19 January 2013

Nigeria: NIOMCO - Constraints of a Multibillion Naira Project

The National Iron Ore Mining Company (NIOMCO) located in Kogi State is capable of generating N72.9 billion annually as revenue and provide employment opportunities to thousands. But the project is suffering from several constraints

Atop an ancient hill lying about 10 kilometers to Okene from Lokoja in Kogi State lived an ancient warlord who, legend has it, became an oracle to be consulted whenever warriors in the zone wish to embark on any battle.

The warlord, Itakpe, who lived alone with his hunting tools and farming implements, never knew he was sitting on top of a gold mine, for the entire hill, christened after him, was blessed with a huge amount of iron ore deposit that, arguably, could not be rivalled in the entire West African sub-region.

The Itakpe Hills in and around the town of Itakpe, discovered in 1908, contain very pure deposits of iron ore. The National Iron Ore Mining Company (NIOMCO) is located here and operates an open pit mine. It supplies the steel works of Ajaokuta and Aladja, as well as producing ore for export.

Iron ore is used for making steel, transformers and motor cars, electro-magnetic devices, electric bulbs, engineering works etc.

The National Iron Ore Mining Company operates the Itakpe iron ore mine which has an annual capacity of 5.5 Mt per year. The beneficiated product contains 64.7% Fe. The largest deposit of iron ores of Kogi and Enugu States are yet to be fully exploited.

On April 14, 1971 the Federal Government promulgated Decree 19 setting up the Nigeria Steel Development Authority (NSDA) to plan, operate and maintain iron and steel plants in Nigeria.

In 1979 Decree 60 of September 19, FG dissolved the NSDA and established six companies among which was the Associated Ores Mining Company which was later renamed National Iron Ore Mining Company.

Nigeria's overall demand for iron rod is mostly being sourced from the recycling of waste metal scraps. Besides, there are three inland rolling mills at Oshogbo, Jos and Katsina in addition to some privately-owned rolling mills in Lagos, Calabar and Kano.

The nation also has the Aladja and Ajaokuta steel companies which are potential buyers of the iron ore to be produced apart from the lucrative international market.

The National Iron Ore Mining Project (NIOMP) at Itakpe is projected to supply 2.155 million tons per year iron ore requirement of the Ajaokuta Steel Company. In addition, it is contemplated that the project would also supply about 40 per cent of the requirement of the Delta Steel Company for super-concentrate iron ore fines (grading 68 per cent Fe) which were largely imported from Brazil.

Also, contract for the provision of railway line from Ajaokuta to Warri was only executed over a portion of the over 200km distance. Thus, there is no existing provision for cost-effective bulk transportation of iron ore super-concentrate from Itakpe to Delta Steel Company, Aladja.

Some of the major constraints to full plant operation at NIOMP include inadequacy and low availability of mining equipment, support facilities, spare parts and consumables, such as explosives and non-completion of the 4th beneficiation line that will produce super-concentrate for DSC.

The 51km Itakpe -Ajaokuta iron ore transfer rail line has been completed.

Itakpe is connected to the 132 KV Itakpe/Ajaokuta transmission line and has a staff strength of about 1,241 who are being paid through the Federal Ministry of Mines and Steel Development.

NIOMCO is presently having, three locomotives with 71 wagons (21 in Agbor) and has the first standard gauge rail line in Nigeria.

Attracting interested investors into the mining industry in Nigeria especially into the mining and processing of iron ore and coal because of the vital role they play in a nation's quest for industrialization has thus became a mirage.

It is on record that Nigeria has a proven deposit of over 3 billion tons of iron ore in Kogi, Enugu, Zamfara, Kebbi, Niger and Kaduna States. At present most of iron demands are being met from the recycling of metals scraps and the demand has been estimated at 2 million tons annually.

The iron ore deposit at Itakpe is estimated at about 200 million metric tonnes as minable reserves out of which only 3 million tonnes have been tapped.

As Nigeria strives to achieve Vision 20:2020, it is important that government pay attention to the development of the various iron ore and coal field in Nigeria because they are generally seen as a major index of national prosperity, stakeholders say.

NIOMCO was concessioned to Global Infrastructure Nigeria Ltd. (GINL) in 2005 for ten years and the concession agreement placed on GINL the obligation to complete, rehabilitate and operate the NIOMCO plants so as to be able to recoup their investments as well as make reasonable profit.

In addition, they were expected to pay three per cent of their turnover from operations to the Federal Government and to maintain the accepted stock of spare parts for maintaining the plants in good working condition.

However, they allegedly not only defaulted in all these areas, but also indulged in cannibalizing the Beneficiation Plant hence the termination of the concession agreement in 2008 and setting up of an Interim Management Committee (IMC) to secure the assets of the company.

Late 2012 the IMC was dissolved by the Federal Government. It appointed Engr. Abubakar Y. Ibrahim as Sole Administrator of NIOMCO, with the mandate of putting in place an effective management structure, and supervision of plant rehabilitation work, among others.

Engr. Ibrahim adopted an eight-department structure for the company to include Mines, Beneficiation, Engineering Services, Power and Utilities, Commerce, Estate, and Administration and Finance Departments.

The Beneficiation Plant is the nucleus of activities at NIOMCO where 36 per cent iron run-of-mine ROM ore is crushed, ground and processed to give the marketable product for the steel companies and other users both locally and internationally.

The plant has the capacity of producing 2.15 million tons of 63-65 per cent iron concentrate annually and after the completion of the super concentrate plant, 0.55 million tonnes of super concentrate of 66-68 per cent iron can be produced.

The mines at the plant is made up of the mine, explosive magazines, and the main mine workshop for the maintenance of all mining equipment for pre-exploration drilling.

The mining equipment and explosives are engaged in the exploitation of the ore from the mine to feed the beneficiation plant.

The last mining activity at the Itakpe iron ore mining site was in 2008.

However, Dr. Olusegun Aganga, Minister for Trade and Investment, recently disclosed in far away Australia that Nigeria expects the first significant iron ore production next year from its Itakpe iron ore deposits as it looks to reduce its dependence on oil and gas revenues.

"Unfortunately, once we found oil, all the attention went to oil and we neglected (other areas)... mining is one of the key areas that we want to diversify into," Aganga.

Nigeria will start receiving revenue from iron ore production next year, he said. The Itakpe iron ore deposit contains 3 billion tonnes of iron ore reserves, according to the minister.

Aganga said initial production from the mine is expected to be 2 million tonnes a year, ramping up to 20 million tonnes annually in five years, a development that will help Nigeria establish a track record in the mining industry and allow it to attract more investors.

The benefits to be derived from a developed steel industry are numerous and include economic growth, technological advancement, employment generation, industrialization and skills acquisition.

The steel industry all over the world is a great employer of labour. NIOMCO is capable of employing over 3,000 persons not to talk of the employment opportunities that the multiplier effect of the industry is capable of creating.

NIOMCO is capable of generating N72.9 billion annually for a projected production of 600,000 tonnes of concentrate at the global rate of $180 per ton.

It is sad that the West and their local supporters are not relenting in their determined effort to discourage and frustrate the full development of the plant.

Therefore, stakeholders say, unless the Federal Government demonstrates the will to complete NIOMCO and operate it sustainably, these subversive elements will continue to sabotage the effort of Nigeria to build a virile steel industry.

Copyright © 2013 Daily Trust. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.