Agha Ibiam
29 December 2008
analysis
Lagos — There is no gainsaying that the country is losing so much in revenue that ordinarily should accrue to her from the steel industry. That aspect of production, experts say is waiting to be tapped maximally.
Efforts made by the Federal Government to develop the steel industry in Nigeria dates back to the pre-independence era in 1958. But the more the government tries to fix that sector of the economy, the more things are going from bad to worse. At that time however, experts said action was directed towards the establishment of mini mills that would substitute the limited quantity of imported steel materials which the country was consuming then.
As a first step towards this, extensive market surveys were carried out on steel demand and projections were made. It was boosted and soon became clear with the availability of iron-ore in the country. Coal was also available and with the construction of the hydroelectric Kainji Dam, it was expected that electricity would be available in sufficient quantity to power the plants.
As a result, intensive studies aimed at determining the feasibility of an integrated steel plant were initiated. As these studies were pursued, various international bodies made proposals at various times. The proposals offered various technological processes both proven and unproven. However, the subsequent pilot tests were carried out.
Further more, experts said that in 1967, a team of Soviet experts were invited to conduct a feasibility study for setting up an iron and steel plant. The Soviet experts presented a feasibility report which recommended the use of the blast process for iron making. The report also pointed out that iron ore deposits in the country were of poor quality, and recommended that further geological surveys for exploration of better iron ores and coal for the proposed iron and steel industry should be carried out.
At the end, the investigation of raw materials in different parts of the country led to the establishment of Ajaokuta Steel Company in September, 1979 and charged with the task of constructing and operating an integrated iron and steel plant. The Ajaokuta plant was planned to be built in three stages. The first stage of 1.3 million tones to produce long steel products was followed by immediate expansion to 3.6 million tones for the production of 1.3 million tones of flat products in addition to the long products.
The third stage was the expansion of the complex to produce 5.2 million tones of various types of finished and semi-finished steel products including heavy plates and sections. The plant was designed such that it can be expanded up to 10 million tones eventually subject to demand. The steel complex was almost completed.
Since then, what has happened? The steel industry is still in comatose, draining the economy dry. "It was a white elephant project and a conduit pipe to drain the country's resources. A lot of people are feeding fat there without anything to show. This is a country of waste and it appears they are not ready to change," one sector observer told THISDAY recently.
For Delta Steel Company Limited, the company which was commissioned in 1981 was conceived as one of the key industrial projects of the Third National Development Plan. The company was designed to produce and feed the three inland rolling mills at Jos, Katsina and Oshogbo with billets. The project raw material - iron ore was scheduled to be imported from Brazil.
It was hoped that when the Itakpe iron ore project comes on stream, it would eventually satisfy about 10 per cent of its requirements. The steel plant also utilises limestone which is locally sourced from Mbamosing in Calabar, natural gas supplied from the Ughelli Gas fields. Well, these were the proposals government had in mind, which has become elusive. All that has surrounded the steel industry today is nothing but politics, characterised by lots of policy reversals by the present administration.
For instance, in less than three months, the National Assembly visited the Delta Steel Company (DSC), Owian-Aladja, Delta State. The incessant visits were to ascertain if Global Steel, an Indian was capable of handling the company.
The House claimed that the decision was at saving Nigeria's ailing steel industry and therefore recommended the immediate reversal of the sale of the company. The House equally hinged its decision on the premise that the sale of the plant did not go through due process as well as the failure of Global Steel to make appreciable improvement in terms of physical investments.
To many, that is an old fable, because since then nothing has happened, while few steel industries in the country are still begging for attention. However, while the Federal Government is still foot-dragging on who takes over government owned existing steel industries. There are few ones that only needed a pat on the back and they will spring a lot of surprises in terms of increasing their production capacity.
Recently, the African Steel Mills Nigeria Limited, located at Odogunyan Industrial Estate, Ikorodu, played host to the National Defence College, Abuja. The visitors were Participant of Course 17 of the college, led by the School Commandant, Real Admiral John G. Jonah.
