete Ajaokuta Steel in order to make all its plants functional. They have also proved that about half of the entire project can be completed within two years.
Ajaokuta Steel has been reported to be over 95 percent completed multiple times. Reasonably, it should not linger in inactivity for three more years.
It can truly be completed very soon, in a matter of months even, except Ajaokuta Steel remains relevant to the president as a talking point at political party rallies.
The post After Gulping $10b in 43 Years, Ajaokuta Steel Is Still ‘Almost Ready’ appeared first on Foundation For Investigative Journalism.