To meet the goals of economic diversification laid out in Economic Growth Recovery Plan (ERGP) the government should consider adding Bauxite as priory mineral if Nigeria has commercial quantities. The current priority minerals include iron ore, coal, bitumen, limestone, lead/zinc, gold, and barite. These minerals are considered priority because of their industrial and infrastructural importance to national development. Bauxite is aluminum ore, so it meets the industrial and infrastructural qualifications. Aluminum is used in making things, from soda cans to Airplanes. If this ore was mined in commercial quantities, the country would benefit from import substitution, increase mining and manufacturing output. It is odd Nigeria considers revitalization of Aluminum Smelting Company of Nigeria (ALSCON) crucial yet the input bauxite is not considered a priority.

90% of the bauxite mined is done in tropical locations, this bauxite type is lateritic. It is mined close to the ground and strip-mined economically. According to the Ministry of Mines and Steel Development (MMSD) bauxite is potentially in 3 states being Benue, Delta and Ekiti. There are probably more states that have this ore potential that’s why it’s important states budget money for prospecting and geological mapping. States like Kaduna and Cross River have already made discoveries of mineral that MMSD didn’t list in their report. Commercial quantities of Nickle were discovered in Kaduna in 2016 by an Australian mining firm. Later in 2017 Cross River discovered many minerals as result of MOU between state and Shian Xi Province of China. The geological mapping resulted in discovery of Uranium, Iron ore, Manganese, Barites, 60 metric tons of Salt etc. West Africa has bauxite in commercial quantities in Cameroon, Ghana and Guinea. Guinea’s reserves are the biggest in the world.

The ministry of Mines and Steel Development (MMSD) should set up plan to exploit the potential of integrated aluminum industry in Nigeria like Ghana is doing. MMSD should look to fast track approval of states exploration licenses and special purpose vehicles (SPV) to further geological mapping. The SPV arrangement will follow precedent of Ondo bitumen explorations license that happen June 2017. In the event of commercial quantiles of bauxite being found the MMSD and states should encourage value addition with alumina refinery near mines. MMSD should make low interest rate loans for alumina refineries and states should look to set up PPP deals for these processing plants.

Infrastructure development by state and federal governments in ports, rail and power would help reduce business cost for Mining industry. The Ministry of Transport needs to find funds for Lagos-Calabar Coastal rail line to increase efficiency because Nigeria’s only aluminum smelter is in Akwa Ibom. ALSCON cost would be reduced if inputs can be acquired domestically. Akwa Ibom should focus on completing Ibom Deep sea port and Ibom Industrial City (IIC) which would be able to capitalize on ALSCON output. The objective of ICC is to create and expanded industry in areas such as ship building and repair yards, auto assembly plants, fabrication/construction etc. so it’s strange that the state has not factored ALSCON into its plans. Aluminum alloys are essential a lot of manufacturing process.

Power projects are a must because Aluminum smelting is an energy intensive process. The Qua Iboe Power Project and Mambilla hydro project is step in right direction on Federal level. The latter presents an opportunity for future smelters that could be sited in Taraba because cheap energy prices and availability of power. Akwa Ibom should upgrade the capacity of its current power plant as soon as possible. The other siting option is gas rich states where smelters could buy cheap gas to run their own plants like many aluminum smelters do around the world like Dubai Aluminium Co.

The main technical factors to get ALSCON productive is make sure the plant has adequate gas supply. Historically the plant usually stalled due to gas constraints independent of the owner. The plant in 2015 received licenses from Nigerian Electricity Regulatory Commission (NERC) to generate power from flared gas and solar power. This would be an environmentally friendly policy and economic use of resources. Minister Fayemi said on record that ALSCON has a generation capacity of 540MW while only needing 350MW to run the plant. The excess 190 MW would be channeled into the national grid.

Nigeria currently has the potential to become an aluminum exporter if ALSCON is reactivated. In 1999 the plant netted $324 million dollars when the aluminum price was half its current price. The production was also able to satisfy Nigeria’s aluminum demand with 20% of its annual production while exporting the other 80%. It can be assumed despite global glut in aluminum the plant can still make profit if the production cost is low enough. Even if all the Aluminum was exported it would not do much to change the global price because the plant capacity is 193 tons per year, which would not have great adverse effect on aluminum price. The main factor currently affecting global aluminum pricing is Chinese slowdown in exporting due to pollution control measures and increased Chinese domestic demand. Nigeria would export any alumina and bauxite that is not consumed domestically.

ALSCON revitalization is an opportunity to engender an industrial cluster within the state. The downstream segment of the cluster would be developed around fabrication and alloy development due to proximity to plant. Nigeria currently imports hundreds of millions of dollars’ worth of aluminum products that could be substituted by domestic manufactures. The State and Federal government should also have plan to encourage backward and forward linkages in the local economy in a manner similar to South Africa and Mozambique by aiding the smelting companies and developing human capital. This can be done directly or indirectly through company run training programs. The Akwa Ibom government should also increase infrastructure spending to attract more business to Ikot Abasi zone. The result of this policy would guarantee increased investment, productivity and employment for the state.

The most important aspect is getting the Federal government to obey the Supreme Court’s orders regarding ALSCON rightful ownership. On July 6, 2012 the Supreme court ordered Bureau of Public Enterprises (BPE) and National Council of Privatization (NCP) to hand over ALSCON to BFIG. Then again, the apex court reaffirmed its position on July 11, 2016 saying UC-Rusal request to overturn judgement in favor of BFIG lacked merit. The Minister of Mines and Steel Development Mr. Fayemi’s and NCP are playing games seeking out of court settlements instead of simply complying to the Supreme Courts orders. Governor Emmanuel of Akwa Ibom is lackadaisical about situation not stressing the issue of obeying court orders. When he met Minister Fayemi he asked for Clay refinery and was praising him instead. On multiple occasions Governor Emmanuel has also met Vice President Osinbajo who chairs NCP and failed stress point despite the plants reactivation benefit to the state’s economy. The Governor was more interested in barking nonexistent directives telling oil companies to relocate headquarters to Niger delta but could remind these two about court orders.

