Nigeria: Tackling Challenges in Steel Sector

re posted from                               All Africa

originally published 7 Jan 2016

Nigeria: Tackling Challenges in Steel Sector

The steel industry is a key sector in Nigeria’s economy that should have been the bedrock of the country’s industrialization. The sector provides industrial items such as iron rods, barbed wires and coils, as well as metal doors and windows.

The sector should also have been providing employment to millions of Nigerians, particularly in steel rolling companies which produce steel materials, if the federal government had developed it over the years.

But instead, the sector has experienced perennial neglect which consequently inhibited its growth. Now, stakeholders in the sector stress that genuine efforts be made to address the challenges and save the sector from total collapse.

Global steel production grew enormously in the 20th century from a mere 28 million tonnes at the beginning of the 20th century to 781mn tonnes at the end. Over the course of the century, production of crude steel had risen at an astounding rate to a production level of about 1.6bn tonnes per year. Today, it is difficult to imagine a world without steel.

During the 20th century, the consumption of steel increased at an average annual rate of 3.3 per cent. By 1900, the United States of America was already producing 37 per cent of the world’s steel. With the post-war industrial development in Asia, that region now (at the turn of the 21st century) accounts for almost 40, with Europe (including the former Soviet Union) producing 36 per cent and North America 14.5 per cent.

Planning for the Nigerian steel industry started around 1958. Many international organizations and consulting firms were commissioned at various times to study the feasibility of steel plants under the aegis of the Federal Ministry of Industries. Parallel efforts were also made to identify and analyse the principal raw materials needed for the steel industry. In 1971, an extra-ministerial agency called the Nigerian Steel Development Authority (NSDA) was established to focalize efforts required to actualize a steel plant.

At one time, the Delta Steel Company (DSC), Aladja, was, rather than import super-concentrate, sourcing it from Itakpe (in Kogi state). The DSC was then supplying steel billets to the inland rolling mills at Jos, Oshogbo and Katsina. The steel produced in Aladja was said to have met international standard.

It is also on record that the Ajaokuta Steel Company, which was designed to operate on a “backward integration model”, had, by 1983, completed the rolling mills – namely the light section, billets, wire rod, medium section and structural mills – envisaged to provide the needed funds for the completion of the remaining five per cent of blast furnace yet to be completed. The Ajaokuta Steel is believed to be the largest integrated steel company in West Africa and has cost the federal government an estimated $7 billion (N1.1 trillion) since it was commissioned by the Shehu Shagari administration in the second republic.

Saliu Otori, the national chairman of the Iron and Steel Senior Staff Association of Nigeria (ISSSAN), who at different fora had spoken to journalists on the state of the ASC, blamed the comatose state of the plant on lack of political will by the government to complete the plant and bring it on stream.

“In our estimation as key stakeholders, the missing link in the gap that had hitherto existed in the real desire of the people of Nigeria to see Ajaokuta Steel plant completed and operational is the required political will by the government,” he said.

Experts in the steel sector say that as a developing nation, Nigeria’s steel production is supposed to be far more than her consumption as a country eager to develop. They estimated Nigeria’s present steel production at about 300,000 tonnes per annum, while consumption, as shown by recent studies in 2010, is above 20 million tonnes per annum.

Already, the Minister of Solid Minerals Development, Dr. Kayode Fayemi, saddled with the burden of developing the country’s solid minerals sector, has started to smoke hot. On his first official visit to the company immediately after being sworn in as minister, Fayemi said President Muhammadu Buhari’s government has resolved to revive the Ajaokuta steel company once and for all.

“I want to let you know that the president is very passionate about the Ajaokuta steel company. We will take a look at the company holistically with a view to making it work for the benefits of Nigerians. I’m here on a fact-finding mission. I have read much about the steel complex and have been briefed by the sole administrator. We will make a final decision on the complex, which Nigerians would be happy about.

“We are looking at the entire steel complex. We will not segment the plant. We are told that the captive power plant has been reactivated. After taking the one needed by the company, we will be happy if Kogi and its environs could benefit from the remaining megawatts,” Fayemi said.

In his inaugural press briefing, he hinted that the government would partner with relevant stakeholders that would help fix the moribund company for the country to be able to produce its own liquid steel for consumption by local industries.

“We want to build a sector that will support Nigeria’s industrialization, expansion of low- cost coal-generated power, earn foreign exchange and generate tax revenues for governments at all levels. Our strategic aspiration is to build a sustainable, globally competitive mining and related supporting sectors that will prudently use the finite resources available to improve the quality of life for Nigerians,” he said.

Speaking with journalists recently, Nuhu Audu, a former Deputy General Manager (Administration) with Ajaokuta Steel, who disagreed with the International Monetary Fund (IMF) option that importing steel is cheaper for the country, said, “Yes, it is cheaper, which is true, and the money government is spending on maintenance of the steel company was much. But it was an advice that is in the interest of the western world and not in the interest of Nigeria and Nigerians, because the advantages of the steel plant cannot be measured in naira and kobo.”

Audu stressed that for any nation to develop and attain industrialization, steel development is a major catalyst. “In fact, steel is everything; making of cars, ships and even airplanes.”

To him, the western world does not want their hold on the steel market in Nigeria and by extension Africa to collapse and this is why they have been discouraging steel production in Nigeria through the IMF and World Bank’s advice.

Audu said, “At a time, the ASC was reputed to have the highest concentration of engineers. The engineers were trained in India and Russia but could not utilize their knowledge because of the collapse of the company.”

There is no doubt that the steel industry in Nigeria can be developed productively provided there is the will, commitment and genuine patriotism. Although it has been stagnant for so long, it could still be reactivated to provide the necessary vehicle for industrial transformation and growth.


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