The Sorry State of Nigeria’s Mines and Steel Sectors

By Prince Andrew Ighodalo – 
If you think you are man enough that nothing can make you shed tears, then visit the Ajaokuta Steel Company located in Kogi State. A multi billion Dollars integrated steel complex that was conceptualised to industrialise Nigeria and make her compete favourably with some other countries that were seen then as third world, Ajaokuta is not only a failed dream but also the direct meaning of shame. Ajaokuta was the single largest steel company in black Africa for which its workers felt like a privileged class of citizens. But Ajaokuta is now a trampled rose flower, ran aground by Nigerian managers who were aided by ministry officials.

After several years in comatose, then president Olusegun Obasanjo and his Power and Steel Minister, Liyel Imoke, brought invited the private sector to try and manage the company. The first was a concession agreement with SOLGAS Energy of the US. When the SOLGAS experiment failed, Obasanjo and Imoke engaged a certain Indian company which was able to resuscitate and put Ajaokuta into productive operation as well as payment of workers’ salaries which encouraged the government to equally sell Delta Steel Company to the Indian company.

Less than two years of Ajaokuta profitable operation, there were disputes that led to the exit of the Indians. While government and workers claimed the company was not moving at the expected speed of progress, the company alleged that government failed to carry out its own responsibilities which include dredging of the Escravos, provision of railways, uninterrupted electricity among others, saying that government’s failure to fulfil its obligations frustrated the efforts to achieve expected goals. The dispute between government and the Indian company spiraled to Delta Steel which government also took over from the company.

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Since then, the several plants in Ajaokuta are down and completely out. The blast furnace, the rolling mill, the billet mill, all the mills, the coke oven, the oxygen plant, everything is silent, without sound.

Ajaokuta use to have some of the most educated, best trained and highly committed workforce. These workers, many of who were trained in Russia, Ukraine, Kiev, Yugoslavia and even Germany by the Federal Government with huge foreign exchange years ago have now become disillusioned and redundant. Almost all of them are now farmers due to inactivity at the plant sites while the Ajaokuta Steel Township which was at a time seen as Nigeria’s version of London is now an abandoned cemetery. Both the plants and the steel township have been taken over by weeds and reptiles.

If the Ajaokuta situation didn’t move you to tears, then go to the National Iron Ore Mining Company (NIOMCO) located in Itakpe also in Kogi State. While there are pretences of some miniature movements in Ajaokuta, NIOMCO is prostrate. You cannot see even one ant within the premises of NIOMCO even if you sleep in that bush for days. There is no need repeating this ugly narrative in the case of Delta Steel Company Aladja in Warri. You can simply call Delta Steel ‘sorry.’

While the sites of these supposed national monuments lie waste, the nation spends billions of Naira to pay their workers as well as for administrative purposes. For example, Ajaokuta steel still has over 2,500 workers with a monthly (yes, monthly) wage bill of close to Three Hundred Million Naira (N300m). Multiply that by 12months of one year. For NIOMCO, the same Federal Government spends over Fifty Million Naira (N50m) on its workers’ salaries every month. Delta Steel workers take close to One Hundred and Fifty Million Naira (N150m) monthly wage bill.

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In addition to salaries, contracts are awarded and paid for by the ministry in the name of these companies even though they are not operational. This is why the current Minister of Steel and Solid Minerals Development, Mr. Kayode Fayemi, must be commended for discovering this conduit and going ahead to cancel over 16 of these contracts including the billions being paid to a Nigerian company called Koch over the years, even as Koch could not install the so-called Fourthlines in NIOMCO as well as contracts for the supply of Billet to Ajaokuta.

The problem of Ajaokuta is not to buy billet and roll out steel. Putting the company back to work requires long time study and planning. For example, government must find a solution to the problem posed by the Excravos without which you cannot bring materials through the sea.

If you import billets and use it to roll out rods, how much will you sell the products to recover your investment and make profit? Can the proceeds of the product pay the about 300million Naira monthly wage bill? You hear some people say Ajaokuta Steel Power Plants is now operational, laudable.

The two power plants in Ajaokuta have a combined capacity of 110megawatts that is 55MGW each. The one in operation now generates about 10megawatts. That is nearly Nine percent which is nothing to write home about. Even if you sell all that you generate now to the national grid, can it even take care of the company’s overhead not to talk of salaries?

The truth, even though bitter fact, is that President Muhammadu Buhari should set up a high powered team of technocrats supervised by the Minister of Steel and Solid Minerals Development, who has demonstrated insightful capacity to supervise the ministry, to brainstorm on a long term, lasting solution to the problem of Nigeria’s Mines and Steel sectors.

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No matter how you look at the situation, the solution still lies in getting investors who have the capacity to put in money and expertise to get the companies back on track. This is so because it has become obvious that Nigerian government cannot successfully fund the full and conclusive reactivation and operation of these moribund entities because of the huge funding required doing so. This even truer in the face of dwindling oil rent accruable to the government. Telling government we can do it is sentimental patriotism. Facts on ground do not support these claims.

Number two is, should the government find investors who are willing to take risk on these obviously dead museums, Nigerians, and especially host communities and workers should give the investors enough time as well as enabling environment to try and see if they can be put back to profitable operation because huge financial infusion is required.

For example, the iron ore obtainable from NIOMCO is not of international standard. While the international iron content is 69-70%, the iron content from NIOMCO ore is 36%. This means that any investor operating the site would need to super-concentrate it before it can be ready and suitable for the steel plants.

Ajaokuta, Aladja and NIOMCO are like triplets. Whether it is one investor or different ones that would operate all of them is another serious issue the government should consider. This is because the three are both independent and interdependent. The National Iron Ore Mining Company (NIOMCO) was designed to serve as the feeder plant for both Ajaokuta and Delta Steel as both needs iron ore from NIOMCO to survive.

Ighodalo is a former staff of Delta Steel, Aladja Delta
Email: [email protected]

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