Adegbite: Conspiracy Led to Failure of Ajaokuta Steel Company


The Minister of Mines and Steel Development, Mr. Olamilekan Adegbite, in this interview on ‘The Morning Show,’ on Arise Television, spoke about the efforts by the federal government to revive the Ajaokuta Steel Company through a partnership with the Russian government. Among other issues, he also spoke about efforts to enhance capacity and productivity of artisanal miners, to enable them thrive better.  Peter Uzoho presents the excerpts:

How optimistic should we be about Ajaokuta Steel Company considering the fact that it has almost become a white elephant project and since 1979, we have just been moving back and forth, from the Russians to the Indians?

We need to be optimistic about Ajaokuta. This administration is giving its best shots now on Ajaokuta, we have tried quasi-privatisation in the past, we have tried concession with the Americans, like you said, with the Indians, and all that, and it all failed. Now we have gone to the original people that built Ajaokuta. It is unfortunate that we are at this impasse, because Ajaokuta like everybody will tell you is 95 per cent or 98 per cent complete, and you just wonder why not that little push. There is a conspiracy internationally for Nigeria not to produce steel, especially then we were buying our steel from the West. Of course, they didn’t want us to produce steel, and of course, with some local collusion or whatever, Ajaokuta has failed. But that is in the past, the focus now is on making sure that Ajaokuta works.  President Muhammadu Buhari has said we cannot throw Nigeria’s money, hard-earned revenue at Ajaokuta again.  So we are looking at something totally different and innovative. We have gone back to the Russians who are the original builders under the Soviet Union –Russia, Ukraine, and then some Romanians participated. What we are doing now is, we have gone to the Government of Russia and they are working with the Nigerian Government to say that Russian will nominate a contractor from their country. We have got funding from the Russian Export Centre, that is something like an Eximbank and of course from the Afreximbank, we have this funding. Now, the Russian Government will bring the contractor forth and we are working government to government. This seems to be a better idea than what we had in the past, where it was just profit-oriented and then people just came in and milked Ajaokuta. Ajaokuta has worked at different times sporadically, one activity or the other, but now the thing is to get it working and keep it working. The arrangement we have now in place is that a company will come in, with the funding we are getting, and Ajaokuta will pay for itself.  So we don’t have to involve public fund in Ajaokuta, that is the model we are working on now.  As we speak, we are developing a business model to justify that, and this time, with all hands on deck, I think we should get it right. 

You said that public fund will not be involved, but in the 2020 budget, there is a provision of a substantial amount of money for Ajaokuta Steel company, which contradicts what you just said?

When I came into office a few months ago and I looked at the budget over the years and I said, look, we are paying staff in Ajaokuta, I mean something close to over N2 billion every year, that is the budget; and I said, why this? But I have visited Ajaokuta and I realised that the only reason why we have assets there today, why Ajaokuta is intact, is because we have been spending that money annually paying the staff.  What government has done over the years is to maintain the staff in Ajaokuta and they have been operating skeletally. They keep the machines moving, they do the routine maintenance and that is why there is something you can come back to.  We all know what this country is like.  Look at the rail slippers that have just been installed and people were stealing them.  If Ajaokuta has been left since about 1994 or so, you won’t meet anything there. The whole place will be vandalised, it will become a ghost town.  Let me give you this, Ajaokuta itself is bigger than the whole of the FCT. Ajaokuta was created as a steel territory and it is a bigger town than Abuja that we have here.  It has its own airport, it has its own port,  it has communities,  over 10,000 housing units,  all these have been maintained by this model that you see in the budget and of course the same thing for next year. The staff are there. Ultimately, when Ajaokuta is running, of course, like I said, the business model will take over, because then it will be able to pay the staff and of course pay, its way out of this borrowings. So, what you see in the budget is actually the fund to pay the staff of Ajaokuta and it has been like that, and I think it is something that is commendable.

Currently mining and solid minerals only account for 0.3 per cent of the Gross Domestic Product as it stands. How are we looking to increase that?

