Nigeria’s plan to build a railway to supply
iron ore to its idle Ajaokuta steel plant
could be the biggest sign yet that
President Muhammadu Buhari is
implementing his policy to diversify away
from oil.
The project began in 1979 with what the
World Bank in 2002 called obsolete Soviet
technology, and has never been finished.
Authorities want to revive it as part of
Buhari’s efforts to lessen the economy’s
dependence on crude, which accounts for
90 percent of export earnings and the
price of which has dropped 64 percent
from a 2008 record. Ajaokuta cost more
than $4.5 billion from 1979 to 1993,
according to the World Bank.
If successfully executed, it “would be one
of the strongest indicators to date of the
government’s stated commitment to
economic diversification,” said Manji
Cheto, senior vice president for West
Africa at New York-based Teneo
Intelligence. “How the government deals
with this will be important to watch."
The 275-kilometer (171-mile) railroad will
link the plant to an iron-ore mine in the
central Kogi state, the port city of Warri to
the south and Kaduna state in the north
before 2019,
Transport Ministry Permanent Secretary
Sabiu Zakari said in an interview this
month. It will award the operating
concession after that, he said.
Dilapidated Infrastructure
The project spans 24,000 hectares (59,305
acres), almost the size of the Maldives
islands in the Indian Ocean. Besides the
800-hectare plant, Ajaokuta was designed
to include a town comprising 10,000
houses, a hospital, and school. But almost
nothing has been completed since
building started 38 years back, and most
of the infrastructure and equipment is
dilapidated.
A blast furnace, conveyor belts, and
crane-like structures with “Made in
U.S.S.R.” labels are surrounded by bushes,
while weed-covered roads are littered
with dung from cattle that graze on acres
of land meant to stock materials such as
coal.
“We stopped hoping -- all we can do now
is pray,” said Isah Onobere, 58, who
started at Ajaokuta Steel Co. as a trainee
in 1982 and is now the head of the plant.
He manages a workforce of 3,000 people
that make wire rods using billets, or semi-
finished steel castings, brought in from
elsewhere and keep the never-used main
plant in “serviceable condition,’’ he said.
The blast furnace, while 98 percent
complete, has never been commissioned,
Onobere said. This can’t be done “until we
have external infrastructure to guarantee
supply of inputs like the iron ore and coal,
and take out products.” The furnace must
operate for at least seven years without
interruption to make economic sense, he
said.
Funds Required
Getting Ajaokuta to produce at full annual
capacity of 5 million metric annually will
require $2 billion, Mines Minister Kayode
Fayemi said in an August interview.
“An inherent risk with these kind of
brownfield investments is that investors
underestimate the turnaround cost to
start production,’’ said Malte
Liewerscheidt, a senior Africa Analyst at
global risk consultancy Verisk Maplecroft
in London. “Protectionist tariffs on steel
or even an outright import ban are
certainly on the cards to shield the
Ajaokuta plant from international
competition. This would lead to a rise in
costs for building.’’
The West African nation spends about $
3.3 billion on steel imports every year.
Just 18 of the 30 steel manufacturers in
Nigeria are active, producing about 2.2
million tons a year using scrap and billets
imported from countries such as China.
Ownership, Management
Ownership and management have also
been problems for Ajaokuta complex. The
government revoked a $3.6 billion, 10-
year accord with Solgas Energy Ltd. in
2003 and then with India’s Global Steel
Holdings Ltd. in 2004, according to
government documents.
After renegotiations last year, the
government took over Ajakouta and
Global Steel retained Nigeria Iron Ore
Mining Co., known as NIOMC.
Under the new agreement, NIOMC’s
primary business will be supplying iron
ore to Ajaokuta before offering the raw
material to other steel producers.
“We will recruit a competent company
with financial resources able to operate
Ajaokuta," Fayemi said in August. More
than 10 companies including some from
Russia, China and Ukraine have expressed
interest in operating the plant, he said,
declining to identify them.
While there is a 100-megawatt power
plant at the complex, the company will
have to deal with unstable supply that
plagues businesses nationwide due to
cuts in fuel and gas to generators.
“We have left a lot undone over the past
two to three decades,” Olumide Awe,
head of research at Investment One
Financial Services Ltd., said by phone
from Lagos. "If they get the plant up, it will
bode well with the government’s
economic diversification agenda."
https://www.bloomberg.com/news/articles/2017-01-17/nigeria-bid-to-link-mines-to-idle-steel-mill-seen-as-buhari-test?utm_content=africa&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-africa

Mynd44, lalasticlala

The problem with Nigeria is that everybody knows the problem but implementing and doing things to solve the peoblem thats where there is problem. All na talk talk they should work and talk less