Nigeria. What way for the steel sector?

Nigeria. What way for the steel sector?
Steel Development in Nigeria dates back to the pre-independence era. Regarded as vital for employment generation if adequate measures are adopted, the sector is vital to nation-building. While the Federal Government, through its 7-seven point agenda is doing all it can to impact on the living standard of the people, the steel sector, is said to be hanging in the balance as discordant tunes emanate from within it. In today’s World, steel is not just taking centre stage, its production and demand has been on the increase. In fact sales of steel have assumed an astronomical growth that it is predicted, that about 400 million tones of steel representing about 30 per cent of the total steel production in the World, will be traded through the internet. This, perhaps explains why economic planners have consistently argued that the growth of any nation is largely dependent on it’s per capita consumption of steel and it is also said that any nation with a steel-based economy, has created a nexus for its employment generation. Investigations also reveal that Nigeria, as one of the lowest steel consuming countries in the world with less than 600 thousand tones per annum as against a projected consumption figure of 10 million tones per annum, has not really fared well as most of its public institutions like the Power Holding Company of Nigeria (PHCN), Railways, are in total decay. Little wonder then that the Federal Government said recently that it has put in place measures to engage its nationals, especially young engineers to be sound steel and metal operators. This, it was gathered, was aimed at repositioning the country as one of Africa’s giant steel producers. To justify this, the Minister of State for Mines and Steel Development, Ahmed Mohammed Gusau, said his ministry along with other stakeholders was all out to ensure that they win back investors’ into the country’s steel industry. Gusau, who was addressing members of the National Association of Metallurgical and Materials Engineering Students of Nigeria in Abuja, underscored the pivotal role metallurgical and materials engineering students play in the development of the country’s metal and steel industry. The Minister said in a bid to bring about positive innovations to the industry, government had put in place both the minerals and metals policy and the minerals and mining Act of 2007. He noted that the ministry was prepared to come to the association’s aid to boost the mines and steel sector. He was confident to announce the commencement of steel materials production conducted by the Dana Steel Nigeria Limited Katsina, formerly Katsina Steel Rolling Mill. While it may appear that the Federal Government has woken up from its slumber, there are however, some pertinent questions which stakeholders in the industry have asked? For instance, many have asked why the iron ore deposits estimated at over 200 million tones at Itakpe Hill, near Okene, cooking coal estimated at 120 million tones at Lafia in Nassarawa State, marble at Jakura and Ubo in Kwara State, Limestone at Mfamosing in Cross River State,. Dolomite at Barum and Osara, and refectory clays at Onitbode/Oshiele among others have remained comatose, even when the history of steel development in the country dates back to the pre-independence era? Equally, questions have been asked concerning the fate of the Nigerian Steel Development Authority (NSSDA), which was established in April 1971, to ensure the general development of the steel industry in the country as a whole has remained a shadow of its-self? While terminologies such as national museum, white elephant project, bottomless pit of national waste have become synonymous with the NSSDA, a casual look at the blueprint establishing the agency cast some doubts in the plan by the Federal Government to resuscitate the steel sector as steel has no clearly defined position, which implies that for any nation to develop, steel and the metal industry are regarded as key factors for rapid development to take place. Looking at the industry constructively, indicate that the Ajaokuta community, which hosts the largest single industrial establishment in Africa South of Sahara--the Ajaokuta Steel Plant, has for nearly 20 years, waited to be part of this global trend in steel production, but alas, poor economic state of the Nigerian Nation, international politics and the greater attention placed on the development of the oil sector against other productive and revenue yielding sector such as solid mineral, Gas, etc, compounded the Ajaokuta problems. With a colossal investment on the project by the Federal Government, in terms of envisaged benefits to the nation’s economy, Nigerians were hopeful that the Ajaokuta Steel Plant would be completed without delay. However, this dream soon became a shattered one when Tiajpromexport, the Russian Firm handling the project abandoned work and left site in 1994. But, contrary to expectations, the abandonment did not dissuade potential investors, despite the myriads of controversies which have trailed it in recent times. One of such controversies was the move by the Federal Government to terminate the concession it granted Global Infrastructures Holding Nigeria Limited (GINL) on both Ajaokuta Steel Company, Aladja, Delta State and the National Iron Ore Mining Company, Itakpe. While efforts were made to have the Federal Government reconsider its decision, observers contended that revelations from an administrative panel of inquiry report set up to look into the concessions and progress made in the companies, indicated that the Delta Steel Company (DSC), Aladja, Delta State is making appreciable progress in terms of production of steel and operation of other sections of the plant. The DSC, which was commissioned in 1981, was conceived as one of the key industrial projects of the Third National Development Plan. In contrast to Ajaokuta Steel Project, the DSC uses the direct reduction thereby utilizing the abundant natural gas. The DSC was designed to produce and feed the three inland rolling mills at Jos, Katsina and Osogbo with billets. But the report, which said GINL had no technical and financial capabilities to operate the steel companies and on the basis of which the Federal Government took its decision later became mired in controversy as the latter raised alarm over allegations of politically motivated bias, which were leveled against members of the panel. THISDAY gathered that DSC, which was privatised to GINL, is not only on course but fully functional now, and producing. Workers unions and other staff, who spoke with THISDAY, expressed confidence on the investor and declared their readiness to continue working with them, as according to the workers, the steel plant was dead and have been lying prostrate for over twenty years before GINL took over its management. Expectedly, the progress of work being