Well, I think your data is slightly out of date.  We were 0.03 in 2015. As of end of 2018, we have grown to 0.05. You may say that is just marginal increase, but that shows you that since 2015 when this administration came on board, they have put a lot of attention on mining and have put a lot of money into it as well, and we will begin to see increment on that. Even our revenue this year has surpassed whatever we have done in the past since we started monitoring. We have been monitoring revenue since about 2015 and right now this year has gone on record, I think we are going to make about N5 billion.  That is from direct royalty and licensing.  There is a lot of money that come from mining which we are now trying to insist should be credited to mining.  Look at all the cement companies in Nigeria, essentially their major ingredient is limestone which is from mining.  So a lot of money that is paid to government as taxes on this limestone thing is not credited to mining, it is credited to the industry and some other sectors.  If we credit that, actually what mining is contributing now is slightly higher than the data we have.  But as of 2018, it had climbed from 0.03 to 0.05.

Looking at the way Nigeria is enriched with over 40 different types of solid minerals, how are we proposing to utilise these minerals to serve the people?

Well, what really happened was that Nigeria lost focus on mining when we got oil and gas. This is because when the colonial masters were here, they relied on mining. Nigeria was quoted copiously on the London Exchange. We were the largest exporter of columbite at one point.  We were exporting coal, exporting tin to the world. But with the advent of oil and gas, we shifted focus away from mining. But now that oil and gas, fossil fuel is on its way out, everybody is talking about climate change and all that, the focus is now back on mining; and the potential in mining actually can surpass what we have in oil and gas.  Like you said, as of today, we have about 44 minerals which have been identified, especially the minerals of the future, like cotton, cobalt, lithium. These are materials of the future and Nigeria has abundance of that.  You know, when you go into electric car, when you go into your mobile phone and all that, these are the materials that are used for that. But besides, the immediate ones are the industrial minerals that we are trying to make sure we use.  I have spoken about barite in so many fora, that is one. Nigerians spent several millions of dollars annually importing barites into Nigeria.  Nigeria has plenty of barites. The problem has been the gap between the mines and the market, and we are bridging that to make sure that in about a year time, we start supplying Nigerian market with barites, and we are looking at about two years, to make sure that we satisfy local demand and then stop importation, meet the quality that is required, that is one. There is dimension stone.  You mentioned marble, we have granite. People spend millions of dollars annually importing from Italy, from China and all that. But we have got these materials. There was a success story when I was working for Ogun State Government. The largest ceramic tile manufacturer came into Ogun, that is CDK, they are there at the Sagamu Interchange, and now, the good thing about that which is for mining is that they are producing tiles which they export to the world, and you see made-in-Nigeria from Ogun State on those cartons that are being exported to the world.  Yes, it is a success story. They are the largest manufacturer of tiles and ceramics in the world. They do all toilet fixtures, fittings and all that. It is just being done out of Shagamu in Ogun State. It is one of the success story of mining.  The material is there. We are trying to extend that to marble, granite. We have got various stones all over the country, dimension stones. Instead of importing your granite, marble for millions of dollars, we can do it here. It is the same stones that are cut.  All you need is the right equipment to polish them. 

We all know that the Nigerian Iron Ore Company was tasked with processing and supplying Ajaokuta Steel Company with iron steel and all of that, so since the Ajaokuta is not functional at the moment, what exactly is its function?

Well, I think I have explained Ajaokuta. You need to visit Ajaokuta. Everybody keeps talking about Ajaokuta, people are emotional about it.  Some even said let us sell it outrightly. Nigeria has spent close to $6 billion on Ajaokuta as it stands.  But you need to go there. It is bigger than the whole of Abuja, and it is a lot of money that has been sunk into that place, it is a lot of investment. But this investment has been kept alive by the money we pay to the staff annually. About 10,000 housing units are there. You have got the plant itself which is being maintained. Even now as the Russians are coming, all the mechanical parts are intact, almost 100 per cent.  Most of the things that will be changed in Ajaokuta will be the electronics and few things like that, which are of course obsolete because they have been fixed since 1994, that was the time they pulled out.  So, Ajaokuta itself is something that is a game changer for Nigeria, because you cannot industrialise when you don’t have steel, it is very important. Even in construction we spend several billions of dollars every year importing steel into this country. If Ajaokuta could come on stream, there a few local companies that are producing steel now but they can’t even meet local demand. So we still import a lot of steel into Nigeria. If Ajaokuta were to produce, the facility in Ajaokuta is so outstanding, we can even begin to make ammunition for the military, we can begin to make car parks for vehicles, engine blocks, everything is there. So, there is a lot of potential, ones you produce steel you can now transform it to anything; and of course it is creating a lot of employment which is the mandate the president has given us –create a lot of employment, generate revenue for Nigeria, and of course begin to take millions of youths who are roaming the street off the streets. Ajaokuta has a lot of benefit downstream as well. There are a lot of foundries that will benefit from Ajaokuta, our industries will benefit. There are so many things that will come from Ajaokuta. And like I said, Ajaokuta itself is mining because you have to mine the iron ore, which is the major ingredient for steel production. We mine the iron ore at Itakpe, and of course there is a rail link that transports it to Ajaokuta and so on and so forth. There is so much potential in mining and steel for Nigeria. I think we have put the right focus and as we are doing that and we are sustaining that we will get there.

