Will Ajaokuta Steel Mill Ever Work?


Kasim Sumaina x-rays the misconceptions chequered by history and interplay forces making the ASCL completion and commissioning elusive till date, even as the Senate visits

Since inception over 49 years ago, Ajaokuta Steel Company Limited (ASCL), Kogi State, is yet to fulfill the yearning of Nigerians to have localised steel products to boost the manufacturing industry despite successive administration’s continuous follow-ups, but heavy lips service.

The Ajaokuta Steel complex conceived in 1976, was aimed at establishing a metallurgical process plant and engineering complex with other facilities, which is meant to generate important upstream and downstream industrial and economic activities that are critical to the industrialisation of Nigeria has been marred by one controversies to another. From legal tussle of NIOMCO and taking over of operationalisation of Ajaokuta by Indians at a certain point back to the Nigerian government whose interest in resuscitating the mill is fading everyday.

Since the country’s returned to democracy in 1999, Ajaokuta has witnessed several tourist visits by appointed Minister’s and committees set up to revitalise the moribund steel plant without success.

The necessity to reposition the steel in Nigeria has geared up to be part of this worthwhile aspiration, as history is yet to reveal a nation that ever industralised without a viable steel sector. Nigeria cannot be exception.

Ajaokuta has gained more prominence in the present administration led by President Muhammadu Buhari, who five years ago appointed Mr. Kayode Fayemi, the current Ekiti State governor, to promote his non-oil economic development through the mining sector and Fayemi in one of his interviews noted that the president’s appreciation for diversification and the place that mining sits in the diversification agenda, the ministry was the juciest aside Agriculture and Trade. Despite his policies and programmes together with a robust road map to ensure that the foundation is rebuilt and that the mining sector becomes a driver of the economy, like his predeccessors, couldn’t deliver Ajaokuta.

A good aspect is that the federal government and the ministry of Solid Mines and Steel Development have expressed commitment to the resuscitation and effective operation of the steel plant to help produce the much-awaited iron ore. It was envisaged that the project would generate innumerable socioeconomic benefits and increase the productivity capacity of the nation through its linkage to other industrial sectors, but government recent pronouncements about not spending a dime on the project henceforth unless on what it termed, ‘Build, Operate and Transfer’, leaves much to be desired.

Presently, the project is said to be making a business case and according to the current minister of Mines and Steel Development, Mr. Olamilekan Adegbite, while taking stocks of what is accruing to the ministry in Post-Covid-19 federal government’s Intervention Fund, informed that the Nigerian government will not spend any money on Ajaokuta anymore, adding, that the project was making a business case. President Muhammadu Buhari has said the Nigerian government will not spend any money on Ajoakuta again. “So Ajaokuta is making a business case which has been accepted and once it is resuscitated and producing it can pay back its loan. So the whole essence is that they will build and operate it for a while upon agreed terms and at the end of the term when the loan is paid with interest, the plant will be reverted back to Nigeria and at that time a decision will be taken on who will manage it.”

The minister stressed that essentially the project on the collaboration with Ajaokuta is the “build, operate and transfer with the Russian government and that President Muhammadu Buhari and President Vladimir Putin, sat together at a bilateral and agreed on a government to government cooperation to resuscitate Ajaokuta because the Russians built Ajoakuta when they where the Soviet Union in collaboration with the Ukrainians and that is why we have gone back to them, the whole essence is for them to come here, access the plant and access the job to be done that is what we call a technical audit, the Russian government will have nominated a contractor who will do the job.”

He added, “The funding is coming from two sources, the Russian export centre, which is a Russian sort of Nexim bank, called the Russian Export Centre, they are providing $450m for the project and of course from the Afrexim bank will be providing $1billion so we have a total of $1.45billion, but the whole essence is that the Russian technical experts will come, do the audit which will lead to them giving us an exact figure of how much it will cost to resuscitate Ajaokuta and National Iron Ore Mining Company (NIOMCO), the two are tied together and once this is done, of course there will be negotiations, we won’t just take whatever they give us, their will be negotiations and at the end of the day, a sum will be agreed and contract formed and that is the basis that we will proceed.”

He further stated that the Russians will bring its experts to fix the plant, and that, the Nigeria government is working on what he called, ‘local context’, “right now we proposed 60 per cent local content, everything that is required in Ajaokuta and NIOMCO that is obtainable in Nigeria must be sourced from Nigeria, we don’t want everyone to come here and dump everything on us, only those things that we cannot provide can be brought from outside so right now we are at that stage of 60/40 of 60 per cent local content and 40 per cent foreign.”

Similarly, the Sole Administrator, Ajaokuta Steel Company Limited, Engr. Samaila Akaaba, stated that there is no point in time that a President of the country took it upon himself to travel to Russia and engage the original builders of this complex, the TPE, and the Russian President has given his consent that the required support would be given to the partnership. “We have a ministerial and a Presidential committees on this already, and a lot of work is being done. The committee has been divided into subcommittees to look at the already existing agreements which are being amended.

