Steel industry needs restructuring

Global steel industry, strengthened by a rising global demand in the building construction sector, industrial infrastructure and machinery is currently worth over $300 billion with...,

Global steel industry, strengthened by a rising global demand in the building construction sector, industrial infrastructure and machinery is currently worth over $300 billion with a tremendous growth expected to reach $963.6 billion by 2027, reports Market Research Future, a global market research company. According to industry players, the steel industry has enormous potential as a major source of revenue for the country, especially at a time when the federal government is exploring alternative ways of economic diversification from oil. Self-sufficiency in steel production, they noted would also mean conserving the much needed foreign exchange spent on steel importation and raise the country’s capacity to employ a large number of the nation’s labour force both directly and indirectly. In September 1979, the Shehu Shagari administration with the support of the Russian government, established the Ajaokuta Steel Project with the prospect of becoming the largest steelmaking plant in the sub-Saharan Africa. Designed as an integrated iron and steel complex, the first phase was designed to produce 1.3 million metric tonnes (MT) of liquid steel per annum with capacity to expand to 2.6 million MT and 5.2 million MT in three phases. Unfortunately, the company has been moribund for over three decades and its goal to serve as Nigeria’s main platform toward becoming an economic and industrial global power remains defeated despite the country’s large reserves of iron ore, limestone, clays/silica sand which are basic raw materials for steel production. The history of Nigeria’s attempt to develop the steel industry has been described as a cycle of white elephant projects that have engulfed millions of dollars with no significant achievement to boast. Analysts also noted that attempts by successive governments to resuscitate the industry have failed to yield desired results due to a myriad of challenges including superficial projections, lack of infrastructure support, change in political administrations and policies, among others. According to a report by the Nigerian Society of Engineers, the country spends $3.3 billion annually on the importation of steel products. Stakeholders in the motor vehicle manufacturing sector also noted that government’s failure to revive the steel industry has stalled the local automotive development agenda to promote local assembling and car manufacturing. In the alternative, local manufacturers spend about N10 billion annually on importation of allied components used for local assembling with steel accounting for about 60 per cent of raw materials used in manufacturing motor vehicles. Addressing the worrisome state of the Nigerian steel industry, Olamilekan Adegbite, minister of mines and steel development, raised optimism that the Ajaokuta steel company would function before the end of President Muhammadu Buhari’s tenure. According to Adegbite, the federal government had reached an agreement with Vladimir Putin, Russian president, to ensure that TPE, the original constructors of the steel company, conduct a technical audit of the company to ascertain the level of work to be completed. He said the 60-man Russian technical team expected to work with a 100-man Nigerian technical team, would have been in the country since 2020 for the technical audit, but have been hindered by the pandemic. The minister also explained that the main purpose of constructing the steel company was to produce liquid steel, noting that the National Iron Ore Mining Company (NIOMCO) was established at Itakpe in Kogi to provide it with iron ore, a basic steel component. “I hope they come very soon and that we kick start the plan to resuscitate the plant again. It will help our industrialisation because production of liquid steel will take us to the next level in industrialisation as we will be able to produce parts for vehicles, engine blocks and so on,” he said. In the same vein, Oluwatoyin Akinlade, permanent secretary, ministry of mines and steel development, disclosed that the federal government put in place machinery to ensure conducive environment for operation of the Russia Technical Audit Team billed to arrive the country for the resuscitation of ASC and NIOMCO. Reacting to this, an expert who chose to speak under the condition of anonymity argued that the federal government needs to implement structural steps towards reviving the steel sector rather than holding conferences with no viable result. He also noted that the government needs commitment to building a substantial stock of human, social and physical infrastructure by engaging indigenous companies in the steel production sector to promote self-sufficiency. Kamoru Yusuf, chairman, Basic Metal, Iron and Steel and Fabricated Metal Products sector of the Manufacturers Association of Nigeria (MAN), urged the feder ernment to adopt the used by China to tran its Steel industry in t suscitation of Ajaokuta Company. According to Yusuf the Chinese governme was to indigenize one country’s major indu iron and steel, into the of their people with th ernment holding only cent interest while local tors were allowed to o per cent stake. This, he noted, cr opportunities for the investors and ensure the wealth remained the country, without triation of capital as w dividends; thereby lead the development of loca and other multiplier e that finally resulted in the world is witnessing as the industrial explos China. “It is only indigeno vestors that can make i pen so that the proc can remain here in N and we can re-invest th the economy. This we all seen was the case cement industry and w nation taking another stride in refinery and chemicals,’.’ He also pointed out t process of resuscitating kuta Steel Company w properly structured as o of existing steel plants would have given clear rations of the issues in t dustry, were not consult Yusuf believes to around the fortune of th sector is to channel the prehensive Import Supe ry Scheme, CISS, charge to the Nigeria Customs S NCS, to provide bailou support to the steel sect