AJAOKUTA STEEL COMPANY (ASCL): NIGERIA AND AFRICA’S BIGGEST FAILURE

     

PREAMBLE:

Ajaokuta Steel Company Limited, reputably referred to as the bedrock of Nigeria’s industrialization has sadly become Nigeria’s Engineering Museum for students and tourist over the years.

No Nigerian can visit Ajaokuta Steel Company Limited (ASCL), and see investments of more than $8billion rotting in the African sun and not cry.

The first twenty (21) years of my life was lived in Ajaokuta, My father started his career as an engineer and retired there after complete Thirty five (35) years in service. I also did one year Internship at the Steel complex in between my tertiary education, and in all of this years spent around the steel complex territory, never did I envisaged that the problems the company faced after forty (40) years of establishment would still linger considering the magnitude of investment I see there and the capability of the steel plant to turn Nigeria’s fortune around is a cause of worry even as I pen down this article.

BRIEF HISTORY:

Ajaokuta Steel Company Limited (ASCL)  is a steel mill in Nigeria, located in Ajaokuta, Kogi State, Nigeria. Built on a 24,000 hectares (59,000 acres) site starting in 1979. It is the largest steel mill in Nigeria, and its coke oven and byproducts plant are larger than all the refineries in Nigeria combined but, the project was mismanaged and remains incomplete 40 years later.

The project was undertaken by the Soviet Union under a cooperation agreement with Nigeria. The Ajaokuta Steel Company Limited was incorporated in 1979, and the steel mill reached 98% completion in 1994, with 40 of the 43 plants at the facility having been built.

To supply the Ajaokuta Steel Mill with raw materials and connect it with the world market, a contract was awarded in 1987 for the construction of Nigeria's first standard gauge railway, from the iron mines at Itakpe to the steel mill at Ajaokuta and continuing to the Atlantic Ocean at Warri.

The Ajaokuta Steel Mill was still unfinished four(4) decades after construction began. After several failed attempts at privatisation, the Nigerian government took back control in 2016

INTRODUCTION:

Iron and steel investment all over the world is capital intensive and because it leads to the industrialization process of every nation, it becomes imperative that the governments of nations as a matter of necessity to exercise control over the development of the industry especially at its

early stages. Therefore, Government policies, activities and diplomatic shuffles are paramount to garner these assistance and cooperation because most steel projects cannot easily be erected without financial and technical cooperation of other countries and institutions.

In Nigeria, the role of government in setting up Ajaokuta Steel Project especially in the planning stage was very visible. But subsequent administrations tend to lack the needed political leadership and will to steer the ship of Nigeria’s bedrock of industrialization after four decades of the establishment of the Project.

THE PRESENT COMATOSE STATE OF AJAOKUTA STEEL COMPANY:

Ajaokuta Steel is massive, 68km road network, 24 housing estates. Some of the estates have over 1,000 homes, a seaport, a 110mw power generation plant. There are 43 separate plants in Ajaokuta alone. It is estimated that if Ajaokuta becomes operational, it will create 500,000 jobs.

There is no industrialized nation on earth that does not have a steel sector it’s that simple. The Central Bank of Nigeria reports that Nigeria currently imports steel, aluminum products and associated derivatives of approximately 25 metric tonnes per annum estimated at $4.5bn.

Ajaokuta is an integrated steel company, it was designed by the Russian to be self-sufficient to get all its inputs from Nigeria and make steel. Ajaokuta strength is also its weakness; Ajaokuta can only work with all inputs available.

Steel is an alloy of iron & carbon. Iron is the base metal in steel, to make steel, you need Iron Ore, Coke from Coal, Limestone as main components. These components are mixed in a blast furnace to make liquid steel which can be long steel for rail lines or flat steel for auto

To give a simple example, look at steel as making jollof rice, iron ore is the rice, the limestone and coke are the pepper and salt the pot is the blast furnace. At a steel plane the blast furnace is ONLY turned on when the steel company is ready to make steel.

Blast furnaces operate continuously and are never shut down. The raw material to be fed into the furnace is divided into several small charges that are introduced into the furnace at 10- to 15-min intervals.

This means everything must be in place BEFORE the blast furnace is turned on, the iron ore, the coal, the limestone, everything, why? Because you do not switch off a blast furnace for another 10 years or however its campaign life is.

Nigeria has all raw materials needed to produce steel including iron ore in Kogi, coal & limestone in Enugu

Nigerian iron has very low iron concentration. Agbaja has the largest iron ore deposit in Nigeria with about 2b tonnes but the Agbaja  ore has a high phosphate content.

