Federal Government Mulls Concession for Ajaokuta Steel Company’s Revival

In a significant move aimed at revitalizing the dormant Ajaokuta Steel Company, the Federal Government, through the Ministry of Steel Development, is contemplating a concession process. This decision, disclosed by the Minister of Steel Development, Shuaibu Audu, during a press interaction in Abuja, is part of a broader strategy to expedite the revival of the Ajaokuta Steel Company. The government’s commitment to this endeavor aligns with a three-year ultimatum to kick-start operations and steel production, as directed by President Bola Tinubu.

Addressing concerns about the viability of the three-year plan, Minister Audu assured that tangible progress is anticipated within this timeframe. He emphasized the objective of initiating some form of steel production, including getting the light steel mill and engineering workshop operational. Moreover, the plan includes the activation of production lines and plants at or near full capacity. Notably, within the envisaged three years, a concessionaire with the requisite skills may take over the operations, potentially signing a long-term agreement of 10 to 30 years to recoup their capital.

Legal Challenges Resolved: Clear Path for Ajaokuta Steel’s Future

This development comes on the heels of a High Court in Kogi State restraining the government from the planned concession of Ajaokuta Steel Company Limited and the National Iron Ore Mining Company at Itakpe just a year ago. Minister Audu assured that ongoing litigations have been resolved, clearing the path for the implementation of the roadmap. The ministry is keen on avoiding the pitfalls of past administrations and is engaging stakeholders to explore all available options for a successful revival. Minister Audu’s proactive approach seeks to ensure that the Ajaokuta Steel Company becomes a robust contributor to the nation’s economic landscape, providing both jobs and revenue.

Roadmap’s Economic Impact: 500,000 Jobs and $10 Billion Revenue Anticipated

The Ajaokuta roadmap, requiring an estimated investment of $5 billion, holds the promise of creating a substantial economic impact. Minister Audu highlighted that the implementation of this roadmap is anticipated to generate 500,000 jobs and potentially yield $10 billion in revenue. The minister’s emphasis on involving skilled concessionaires underscores the government’s commitment to sustainable and efficient steel production. As the Federal Government navigates this path to revitalize Ajaokuta Steel Company, the economic potential and job creation associated with the project seem poised to contribute significantly to the nation’s industrial landscape.

Iron Ore Abundance, Steel Industry Stagnation

Nigeria stands atop a treasure trove of iron ore, ranking as the second-largest holder of these precious reserves in Africa, boasting over two billion tonnes, according to a recent report by www.nairametrics.com. Despite this wealth, the nation’s steel industry finds itself paradoxically dependent on imported rolled steel for local production. The report highlights a history of poor investments in iron ore extraction, coupled with structural bottlenecks, stifling the sector’s growth. Data from the National Bureau of Statistics (NBS) reveals a grim picture, with negative growth rates in 2018 (-0.75%) and 2019 (-1.33%).

Ajaokuta Steel Plant: A Vision Hindered

In response to the steel industry’s challenges, the Ajaokuta Steel Plant was established in 1979 in Kogi State. Intended as a catalyst for Nigeria’s industrialization agenda, job creation, and foreign exchange revenue boost, the plant reached an impressive 95% completion by 1983. However, poor management, legal disputes, and concessions with foreign private companies have left the Ajaokuta Steel Plant in ruins for over four decades. The project’s stagnation not only reflects mismanagement but also prompts questions about the fate of other abandoned initiatives in the country.*

Ajaokuta Steel Plant’s Rise and Fall

A beacon of hope, the Ajaokuta Steel Plant was initiated in 1979 with a contract signed between the Nigerian government and Russia’s Tyazh Prom Export (TPE). The ambitious project aimed to accelerate Nigeria’s industrialization, create jobs, and enhance foreign exchange revenue. Construction commenced promptly, and by 1983, the plant was nearing completion, with former President Shehu Shagari commissioning it.

A Decades-Long Decline

Despite its promising beginnings, the Ajaokuta Steel Plant’s fate took a downturn. The initial vision of using income generated by the company to fund the remaining 5% of the project was overshadowed by poor management decisions, legal disputes, and concessions with foreign private entities. As the plant languishes in ruins after more than four decades, its decline raises broader concerns about the management of large-scale projects in Nigeria and the need for a comprehensive approach to revive such critical infrastructure.