What is the current status of the iron ore company in Itape, it was supposed to be feeding Ajaokuta Steel Mill? Also, I will like you to tell us what is happening at the Aluminum Smelting Company in Ikot Abasi; and also the one that has been sold off by AMCON –the Delta Steel Company in Alaja? What is the Minister of Mines and Steel Development doing about all these strategic national assets?

Well, let me start with the Nigerian Iron Mining Company (NIOMCO) in Itakpe, it is still intact, there is nothing wrong with it. Itakpe is ready to supply iron ore to Ajaokuta. So we don’t have so much to do in Itakpe. Itakpe is actually good to go. Like I said, a few tweaking. The minister of transportation just rehabilitated the rail line that links it from Warri, of course that is at Alaja to Itakpe and to Ajaokuta. So, we are good to go as far as Itakpe is concerned, just a few tweaking. But then, I must tell you the other two you asked about – that is, the Aluminum Smelting Company in Ikot Abasi, it is no longer Nigeria’s asset. That has been privatised, it is a private company now that has been sold. Also, with Delta Steel Company in Alaja, it has also been privatised and out of the hands of the Nigerian government. So, those two entities are no longer national assets, they have been privatised, of course in the best opinion of the government that came before us. 

But do you really believe that focusing on mining can boost the country’s GDP?

Yes, I can say that, the potential in mining is so vast that it can of course surpass oil and gas in terms of earnings. For instance, there was a joke just recently, between myself and the minister of state for petroleum, I said give me one kilogram of gold and I give you one kilogram of oil, I call him the minister for black gold. And you see, you cannot compare that. Maybe a kilogram weight in oil will sell for maybe about N1000. For gold, that will sell for about $1.4 million. So, if we get it right, with the potential we have, we have plenty of gold. I have not even spoken about gemstones we have in Nigeria. Some of these stones are so rare that they are not found anywhere else. People are coming after them. Unfortunately, we have had a couple of this illegal mining activity, but we are stemming that. So, we got gold on one hand, which is a game changer. If we can get our gold right, it can earn so much for us. We have got all these sapphire, ruby, so many of these gemstones, that is another industry on its own. Apart from the revenue potential, it also can create job. Now, part of the things we are doing is that we are training people to be able handle gemstones, create jewelry and all that. Recently, I was in a factory in Abuja, I went to inspect, there was a lady that making jewelry and I was so happy. She made a custom-made jewelry for a big society wedding in Nigeria, I saw the picture and the bride was looking so lovely. You will think that this came from any of those big capitals of the world, but it was made right here in Abuja, and that was the potential we are trying to push forward. This industry can create jobs for our youth, from people who cut the stones to people who make the metals, whether it is gold, silver or any metal, from diamond and all that, people who cut this, there is a big industry there that we can create employment for our people. So it has got a lot of potential. It is unfortunate that we left it behind for so long and that inertia of starting again is what we are witnessing now. But once we get moving, it will be coasting down here and of course Nigeria will be better for it.

Artisanal mining is a huge source of livelihood for a lot of people in the rural areas.  However, the health hazards are inevitable and I am curious as to if there are other alternative to this form of mining, looking at the fact that it is terrible for their health, especially lead poisoning, mercury poisoning, amongst others? 

