The arrival of 23 Russian engineers at Ajaokuta Steel Complex has raised the hope of the revival of the multi-billion-dollar steel plant that has not seen much productivity from inception till date.
Announcing their arrival last Friday on its X (formerly Twitter) handle, NTA News said the Russian team will carry out a technical audit of the plant in company of the Nigerian team with a view to completing the complex.
“An advance team of twenty-three Russians, the original builders of Ajaokuta Steel Company, has arrived at Ajaokuta for technical audit with the team of engineers in the company in anticipation for the completion of the project. Some analogue equipment shall be replaced with digital ones for effective operations,” NTA News said.
“The sole administrator of the Ajaokuta Steel Company, Sumaila Abdul-Akaba, who confirms this to NTA, says the team has visited several units including thermal power plant, light mills section and the oxygen plant,” it added.
In May 2024, the Federal Government launched an initiative to raise a $2 billion facility for Ajaokuta Steel Complex, with the FG beaming its searchlight on Chinese, Russian and Arab investors.
While making that move, Minister of Steel Development, Shuaibu Audu, said Plant One within the Ajaokuta Steel Complex, which can produce about 400,000 metric tonnes of iron rod, was 98 per cent complete and will require $35 million additional funding for full completion, justifying the move to raise the new facility.
“Although we are talking to the Russians, we have other parties that are also showing interest, including the Chinese, the Arab companies. The consortium the Russians are bringing also include the Nigerian investors. We are factoring local capacity into the conversation,” Audu said in May.
Ajaokuta Steel Complex in Ajaokuta, Kogi State, about 38 km away from Lokoja, the state capital, was set up in 1979 with a design to produce iron and liquid steel from the Iron Ore Mines at Itakpe, Kogi State. It is one of the huge investment decisions made back then by the Nigerian government in order to boost the nation’s industrialisation drive. The motivation derived from the fact that Nigeria’s proven iron ore reserves stand at 2,542 million tonnes with an average quality of 36 percent iron content, according to the Federal Ministry of Mines and Steel Development.
However, from inception to date, the Ajaokuta Steel Complex faced serious local and foreign undue influence, resulting in the huge complex being idle for over four decades.
Nigeria currently imports as much as $3.3 billion worth of steel annually, according to PwC. This is as the nation’s steel and mining industry contributes less than one per cent to its Gross Domestic Product, further exacerbating the need to import steel-related products.
Based on the GDP figures, the metal ores subsector of the Nigerian economy contributed N6.21 billion to the nation’s GDP in 2020; N8.33 billion in 2021; N9.66 billion in 2022; N14.53 billion in 2023, and N15.91 billion at the end of the first quarter of 2024, in a country with over N70 trillion GDP.
According to PwC, Nigeria’s mining and quarrying sector, including metal ores, is expected to contribute 0.29 per cent to the nation’s GDP in 2024 and 0.34 per cent in 2025, citing the challenges of the sector to include insecurity, smuggling, state and FG tax alignment, illegal mining, low level of mining mechanisation as well as inadequate finding. The current contribution to GDP is still a far cry from the 3 per cent annual target in Nigeria’s mining roadmap.
The numerous challenges faced by the Ajaokuta Steel Complex included the 2022 litigation which involved the Federal Government and Global Steel Holdings Limited, an Indian firm. Nigeria eventually agreed to pay Global Steel Holdings $496 million following an out-of-court settlement. The firm initially demanded over $4 billion as damages.
The dispute arose when the late President Umar Musa Yar’Adua cancelled the agreement the Nigerian government had with Global Steel Holdings on the grounds that the terms of the agreement were not favourable to Nigeria. Global Steel Holdings eventually took Nigeria to the International Court of Arbitration in Paris, which resolved the payment made in favour of the plaintiff.
In spite of Ajaokuta firm having not produced any products, the firm currently claims to have about 10,000 workers in its employ, gulping recurrent expenditure in the form of salaries and allowances to workers.
According to a recent finding by the Punch newspaper, Ajaokuta Steel Complex, between 2014 and 2024, gulped N38.9 billion as recurrent expenditure. The breakdown showed that N29.11 billion was paid as salaries and wages, while N9.8 billion was paid as allowances to the said workers. This implies that the current move by the FG, if successfully implemented, will make those workers work for the money they are being paid.
“Resolution of matters stalling the recommencement of operations of Ajaokuta Steel Company Limited and Delta Steel Company Limited needs to be resolved as a matter of urgency. Otherwise, the government should consider alternative approaches to stimulate the development of the steel industry,” PwC said.