Nigeria should incorporate an integrated aluminum industry into ERGP. This can be achieved by prioritizing bauxite mining and reactivating the ALSCON. State and Federal governments have their roles to play through geological mapping and infrastructure spending. Nigeria needs all the appropriate rail, power, port and road infrastructure to make this process as efficient as possible. ALSCON reactivation could grow the states GDP by a billion dollars. Other states in country would also benefit from the growth in Mining and refining. This estimate does include the other industrial clusters. Success in this area could be applied to other future smelters or to steel industry.

image source:

Image 1: 20-year aluminum price chart

Image 2: 2015 Nigeria metal imports

cc: mapet, EVAN, Omohayek, trilobite

Front Page: lalasticlala

The economy could literally grow by $1 billion dollars if the plant comes back to life. It's a sin the plant is closed due to stupidity of the government over the years. We over half a billion dollars worth of Aluminum products. Then if there's potential to export a vast majority. Lastly the industry cluster would take form having multiplier effect. If Akwa Ibom impressed by stadium employment effects they'll have mind blown here.

The next part to this story we be about siting a future smelter in Taraba. That smelter could easily produce 500 tons per year If people are willing. A plant that size would consune over half of the power go to that manbilla would generate.

Ps: It's a long read so use text to speach app like @voicealoud.

Nigeria is richly blessed with mineral resources and richly cursed with 'un-visionary' leaders.

shervydman:
Nigeria is richly blessed with mineral resources and richly cursed with 'un-visionary' leaders.

Oh well maybe the this academic exercise will interest a few people if the care about constituents. Minister Fayemi is from EKiti, The chairman of the senate solid minerals committee is from Delta while the vice chairman of house solid minerals committee is from Benue. All 3 states directly benefit so I sure they would gladly make it priority ounce commercial reserves are found. The state governments should look for it. The benefit from direct taxes and 13% derivation in future. The good thing about refining bauxite is that its not very energy intensive compared to smelting.

this Same issues that affects ajao kuta and the refineries will haunt Alston.
1.minerals is exclusive to fg and it wants nnpc model.it won't work

2.as long as Alston is govt facility it will have issues like nitel.

3.Limestone and telecom are thriving because fg from obj era moved them off its exclusive list and handed these minerals to private investors without baise of who the investor is

.without a sea port at ibom or a calculated alienation of calabar port means cost of alscon will be high

baralatie:
this Same issues that affects ajao kuta and the refineries will haunt ALSCON.
1.minerals is exclusive to fg and it wants nnpc model.it won't work

2.as long as ALSCON is govt facility it will have issues like nitel.

3.Limestone and telecom are thriving because fg from obj era moved them off its exclusive list and handed these minerals to private investors without baise of who the investor is

.without a sea port at ibom or a calculated alienation of calabar port means cost of alscon will be high

1. Agreen on moving item to concurrent list. Meanwhile states can take advantage of SPV in mean times like Ondo government.

2. ALSCON is not owned by government. It was privitised in 2004. They simply need to give it to BFIG and sack UC Rusal from plant.

3. ALSCON actually has their own jetty at calabar port. They also have port on Imo river. I agree Akwa Ibom should build Ibom deep seaport ASAP though.

The situations with ALSCON and ASC have a few key differences. I do have more hope in private ALSCON than federal government run ASC.

Blue3k:


Oh well maybe the this academic exercise will interest a few people if the care about constituents. Minister Fayemi is from EKiti, The chairman of the senate solid minerals committee is from Delta while the vice chairman of house solid minerals committee is from Benue. All 3 states directly benefit so I sure they would gladly make it priority ounce commercial reserves are found. The state governments should look for it. The benefit from direct taxes and 13% derivation in future. The good thing about refining bauxite is that its not very energy intensive compared to smelting.

Like seriously.....SA became an economic powerhouse through solid minerals before diversifying their economy.

I see Nigeria prospering faster than the mind can comprehend if we tap into solid minerals potentials and also infrastructural development.

Something I forgot to touch on. The federal government can use Natural Resources Development Fund to fund exploration of this. The currency have 100 billion Naira to work with.

Thanks Blue3k........

Gimme few hours...... I will be back on this interesting topic

mapet:
Thanks Blue3k........

Gimme few hours...... I will be back on this interesting topic

Tag me if you do.

Bumping thread. I just remembered there's also a proposed Free zone for Ikot Abasi in works. This would be good if the states trying to attract foreign investment. If all the free zones get build it would make 3 total.

1. ALSCON FTZ
2. Ibakka OGFTZ
3. Liberty Free trade zone (Ikot Abasi)

Off Topic I've been thinking about steel production in Nigeria. I believe Nigeria does indeed have a competitive advantage in producing it. All the resources are there but Infrastructure and transport cost are high for private sector. The the Nigerian government was inept with Ajaokuta.

Basically if any company wants to set up a steel plants they should just produce it by sourcing Iron domestically or buying it from our Sierra Leone depending on where plant is. They will produce Direct reduction then put it in Electric steel Arc produces the steel. Electric arc furnaces are cheaer than traditional blast furnaces too. They just require alot f electric but if ot works like ALSCON which produces its own power problem solved.

Ps: I could go on but that might be another topic if I dont get lazy about writing it. The country below is