The Minister in charge of Mines and Olamilekan Adegbite this week said President Muhammadu Buhari has given him the marching order to carry on with all negotiations necessary for the completion and operation of the Ajaokuta Steel Company located in Kogi State.
He said his ministry has studied the issues surrounding the company to see how it could put its many potential to good use, adding that part of the president’s order was to work a way that the company could be used to diversify the country’s economy and create employments.
Adegbite made this known in Abuja while speaking to newsmen on the proposed Nigerian solid minerals downstream workshop scheduled to hold Monday, December 2.
The Minister who spoke through his special adviser on special duty, Sunny Ekozin, said the ministry had been on its toes to ensure that the presidential order is carried out.
“For the past three months, we have been doing everything possible to ensure we make progress and we are happy to let the nation know that the president has given us full backing in this assignment.
“The support given by the president includes political backing to ensure that Ajaokuta works and by the grace of God it will work soon,” he said.
He stated that President Buhari also wanted the sector to resolve persistent problems surrounding the solid minerals and to ensure Nigeria could rely on the sector as a means to diversify its economy, adding that after studying the problems of the sector for the past three months,
the administration was on the path of maximising the potentials that abound in the minerals sector for the nation’s benefit, explaining further that one of the steps taken was the current process of developing the Nigerian Downstream Mineral Policy.
“The downstream mineral policy will trigger the nation with a clear diversification blue print in a sustainable manner, especially for the revamping of Ajaokuta steel company.
“And also effective harnessing of the abundant minerals endowment spread across the 36 states and the Federal Capital Territory (FCT).
“As part of the process leading to the revamping of the entire solid minerals sector, we are sensitising key stakeholders, especially large investors of this novel initiative for the development of solid mineral downstream value chains. This will help to create massive jobs, wealth and industrialisation,” he said.
It is because of the personality of the current Mines and Steel Minister and his impressive track records of achievements that one is encouraged to believe that this time, something good may come out of the promises to resuscitate Ajaokuta Steel and put it into operation.
This is because virtually all past military heads of state and civilian presidents that have governed Nigeria since 1984 have used Ajaokuta Steel as a platform for political gain while officials of the ministry and the various management teams back in Ajaokuta use the steel company to make money for themselves.
As published in the Daily Times of November 29, 1985, then head of state Gen. Ibrahim Babangida promised to ensure that the steel company was not neglected.
He said his administration would do everything to give the project maximum corporation in terms of funding and presidential impetus.
But Babangida, Buhari as military heads of government, civilian presidents Olusegun Obasanjo, Umaru Musa Yar’Adua, among others failed flatly on their faces to deliver.
The foundation stone for Ajaokuta, designed to be the largest integrated steel company in black Africa was laid in 1980 by then President Alhaji Shehu Shagari.
So far, the project is estimated to have gulped nearly $5bn but it’s development has been hindered by maladministration and corruption as budgetary allocation by various governments were allegedly diverted to private coffers while little was spent for the purpose of completing Ajaokuta and putting it into full operations.
After many years of rottenness, the administration of former president Olusegun Obasanjo concessioned the company to SOLGAS Energy, a US company in collaboration with Nigerian investors.
Following the failure of SOLGAS to operate the company, Obasanjo terminated their concession and entered another agreement with Global Infrastructures Nigeria Limited, a company promoted by a foremost Indian Steel making family called Mittal which carried out rehabilitation of the plant and commenced the production of steel products as well as took over the payment of the over 3,500 workers of the company.
There was virtually no meaningful or serious activities at the plant site, from June 1993 when the plant was shut down to 2014 when Global Infrastructures Nigeria Limited took over its management, began operation, producing highly rated iron rods and exporting them while servicing local industries.
The steel company went back into coma from 2007 following the termination of the concession agreement by late Yar’Adua and has remained, ‘dead’ till today, in spite of bogus claims by Nigerian administrations to put it back on track.
Yar’Adua unilaterally terminated the concession following allegations that the operators were not able to meet the target of the government in terms of volume of operations, demand by government for commencement of flat-sheets and accusations that they stripped assets of Ajaokuta steel company.
But the management of the concessionaire, Global Steel denied allegations of asset stripping, saying it received full approvals from the supervising ministry to borrow some consumables from Ajaokuta to Delta Steel which at that time was privatised to them.
On allegations that it failed to meet level of operations and to commence flat-sheets production as spelt out in the agreement with government, the company said Nigerian failed to carry out Federal Government’s own obligations that would have helped them accomplish their own parts of the agreement including completion of rail lines,
dredging of Escravos river in Warri, among others, saying government’s failure to do its own bit frustrated them from achieving fully, the targets. The company therefore dragged Nigeria to the international court of arbitration in London where the case is pending.
Efforts by the administration of President Buhari to reactivate the steel company during his first four-year term could not see the light of the day caused partly by the litigations over the concession termination.
Since he assumed office as Minister of Mines and Steel, Architect Adegnite has continued to give assurances that the days of Ajaokuta’s dormancy is over and many stakeholders in the industry have said that with his track record of achievements, he has the capacity to break the ice.
There is however the need for the government to be realistic and fair in dealing with companies, local and foreign investors interested in doing business with Nigeria as that is the most practical way to encourage Foreign Direct Investment (FDI).
A situation whereby Nigeria often terminates unilaterally and with impunity, concessions or agreements entered with businesses rather de-markets our country as was the case with the termination of the concession granted Dangote to operate refineries and the concession on Aluminum Smelter Company (ALSCON) located in Akwa Ibom, among others is not good for the image of the country.
Apart from satisfying the ego of those critics and so called activists that kicked against privatization and commercialization, what can Nigeria point at as the gains derived from the termination of the concessions Obasanjo granted on Ajaokuta Steel, the refineries, ALSCON and others because since then, none of these companies are working as boasted by those who claimed ‘we can operate them.’
Going forward therefore, it is necessary that the current administration in its determination to put Ajaokuta on the path of progress should ensure that all legal entangles with stakeholders, especially Global Steel are settled before or while engaging the Russians, Americans or any other interested party.
This is to avoid our walking the path of the controversial P&ID in which we had to pay a whopping $200million down before international court of arbitration even began to listen to our appeal on the earlier ruling.
As we delay in trashing the Ajaokuta legal debacle, interest would continue to accrue on the amount in contention which at the end is at the detriment of Nigerian tax papers.
The government should also note that steel industry in general is in a recession with China having their huge production capacity underutilized.
Because of the current recession especially as it affects the steel industry, investors all over the world are no longer keen in putting their money in the industry because technology has made it easier for serious countries to produce steel and the prices are no longer attractive.
For example, the highest steel producing country in Africa which is South Africa with a total of 6MTA. South Africa has so much steel available in the market and with throw away price. Ajaokuta’s capacity is a mere 1MTPA (Million tons per annum).
A little check will reveal that ArcelorMittal, owned by another member of the Mittal family who is also operating South Africa’s major steel company is about shut down the plant and lay off 1,000 workers in that country. This is verifiable online.
While wishing Minister Adegbite good luck in his determination, it may not be out of place to say that because I am conversant with the politics of Ajaokuta, having worked with the steel company for years,
that the Russians may be keen to operate and manage the company if you engage and pay them, but may not put a dime of their own as they did before the perestroika, under President Gorbachev.