achieved at DSC, is said to be at variance despite the fact the investor has been bitter following the closure of the National Iron Ore Mining Company, Itakpe, which before the termination of the concessions was the main source of its raw material, iron ore. This is in addition to the very low level of power supply that the steel plants require so badly, to function. Incidentally, this development came against the backdrop of the first Nigeria Iron and Steel Summit, which took place in Lagos. The event, which was hosted by the Federal Ministry of Solid Minerals and Steel Development was reportedly said to have failed, in its objectives, to proffer immediate solution to the problems bedeviling the sector. For instance, the Minister of Solid Minerals and Steel Development Tunji Sarafa Isola and his Minister of State counterpart, Gusau had both argued that private investors in the sector have failed to rescue the nation’s steel sector. Yet, the minister added that government was looking for another investor to manage the companies, which in itself, according to experts, is a contradiction. To make matters worse, the communiqué which was issued at the end of the summit failed to proffer any immediate measure on steps to be taken in order to bring the steel companies back to life. Instead, the summit harped on the same issues that have been over-flogged over the years, rather than how the Federal Government should be more dedicated to funding the steel companies. While it blamed GINL over what it called its failure to bring the companies into substantial productive level, the summit failed to tell Nigerians and indeed the Federal Government that the steel companies were ran aground by Nigerian managers even when budgetary allocations were duly made and that for over 17 years, that the companies were not able to produce a single pin, not to talk of Iron and Steel materials. Though the participants failed to address some of the key issues raised, the failure of the Federal Government to fulfill its own part of the contractual agreements was alleged to have been the real factor which frustrated efforts of the investors to deliver to expected level. Expectedly, the Ministers and the stakeholders at the summit were expected to admit that the Federal Government had failed to dredge the Escravos River, which had subsequently failed to provide adequate power supply to the steel plants as well as complete the rail lines and carry out several other obligations contained in the agreements it entered with the investors over the steel companies. To say that most of the so-called veterans in the sector, who delivered papers at the summit, are the same Nigerians, who as chief executives of the steel companies contributed to their abysmal performance and eventual collapse, is to say the least of the facts of the case. And going back to the termination of the concession agreements did the minister and the participants at the summit disclose that workers of ASC and NIOMCO have not been paid any salary since the investors were hurriedly chased away? The workers are being owed six months salaries while the steel companies are dead again with no single activity going at the plants. DSC has continued to operate, producing thousands of tons of billets with the use of scrap materials sourced from very pitiable places and converting the billets into finished steel and iron products of different dimensions. This is what Nigerians could not do for the many years they operated the companies, in spite of the billions of dollars invested by the Federal Government. For some workers, the coming of GINL was a welcome development. According to one worker who pleaded anonymity, “Workers of Delta Steel Company are of the view that following the coming on board of GINL that their fortunes and that of the companies have improved for the better and as such have faulted the government revocation of the concession deal”. Leaders of the workers unions said things had changed for good in the three years that GINL took over the organisation, recalling that they suffered untold hardship for several years when the plant was managed by the Federal Government, with their salaries withheld for several months, and at a time for three years at a stretch, while the steel plants remained dormant.” Chairman of Iron and Steel Senior Staff Association of Nigeria (ISSSAN), DSC Branch, Comrade Ikpinima Daniel, was said to have specifically condemned the years of neglect and abandonment of the steel plant as well as the humiliation suffered by workers from successive administrations in the country, especially the refusal to pay salaries to workers. Ikpinima commended GINL for bringing DSC back on stream, irrespective of the low capacity utilisation of the firm. “Before the advent of GINL, DSC was completely down,” he recalled. “There was no production of any sort. We were not paid salaries for months.” However he noted that, “as soon as GINL was given the plant, in a few months, the plant came back to life. And since then, we have been making progress in areas of production, even if not at maximal level, and we hope that with time, it would improve.” “I will not subscribe to anyone saying that GINL does not have the financial and technical capacity to run steel companies in Nigeria . Like I said earlier, this plant was completely down before GINL came over. And within a short period, they were able to rehabilitate the plant and start production,” he said to prove the capability of the Indian firm. “What then is technical capability?” he queried, faulting the government claims. Collaborating Ikpinima’s position, the Assistant General Manager, Industrial Relations of DSC, Mr. I. L Obiuwerbi praised the management of GINL for restoring the company back to life after years of dormancy. He said those who were retrenched as a result of privatisation, had been recalled. “The plants are now working except one or two areas and that is either because of poor electricity supply to the company or the problem of getting Iron Ore,” he said. Obiuwerbi praised the management of GINL for restoring the company back to life after years of dormancy. “Before the advent of GINL, the company was in a state of coma. There was no productivity and facilities in the plant were just lying idle. But when GINL came in, within a space of six months or thereabout, production activities were resumed in earnest.” The steel industry, no doubt, is the bedrock of any country’s industrialisation, but today it’s the least on the development index of our country. It is expected that the National Assembly and indeed the Yar’Adua administration should take a second look at the economic impact of Global Steels’ foray into the Nigerian Steel Sector and not the politics of how they got here. They are here, they are providing the country with the needed vehicle for employment generation and they should be encouraged, if Nigeria is to develop its metal and steel sector.