Consolidating the Gains of Steel Sector
Steel and non-steel products produced in Nigeria are already competing favourably with those of the western world. Jonathan Eze writes on the breakthroughs
Steel is at the heart of any country’s economic development. It is one of the most important materials widely used for both domestic and industrial purposes throughout the world, hence the priority given to the sector.
Besides accelerating the industrial development of a nation, a vibrant steel sector contributes to the growth of the Gross Domestic Product and exploitation of Nigeria’s abundant natural resources.
A vibrant steel sector also generates economic activities in downstream industries, creates job opportunities and acquisition of technical skills, and helps in the transfer of technology and provision of machine parts and tools.
Thus, it was cheering when African Industries, a steel company that was founded in 1971 in Nigeria gathered stakeholders in the steel industry and their financial support partners, government representatives in Lagos and reviewed its operations and the feat it had attained especially in exporting locally made steels.
The Group Managing Director, Mr. Alok Gupta, told the gathering that it had been exporting non-steel products to regional markets for many years, and according to him, their steel products had to compete with big produces from Ukraine, Russia, China and other developed countries. “However, our constant effort in marketing backed by international certification and satisfied products sampling by user made it acceptable in these market. Recent adjustment of naira has made our product more competitive to the extent that a significant amount of our production is in now destined for export.”
Gupta projected what the company intends to achieve in future which are realistically attainable considering its antecedents.
He said: “We are targeting to export between 150,000 – 200,000 metric tonnes of steel on annual basis to start with. Our export of steel during first nine months of this year, have increased over three folds by weight and value compared to the full last year 2016. To put numbers on it, in year 2017 for the first three quarters, our steel export are almost $13.5million compared to $4.1million in 2016 and we are expecting an additional $12million of steel exports in the final quarter of the year. “Overall, we expect over $25million in the current year 2017. We are proud to achieve this milestone due to combined effort of our team and enabling environment created by domestic industrial policies.
“However, there are many miles to go and it is just the beginning. There are many challenges both on logistics and fiscal policy issues. Sea freight between Lagos and other West African countries is almost double of what it cost to bring the steel product from Ukraine or China. For example, sea freight from Ukraine to Ghana is $35-40 per MT while from Lagos to Ghana cost $65 perMT, i.e almost 50 per cent more.
“We appeal to shipping companies operating in Nigeria to remove this abnormality and make a level playing field for us, if we really wants Nigeria to emerge as global player in steel sector. We need our colleague, partner and workforce among port authorities and customs to ease the bottleneck associated with smooth flow of export cargoes through port, reduce the various charges to acceptable level so as to make Nigerian goods compatible in global market.”
Towards making its business thrive more in the country, the firm urged government to “look at provision of current export incentives and make it attractive to induce us for more export. Current export incentive for fully Nigeria manufactured goods are enough to cover the cost incurred due to infrastructural deficiency like high transport cost to port, dollar denominated high natural gas price, abolition of various taxes and levies on export cargoes and export expansion grant”.
Earlier, the Group Executive Director, Mr. Uche Iwuamadi, elatedly told the audience that the essence of the meeting was to update their business associates from the federal government agencies, banking sector, embassies, customs and steel dealers, update them with their manufacturing activities in Nigeria.
According to him, “the major breakthrough which I called breaking news is that for the first time in Nigeria, we are now exporting steel , finished steel, made-in-Nigeria steel from Nigeria to other countries. That is just the news and it has been on for a while. At this very critical time in the country, where people are talking of forex for importation, they are calling this country import oriented nation, we want to change the wheel, now we are exporting our finished products meeting up international standards and are accepted globally. At least having met the requirement of local need that is the most important thing. We have been able to produce enough to meet the local market and that is why we are now thinking of exporting. That is the summary.”
On how the company balances the issue of not having enough scrap locally, Iwuamadi said: “In fact, there is no need of importing finished iron rods into this country, there is no basis for that. As at the moment, the number of manufacturing plants in steel in this country, if they go into full production, including us, we are not yet doing 100% capacity. We are still doing below 70 per cent operational capacity, so by the time we have up to 100% capacity we will have excess.
“So the problem is not about meeting up demand but being able to operate at optimum level which we are not doing due to so many reasons. But that does not stop our export because the export driven part of it is a different segment entirely. This is an era where one of the major constraints of Nigerian businesses today is forex scarcity and if you can meet up to international standard, you can sell your product beyond your shores and earn forex for the nation. If everybody is thinking of producing something you can export, of course export would be separate segment of business. Back to your question and where we are exporting to. We are exporting to Ghana, Ivory coast, Morocco and Egypt.”
Iwuamadi added that the company has invested over $1.1billioillion in Nigeria as a total investment of the group and plans to invest more in upcoming project and the exporting we are doing is saving the nation over $650million yearly. In the past, many people have been importing steel into this country, nobody talks about that because imported steel cannot compete with our own. We are in the same standard so you don’t need to waste your money importing steel.
On his part, the Minister, Mines and Steel Development, Mr. Kayode Fayemi, lauded the company’s stride, saying that the federal government policy on privatisation of the steel sector was working. Fayemi who was represented by Director, Steel and Non- Ferrous Metals, Ministry of Mines and Steel Development, Mr. Ime Ekrikpo, assured operators in the sector of right policy support and incentives aimed at taking the industry higher.
“Our key target in the mining industry is the steel and we will give them all the necessary support to begin to produce iron ore,” he said.
Also speaking at the event, President, Manufacturers Association of Nigeria, Mr. Frank Jacob, applauded the company’s export feat. “In spite of harsh operating environment, they are able to produce, export and earn forex for the country. I congratulate them,” he said.
African Industries started in 1971 and they are manufacturing various types of Steel products such as Iron Rods, Angles, Channels, Pipes, wire related products - in total over 1 Million MT / annum is produced, representing 33% of the steel consumed in Nigeria
Out of this quantity, the company produces over 50% of Iron Rods consumed in the country.
It also manufactures other non -steel products such as sheet glass, Industrial chemicals, Refined Lead, Wood based products such as plywood & other construction materials. The company generates its own electricity using Natural gas and sells its surplus electricity via the national grid. The group is also in the process of setting up a large agricultural processing facility in the Northern part of Nigeria. It employs over 8,000 Nigerians and benefit lives of more than 100,000 Nigerians in the entire supply chain.
The company in a statement sent to THISDAY added that its industries are located in Port harcourt, Abuja, Agbara, Ogijo, Ikorodu
It has invested over 1.1billion and plans are on the way to increase and further diversify their product portfolio.
On what has helped them progress, the company added: “The enabling environment created by Democracy has allowed us to work hard to manufacture liquid steel in Nigeria.
“Our technology uses the latest state of the art equipment and is safe and environmental friendly.
“We are the first steel plant to get all 3 ISO certifications such as ISO9001, 14001, 18001 certified by Rina Italy on IFC/WB guidelines.
“We are also the first and the only company in Nigeria and the second company in sub-Saharan Africa to have UK Cares British Standard certification. It also means we can sell Iron Rods into UK or Germany without anyone challenging our quality.”
African Industries boast of patronage from almost all the large construction companies and government parastatals. However, it concluded that with additional support from government, export grants will perhaps go a long way to sustain exports.