As a way of training strategic leaders, not necessary in the military, but as a way of encompassing the assembly of what goes on to make the national power. He said one of the things they do every year is to try to look at strategic installations in the country that are of serious value to the country.
This year, the participants' course 17, Jonah said decided to look at the role of steel in strategic planning for vision 2020 and at the sectors that will contribute to the success of that vision. From the commandant point of view, he feels that steel industry will serve as backbone to many developments in the country when properly harnessed.
"We feel that without steel, no country goes anywhere. We are looking at the steel establishment in the country. A group traveled to Ajaokuta and another to Katsina. At the end of the day, we will gather our information and document them and later present them to the government," Jonah said.
African Steel Mills came on board in 2000 as a result of the chairman's response to the clarion call for direct foreign investment programme of the Federal Government for investment in the country. As an international conglomerate operating in the country for over 42 years, the principal activities of the company is in manufacturing iron and steel.
According to Uche Iwuamadi, a lawyer and the executive director of the company, the factory's production line consists of two essential sections, namely melting and the rolling mill. As the name suggests, the melting section takes care of the iron scraps, where they are melted into liquid in the oven and are then poured into moulds to form ingots.
The process goes further as the ingots are pushed into furnace where it again undergoes some processes and then come out to the rolling mill as finished products. Iwuamadi said at present, there are two melting sections and two rolling mills in operations and one of them is fully automated to the finishing point.
The factory, the director said has the facility and capacity to produce 200,000 metric tons of steel per annum, ranging from 10mm to 32mm in form re-enforcement. Bars and others such as square rods, flat bars, angles, channels bar, square bars and beams of various sizes, he said are produced at the industry.
One unique important service African Steel renders to the economy is that its raw materials: scraps are locally sourced. Unlike other existing steel plants that imports billets for their production, 12,000 tons of scraps are consumed monthly. This the organisation said will go up to 15,000 tons per month by the second quarter of 2009.
According to the National Defence College Commandant, the use of scrap materials in regenerating other raw materials have been very common in Asian countries such as China, as they turn these scraps into impressive things. However, the mentality of Nigerians not refining scraps which are in large quantity is nothing but colossal waste.
As a marine engineer, Jonah said, the use of steel is very common in his profession; therefore he was impressed at what they saw at the industry after the tour of some of the company's departments.
Another economic values accrued to the nation via African Steel is that its products are locally distributed and adopts the latest high frequency electric induction furnace technology. This technology, the organisation said will not only save the country of scarce foreign reserves but at the same time help to clean up streets of the unwanted nuisance called scraps.
The company also renders social corporate responsibilities within the community it operates. Apart from generating up to 600 direct jobs which cut across unskilled, semi skilled and skilled labours. Iwuamadi said about 1500 additional jobs is created for scraps collectors, sorters, loaders, transporters, oil companies, gas suppliers, electrical and mechanical material suppliers.
African Steel was almost at the verge of going public before the global economic meltdown. The company's technical director, Mr. Rari Sherma, during question and answer time, explained that people are still skeptical on investing heavily in the country and more so the economic environment is still not conducive because they don't know what might happen in the future.
"We have been denied of so many incentives, and this was not our bargain with the Lagos State government initially. We were promised so many things that will help accelerate our business, because it takes about five to seven years to recover whatever one has invested in steel business. The demand for steel market is more than the supply, but we are not encouraged," he lamented.
But despite the challenges faced by the organisation, Sherma said they are willing and capable of expanding to other states and replicate what they are doing in Lagos. For instance, the Ogun State government has approached the company on fertilizer business that will gulp about $2 billion, but he said they have to wait until the economic condition change so that they will be able to separate themselves from the crowd, an opportunity that comes ones in life time.
Apart from creating conducive environment to boost production capacity, Iwuamadi said the company is faced with a lot of constraints which included perennial unavailability of power; scraps at high price; smuggling of scrap; poor infrastructure and security, leading to threat of life. Despite the myriad challenges, the organisation is optimistic that production capacity is likely to increase by 50 per cent in the next two to three years.
The Participant Course 17 members include officers from Namibia, Sierra-Leone, Rwanda and Chad.
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