Well, artisanal miners as it were, people used to call them illegal miners but we say no, they are not illegal miners. These are artisans who are engaged in subsistence living. They go there, they do surface mining, they dig about two feet, 10 feet miles and they get some minerals, they sell and then get their next meal or something to keep them for the next one month.  So these are the artisanal miners, but they are going about it the illegal way; and government has done something very fantastic even before I came into office.  They have created a fund for them. We have a N5 billion fund which we are managing, to say look, these artisanal miners should come in, we train them, we give them equipment, we teach them safer methods. You know, because they are not trained and they are just doing this haphazardly. We have had incident like you mentioned, lead poisoning which happened in Zamfara. We have had the walls of the mine collapsing on them.  At times, it hits the water table and then the water just flows into the mine and before you can get out it drowns people. So this is what we are doing: we are calling these artisans miners, training them, we are organising them into cooperatives, because that is the only way we can deal with them and that is the only way we can ensure that the money we give them comes back. 

What do you think is responsible for Nigeria’s inability to move from a mineral-rich country to a mining country?

Well, the truth of the matter is that these potential is not something that is just academic.  You need to look at what sustains Nigeria.  You are right. From 1902, what sustained Nigeria before the advent of oil and gas, I told you, it is not just a matter of saying the potential is the, it actually was the main earner for Nigeria. We were exporting coal from Enugu, exporting tin from Jos, and of course, we were doing colombite. So, it is not that we are just talking about potential, it is what had happened before in Nigeria. And someone would say, it is the curse of oil. When we got oil and gas in the 50s, we drifted away from mining.  Mining was the main thing Nigeria was doing, Nigeria was not known for oil. We left mining behind.  Those countries that didn’t have oil and were relying on mining of course progressed. You know, new technologies, new findings and all that.  Mining also has to do with exploration. As of today, we say we have found 44 minerals. There may be many more there. We need to invest more in exploration to discover them, they are all over this country, you find them in every nook and cranny. So, what really happened was that we lost focus, and then by the 70s, I think by 1975, with the Indigenisation Decree, the big mining companies left Nigeria because government of course naturalised everything, they left.  So, we are totally out of mining.  So we are talking potentials today is because we are just starting all over again. And like I said, there is always inertia, something you have not done for a long while and you are trying to go back to it, it is going to take you a while. We go to all these miming fora abroad and sell Nigeria to them.  Nigeria is not known for mining, that is they tell us, Nigeria is known for oil and gas.  So we are trying to sell Nigeria back to the consciousness of this people. We need the big miners to come into Nigeria to develop the mines.  What the artisanal miners are doing is scratching the surface.  That is not even the minerals we gave in Nigeria, the minerals we have in Nigeria are deep down there and you can’t do that with artisans mining with all these simple implements.  You need to build proper mine shaft; at times it goes down about half a kilometer into the ground before you hit a pale load. So this is what we are trying to do: get the people who can do this, and that is where Nigeria can make money from this. We are not making money from the artisanal miners.  Most of these people are known informally, they don’t have licences, they just do it because it is at the back of their house; they met their parents doing it and they are just doing it for their subsistence living, and we don’t want to deprive them, if you chase them away of course that is going to create a lot of problem.

Tech companies like Tesla, Google, Apple are now under investigation for use of child miners in the Democrstic Republic of Congo. What checks and balances do you have in place to ensure that won’t take place in Nigeria?

Well, seriously, you know DRC has its own peculiar problems because it is a war-torn country. Some would say a country is not at peace because of the mining activity. Because it pains a lot of people when the government is not in place a lot of illegal activities can take place, that is the problem of DRC.  In Nigeria, thank God our system is not near that.  We have children in mining, essentially most of these kids in mining are brought in by their mothers. So there are a lot of women in mining. Government is doing something already.  We had few pilot programmes that have worked. What we did was that we provided the women with simple implements like wheelbarrows, shovels and all that.  At the same time, we furnished classrooms in those communities and enrolment went up to about 400, enrolment shot up. The women are able to produce more with the implements we gave them because hitherto they were using their kids. Now, they can put their children in school, they have the equipment which we provided them with which they can use to increase their productivity.  We have done this in about two places, trying to get the kids out of the mines. We support the women because mostly you find that women bring their children to mining.  We support the women with equipment, give them a little funding and of course taking the kids out of that. Of course, we also help the classrooms, help the schools in those areas and then the kids can go back to school. So, these are some of the success story. But I can assure you that the responsible miners, the big ones will not employ children because they have reputation to protect and all that, and these are the people we are trying to encourage to come into Nigeria.  When they do, they will even absolve all these artisanal miners because they now become their workers, they can now work deep down the ground and of course do what they are doing now in a safer environment.

