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Untapped Opportunities in Nigeria’s Steel Industry

Untapped Opportunities in Nigeria’s Steel Industry

Ugo Aliogo writes on the opportunities in Nigeria’s steel and solid mineral industry and what government needs to enhance revenue from the sector

Nigeria is currently a net importer of steel with negative trade balance of $1.27 billion in 2018 a report by the International Trade Center (ITC) has revealed.
The report came in the wake of the shortage of billet and this has affected the capacity of steel companies in Nigeria to produce.

It was also gathered from industry players that the inability of the iron making sections of the Premium Steel plant (formerly Delta Steel Company) to function and the non-completion of Ajaokuta Steel Company have left the National Iron Ore Mining company (NIOMCO), the only beneficiation facility in the country inactive since 2008.

 

Experts’ Opinion
Experts stated that shortage of raw materials (billets) had led many steel processing companies resort to the use of steel scrap for steel production, therefore depending heavily on import to fill the supply deficit.

Speaking during an interview with THISDAY on the matter, the Head, Advisory and Consulting, Mining Leader, PwC, Cyril Azobu, said in 2018 the federal government presented a roadmap for the development of Nigeria’s industrial minerals’ which was developed by the World Bank and assisted by Mineral Sector Support for Economic Diversification (MinDiver) project.

He stated that part of the MinDiver project was a baseline study for the metals in the steel industry, adding that the study was expected to give insights about the situation of the market and feed into institutions around.

According to him, “So when you go to Kogi State where you have a lot of Iron ore deposits. There is a potential of creating an ecosystem. If you setup and stimulate activities in that area, you are going to have steel production that feeds into the massive steel rolling plants in Ajaokuta, Delta steel, linked to River Niger.

“You can actually have transportation in batches. Firstly, a study has to be carried out on how to address these challenges.

“There is need for the involvement of the private investors who have long term stake and with desire to invests in the sector; when we integrate all of these together, we can then create industrial parks around all of these hubs and get trigger of activities, what is going to happen is that you are going to mobilise employment in the mining hub, where there is deposit.

“Also, you will be stimulating the integration of the value chain, and bridging the gap in terms of scarcity of billets or raw materials for the rolling plants.

“Again, you will be creating a big uptake that encourages investors in Iron Ore to develop their products because that is the only way that the investors can be assured that their investment will be received into the sector.”

He noted that there was no need for another roadmap and appealed for continuity in the sector, adding that there was a Mining Implementation and Strategy Team (MIST) set up to ensure implementation of the 2016 roadmap.

He added: “I think what needs to happen is to take one resource and see it through. So the roadmap identifies a number of resources of which bitumen is one of them and other industrial minerals.
“But if you take the steel sector and give it a push I think there are a lot of fairly immediate gains that you can achieve with that. There are companies waiting for the right actions to be taken by government so that they can step in.

“Foreign investors will be looking into exportation. If the foreign investors see that there is an opportunity to make money locally because when you value add, that is, when you process and go further down the value chain, you create more value and wealth for yourself and the ecosystem.

“I also think that there are financial institutions we can bring together to say how we can fund the sector and make it work. A sector like the steel sector is a massive sector in any society and there has to be a collaborative effort to unlock the values.”

Government’s Position
The Minister of State, for Mines, Steel and Development, Dr. Uche Ogah, has expressed the desire of the federal government to develop new sectorial framework for the mining of solid minerals and improvement in steel production in the country.

He explained that the ministry would begin its work by examining the roadmap on solid minerals drawn by his predecessors, adding that the desire was to enlarge the scope of the roadmap and unlock the opportunities and potentials that are bound in the sector.

According to him, much needed to be done especially in identifying some of the leakages, and putting in place the necessary legal frameworks to make it easy for people to have licenses.
According to him, “Government has spent so much to get the fiscal surveyor for the nation to ensure the deposit of minerals, which will help investors to come in because more investments would be brought into the country through solid minerals.

“Like I stated earlier, we will block some of the leakages so that whatever mines and solid minerals that are going out from Nigeria, can be easily trapped through the airport and seaport. We will make sure that people pay the right royalty for whatever they are taking out of the country. From the roadmap, there are seven key mineral resources that have been identified such as limestone, diamond, bitumen, and others.
“We will look at bitumen, a lot has been talked about it, but not much has been done, so we will expand the scope. We will bring foreign direct investors and private sector players into the sector to develop it.”

Continuing, he said: “The steel industry is still at the infancy stage. It is the only industry that can help increase industrialisation and the country’s infrastructural needs.

“If the steel industry is properly positioned, we will gain a lot especially in rail transport and building of bridges. There is a lot to be done, but we need to develop a framework and policy statement in the steel industry.

“One of the things we are looking at is the Ajaokuta Steel Company and some of the legal issues surrounding the company. We are also looking at iron ore, because we need to tie all of them together and unbundle the legal issues surrounding the Ajaokuta steel and once that is done, we can bring investors who can help unlock the potentials in the sector.”

An expert who pleaded anonymity told THISDAY, that from the outset, federal government got certain things about the sector wrong.

“We should not shy away from the fact that the western world was not ready to help Nigeria; therefore, this was a western conspiracy,” he alleged.

He explained that with the setting up of the Ajaokuta steel company, the expectation was that Nigeria would be a net steel importer, but unfortunately the country has not met that expectation.

According to him, “During the time we went to Russia to seek their assistance, the Russians were not part of the global economy. There are challenges in the steel and mining that have not been properly addressed, such as the activities of artisanal miners, the production stage, exportation and sales to the local market, poor development of the downstream and upstream sectors.

“The potential of the solid mineral deposits identified in Nigeria has not been fully harnessed as expected, the steel value chain has been fully tapped into and if the potential of the sector is fully harnessed it will contribute immensely to the Gross Domestic Product (GDP).

There was a time the company was concessioned to an Indian company, but rather developing it, they started cannibalizing the complex.

“The Russian company who built Ajaokuta steel company also built other steel companies that are functional, but the ones in Nigeria is not functional. The hope of revival for the steel industry is PPP arrangement and government needs to identify the key players in the sector. The private sector is the driver of the economy,” he added.

 

SOURCE:- https://www.thisdaylive.com/index.php/2019/09/26/untapped-opportunities-in-nigerias-steel-industry/