Phosphate can cause brittleness in steel making it to fracture, thus Agbaga was abandoned for Itakpe. Itakpe iron ore has no issues with phosphate but has low iron content.

Thus to make steel with Nigeria iron ore, a process called “beneficiation” has to be done to process the Itakpe ores to raise its iron content to meet the required standard for steel production.

Coal? Most of the coal found in Nigeria is non-coking, thus, unsuitable for steel production. coal deposits in Enugu, have no impurities but are non-coking. The good news? Nigeria has abundant deposit of limestone and we have natural gas to provide power

So back to Ajaokuta, what really happened? why can Nigeria not make steel anytime soon? let’s link up the elements

1.) Policy Failure: The Ajaokuta contract was signed between the FGN & the Soviet state-owned company, Tiajpromexport (TPE)  was scheduled for completion in 1986.

In 2012, the Federal Government launched her backward integration policy. Going forward import licenses for steel products was only granted to companies producing steel locally.

TPE to ensure they could import steel parts for Ajaokuta simply went ahead and built the rolling mills in Ajaokuta BEFORE the actual steel plant was completed, they imported billet from Ukraine to accomplish this.

Ajaokuta was producing steel before the actual steel plant was started. Ajaokuta has a functional rolling mills but no operational blast furnace. Ajaokuta cannot produce steel from basic iron ore found in Nigeria. This is the definition of cart before the horse.

2.) NIOMCO: The iron ore in Nigeria earmarked for Ajaokuta is from Itakpe, it has low iron content thus the FG built National Iron Ore Mining Company (NIOMCO) a 2.15 metric tonnes beneficiation plant to process the low-quality iron ore from Itakpe to iron ore suitable for Ajaokuta

Simply put, if NIOMCO does not operate, Ajaokuta CANNOT operate (unless Ajaokuta uses imported iron ore.) as at today, September 2019, NIOMCO is not operational

3.) Railway: 15m tonnes of iron ore cannot be moved by road, as it will destroy the roads, thus a railway was to be built from Itakpe to Ajaokuta to take iron ore from the beneficiation plan in Itakpe to the Ajaokuta.  Rail link not working today

4.) Blast Furnace: The furnace is the heart. It is the pot where the jollof rice will be cooked, however it has never been turned on, why? because there has never been any time Ajaokuta has had raw materials available to ensure continuous day in day out production for 5 years.

Why no raw materials? Because there is no rail  to take iron ore from Itakpe to Ajaokuta. Why no railway from Itakpe to Ajaokuta? Because NIOMCO in Itakpe is moribund and not functional thus cannot convert Itakpe iron ore to high grade ore for the furnace in Ajaokuta.

For Ajaokuta to work, she MUST have three key critical paths

1 NIOMCO must be functional

2 Itakpe to Ajaokuta Railway line must be functional

3 Blast Furnace operational

All three are not functional, so its clear Nigeria cannot make steel in Ajaokuta for now.

Nothing however stops a corrupt government official from importing billets and running them in the rolling mills. So, when anyone tells you Ajaokuta will soon begin working, ask them, can a steel plant work without NIOMCO, railways and a blast furnace?

Ajaokuta is the only steel plant in the world built by the USSR, sold to Americans, then to Indians, all these teams have come and gone with their own technical style, there have even been accusations of asset stripping by the Indians.

Ajaokuta is Nigeria and probably Africa biggest failure. Can it be made to work? yes but the cost to integrate Ajaokuta with her mines and rails can be used to build new smaller modern turn key functional steel mills.

The government should get out of Ajaokuta, sell the place and allow private sector capital and expertise restructure and own it.

If you want to make jollof rice and there is no rice the solution is not to keep boiling water without rice but to go and get rice.

Thank you.

Yours' Inspirationally,

Tunde Jimoh (Tundegold)

REFERENCES:

11.     Dr. Habib P.E (VOL. 2 NO. 2, 2016) kano Journal of History: Politics of Steel Development in Nigeria: A Study of Ajaokuta Steel Project, Nigeria.

1980–2011  https://www.academia.edu/38424997/politics_of_steel_development_in_nigeria_a_study_of_ajaokuta_steel_project_nigeria_1980_-_2011 [Online]

22.   Kalu Aja (2019): https://twitter.com/FinPlanKaluAja1

33.  Wikipedia-AjaokutaSteelMill: https://en.wikipedia.org/wiki/Ajaokuta_Steel_Mill