In April 2008, the Minister of Mines and Steel at the time mentioned that Nigeria was considering coal as an alternative source of power.  Now I am curious as to whether or not this is still in the works, knowing that we have about 10,000 megawatts of coal for power lying idle?

As we speak, coal being used for power is ongoing in Nigeria in so many areas.   I don’t want to mention specific companies so it won’t be like I am advertising any company. But a lot of companies are using coal to produce in Nigeria now.  So coal as a form of energy is already a big thing in Nigeria: coal-to-power, coal-to-fire engines, to get aid and all that is already a big thing in Nigeria.  As we speak, people are asking for more licences to mine coal to produce power whether for their own use, captive generation or to put on the grid.  So it is something that has already gone very big in Nigeria. We gave a lot of companies now that are using coal in their production system.

In Zamfara, bandits, illegal miners, and artisanal miners took over gold mining in that state and that led to a crisis and eventually government had to shut down mines in the state.  What is the situation in the state presently?

What happened in Zamfara, we need to distinguish it. There are people we call artisanal miners and then, of course the illegal mining.  These are foreign nationals who have invaded Nigeria and of course are going into the hinterland to do mining illegally. We welcome foreigners to come and do mining, but you need to go through the proper protocol, you need to get your licence and then go and do your work and if course you need to report on what you are doing.  So the illegal miners we are dealing with those ones. What happened in Zamfara in that particular case was that in most cases you don’t find minerals in isolation, they come with other things. Of course when these artisanal miners mine gold in Zamfara, there was lead with and they needed to separate the gold from the lead. Unfortunately, because they were not properly schooled, trained in what to do, they were using their pestle and mutter to pound it, because it comes out in chunks. When you do that the gold budget will fall off and then the lead is there.  The same mutter that they were using for the grains they were eating was the sane mutter they were using to separate gold and lead; and of course, this is how they inject that lead, unfortunately it led to several deaths. Government itself gone in now, and like you said, that fund, we are working with Medecins Sans Frontieres, this is doctors without borders. They have been working with the ministry in rehabilitating people there.  Of course a lot of people died.  Lead injection itself is a major thing, it affects the nervous system; and we are working with these kids, people who are affected, we are trying to rehabilitate them.  So it is an ongoing process, it is something that has been going on and that is why government shut down mining activity in Zamfara, especially with the illegal miners. The illegal miners themselves are creating some instability. You had situations where because of what they want to do, maybe it falls within a community, they set a few huts on fire and people run away, banditry and all that. While people are away, they are busy mining.  You know, a Presidential Taskforce was set up on that and people were actually arrested, they were caught, because you go to some remote areas that you and I will think they are saying there is Boko Haram, there is this, you will not want to go, but you go there and you find this people there and they are thriving.  So you begin to ask, there is a lot of hype about this, and some people are hyping that, so they can hide under that, because people will not come there and they are doing their illegal activity. Some of them have been arrested.  The presidential taskforce is a standing force we use to intervene. We have federal mines officers all over the states, they rove with their staff.  Whenever we have report of this illegal activity, we send in this presidential taskforce to arrest situation there. So we have them all over the country and they are mostly foreign nationals who are involved in this illegal mining activity.  The artisanal miners on the other hand are Nigerians who are doing the mining though without proper licensing regime but we are trying to organise this people into cooperatives and bring them into the fold.

What are the opportunities and the expectations from this new and developing value chain?