“And also, the Finance Committee is engaging the AFREXIM Bank and the Russia Trade Centre that made some pledges of $1 billion $0.45 billion. We have never gone this far before. The Senate Committee, led by the Senate Majority Leader, Distinguish Senator Yahaya Abdullahi, is here now on an oversight function.

“We are praying that that COVID-19 pandemic eases off so that the restriction can be lifted, the Russians are ready to come back to do what we call revalidation of an audit we carried out in 2018 to ascertain the status of this plant, and based on that we have had discussions with TPE and AFREXIM Bank, and they have made proposal on modernisation, and upgrade of the plant. They are supposed to be in Abuja just to revalidate the audit before we can sign on the actual contract. And I am confident in the integrity of Mr President. That is even why many nations we want to talk to us today, because they believe in what is happening. This is time for us to move the country forward; Ajaokuta for is for me one of the best opportunities we have as country to move forward.

Akaaba further noted that the management of ASCL was working hand in hand with NIOMCO. “Our relationship is very cordial. We are always together because Ajaokuta cannot work without Itakpe. Itakpe is to provide the raw materials for Ajaokuta to work. So if we don’t work harmoniously, it will be difficult for us. We have discussion all the time to compare notes. Both of us are part of the Presidential Project Monitoring team.”

The Senate Committee Chairman on Solid Minerals, Mines, Steel Development and Metallurgy recently paid an oversight visit to the plant. Led by the Senate leader, Sen Abdulahi Yahaya, pledged National Assembly’s support for the two companies to come on stream soon, noting that NASS is passionate to see that everything is done to make the effort of President Muhammadu Buhari comes to fruition.

He said, “I think all is on the amount of commitment and passion that we have for the project. The President of the country, President Muhammadu Buhari has already entered into agreement with Russia to revive Ajaokuta. You cannot start Ajaokuta without NIOMCO.

“Ajaokuta is a place that if visited by anyone, he or she would shed tears, but there is hope now going by what is being done. So the equipment and other things over the years either by pilfering or abandonment need to be rehabilitated for it to start working. The most important thing is how do we do technical audit on the entire infrastructure? So from the basis of that technical audit, we will know what is wrong and what is required to start the process. In fact, you have to do it before doing the Ajaokuta one and we have informed the Sole Administrators to put it in the 2021 budget.

“The two technical audits have to go together so while you are doing the technical audit for this one the Ajaokuta one is going on and you can synchronise the two so by the time you finish the whole technical audit and rehabilitation because it will provide you with the cost profile. The kind of technical equipment and upgrade the plant and make sure it is working successfully and also do same thing for Ajaokuta because it has been neglected for a long time”, he said.

Speaking in same vein, the Senate Committee Chairman, Mining and Metallurgy, Sen Umar Tanko Al-Makura, said the technical audit remains paramount and cardinal towards the successful take-off of ASCL. “One of the critical purposes the technical audit will serve apart from cost is the implication of revamping the company. It is also a fact that these things have been moribund for some time. The technical audit will also provide the necessary upgrade because from the time the mine stopped working and now technology has advanced.

“So the technical audit will find the way and means to bring the technology here in line with best practices and modern technology. That is the way to get everything back”, Al-Makura added.

Meanwhile, the Sole Administrator, NIOMCO, Augustus Nkechika, informed that NIOMCO’S mandate to provide the basic raw material for iron and steel production makes the company strategic to the nation. “As an evident of this, NIOMCO is required to supply Ajaokuta Steel Company Limited, ASCL, with 2.5 million tonnes of iron ore concentrate with Iron (Fe) content of 63-64 per cent in the latter’s operation during which it is expected to produce 1.3 million tonnes of steel.

Consequently, NIOMCO needs to be properly equipped to discharge its mandate effectively.”

Nkechika while acknowledging and appreciating commitment from the Minister of Mines and Steel Development and Senate Committee on Mining and Metallurgy said, “I therefore affirm on behalf of the management and staff of NIOMCO that we will also do all in our part to complementing your efforts towards bring NIOMCO back to operation and to inform you of the readiness of our staff to reciprocate your kind gesture by putting in their best at work.”

However, the SA pointed out emphatically that, “The need to fully complete the rehabilitation of the plants and also acquire additional mining equipment early cannot be overemphasised.”

He further highlighted challenges bedeviling operations of the company which include inadequate funds, the need to construct a new 45T magazine for storage of explosives and accessories, inadequate mining equipment, non completion of beneficiation and superconcentrate/weathered ore treatment plants, perimeter fence of 74.28km, depletion of human resource, non-commensurate remunerations and welfare scheme.

While it is safe to say that the two projects are tied to one another, it is pertinent to state that if the two cannot be simultaneously revitalised, at least; government should focus it’s attention on the importance.