The first thing I told you, apart from revenue, is the employment opportunity that is there. This sector can generate a lot of jobs. I even told you about the gemstones industry. It is a very good opportunity. Now, at the same time, there is a new policy we call ‘the downstream policy’. In the past, most of the minerals mined in Nigeria were exported in the raw form. We are now saying there must be beneficiation. That is, you must add value before you export them. Of course, there is a lot of job opportunity in this as well. And of course, we will not be getting peanuts. When we export crude oil for instance, we don’t get as much as we should get. If we refine the crude oil and we export PMS or AGO or Aviation fuel and all that, we get more. So, we are avoiding that pitfall in mining. We are making sure that we add value, that is beneficiation. We add value to whatever we are doing whether it is steel, it is melted and all that. We are giving licenses to at least two gold refining companies. One is based in Ogun State, the other one is in Abuja. So instead of just taking the raw gold abroad, we refine them locally. Government has also created a situation where the CBN can buy gold from us and keep some of their reserves in gold. So these are measures to encourage mining in Nigeria. Like I said, the revenue will come but most importantly, at this point in Nigeria, we need to create employment for our people, because the idle hands are ones causing the problem in the country.

What fund is available to cooperatives or individuals interested in mining as means of livelihood, and how easy is it to access this fund?

Since President Muhammadu Buhari came into power, he has put a lot of money into mining. There was a presidential intervention of about N30 billion, which is being used very well. There is also the World Bank support in mining which is about $150 million. But there is this fund that is created. We have N2.5 billion which we have put with the Bank of Industry. Bank of Industry has also backed that up with another N2.5 billion, making it N5 billion fund, that is for artisanal miners. It is to help them, it is so easy to access because we have tried the method in the past and then there was a problem. Everybody thinks this is part of the national cake, they want to access the money and then go away with that, that is not what we want. We want to use this money. We are given out this money at about 3.5 per cent interest rate maximum. So it is actually something that is very inexpensive to get. But the best way we are doing that is by organising these people into cooperatives. We use cooperatives so that we use peer pressure. You don’t have to bring any collateral or any asset. But when we give members of the cooperative, maybe five members in a cooperative of about 200 people, they are going to be the guarantors of this people and if they don’t return that money, nobody else gets from that cooperative, they are blacklisted. So we are using peer pressure, that is the easiest way. Once you have registered at the CAC, we will also help you with that registration, your cooperative is registered, you have trustees and all those things, the cooperative can approach us, and of course, we look at the activity. Another way is that we are providing equipment for them. Instead of giving them, money, now they are using simple implements, using their hands, we are providing them with excavators, bulldozers.  So the equipment is warehoused by a leasing company. We supply the equipment to the leasing company: they can go to the leasing company and lease the equipment at next to nothing. We localised this leasing outlet, so that wherever mining activity is taking place you have something very close to you. They bring equipment for you, you use it for a few days, it enhances your productivity and all that. So these are some of the ways we are supporting artisanal miners.

 There has been clamour for the review of the Minerals and Mining Act No. 20 of 2007, which vests the ownership of all solid minerals and all minerals in Nigeria in the federal government. Some stakeholders, communities even state governments have been saying that part of the law should be reviewed in the true spirit of federalism so that states can also share direct ownership of these minerals and exercise control over them in their own areas of jurisdiction. What do you think about this?

Well, it is not really a big issue.  It is not the Mining Act of 2007 that says that, it is actually the Constitution. You know the Constitution has what you call the exclusive list, the concurrent list, and the residual list, mining happens to fall on the exclusive list, and people tend to forget easily, oil and gas is mining, nobody seems to be saying Rivers State should be doing oil and gas or Bayelsa should be doing oil and gas, and that is what we are doing.  We are doing advocacy now.  I think just a week before the last I was in Lagos State to speak with Governor Sanwo-Olu, that was on Thursday, the following Friday I was in Osun and I was speaking with Governor Oyetola. We are trying to let these governors understand that we are partners in progress.  Yes, it is a federation but unless the constitution is changed these are things that are basic. Mining is on the exclusive list. And if everybody is clamouring now because we all have minerals, we tend to forget that we have partaken in this money coming from the centre in the oil and gas.  This oil and gas came from a particular section of this country and they have allowed the federal government to mine it, bring the money to the centre and it is shared.  You have FAAC meeting every month, everybody shares from that. We have to allow the same, as it is said, what is source for the goose is also source for the gander. You have to allow the same for the minerals in your jurisdiction. The federal government will mine it, make the money and take it to the centre and the money will be shared from FAAC. What we have done in mining as well, like the oil and gas is, there is 13 per cent derivation. So people who have minerals, they get 13 per cent derivation from whatever we make from their side.