They've Been Building
This Steel Factory for 40
Years and It Still Hasn't
Produced Anything
bloomberg.com

On a hot April morning, workers are
furiously cleaning a decorative fountain in
front of the executive office of Nigeria’s
largest steel complex. An onsite power
plant is being repaired by electricians.
Others around the 39-year-old facility are
clearing brush. In the middle of it all,
administrator Abdul-Akaba Sumaila is
meeting in turn with the 20 or so people
crowding his waiting room, a mix of
union officials, local politicians and job
applicants.
When one young man pulls a filled-out
form from a wrinkled envelope, Sumaila
asks him about his background, pats his
back and encourages him to stay positive.
Soon, he says, Ajaokuta Steel will start
hiring. After that, it may actually
make some steel.
The dilapidated factory complex has
never managed to produce a single bar,
coil or rod. Built with Soviet assistance,
the sprawling facility has sucked up $8
billion in public investment and been
hamstrung by repeated stops and starts,
ownership changes, poor governance and
sheer incompetence. It’s a tortured
history that mirrors Nigeria’s broader
attempts to develop a sustainable
economic base beyond fossil fuels.
President Muhammadu Buhari has put a
high priority on getting the plant into
production, hopefully by selling it to
private investors. But the legal, technical
and political problems illustrate in
microcosm—albeit a three-square-mile
microcosm—many of the challenges that
bedevil Nigeria’s diversification drive.
Sumaila, a mechanical engineer who’s
taken a three-year leave of absence from
Royal Dutch Shell Plc to try to revive
Ajaokuta, is undeterred. “What excites me
is the enormous potential of this place,”
he said in his office at the plant.
“Whatever we need to do, we have to do
it.”
The economic imperatives are clear.
Nigeria depends on crude for 90 percent
of its export earnings. With global oil
prices significantly below their past highs
of more than $100 a barrel, shortages of
foreign exchange are a daily reality. And
Nigeria, Africa’s largest oil producer, has
little domestic capacity to refine gasoline
and thus must pay to re-import its own
oil. The consequent lack of foreign
currency has driven up prices for
everything from food to construction
materials, further hobbling an economy
that shrank by 1.6 percent in 2016.
Today much of the
facility beyond the
central administration
block resembles the
set for a post-
apocalyptic action film
The need for diversification, and the
employment it could provide, is made
more urgent by a surging population.
With about 200 million people and
growing rapidly, Nigeria is by far the
most populous country in Africa. Without
durable sources of employment, a
nation that’s spent much of the past
decade fighting insurgencies in its arid
north could descend further into
disorder.
Yet the record of privatization in Nigeria
is decidedly mixed. In the cement
industry, it was largely a success:
Investors succeeded in reviving
production, making the country a net
exporter of the material. One of the early
buyers, Aliko Dangote, is now Africa’s
richest man. By contrast, efforts to sell off
power plants have failed to end blackouts,
still a daily occurrence in much of
Nigeria.
Steel has long been an obvious target.
Nigeria has vast deposits of iron ore,
much of it in Kogi State, the same region
where Ajaokuta is located. Transformed
into steel, the ore could make other
domestic industries, such as construction,
far more viable.
Those intentions underpinned the
construction of Ajaokuta, which when it
began in 1979 was envisioned at
Pharaonic scale. At full capacity, it was
intended to produce as much as 3 million
metric tons of steel annually, enough to
largely close the gap between Nigeria’s
current steel consumption and domestic
output. Yet the most critical piece of
infrastructure, a rail line that would
connect the plant to iron-ore mines and
deliver the finished product, was never
completed.
Today much of the facility beyond the
central administration block resembles
the set for a post-apocalyptic action film.
The blast furnace, conveyor belts and
giant cranes to move materials—many
inscribed with the words “Made in
USSR”—stand idle in scrubby fields. Pipes
as wide as manhole covers are coated in
creeping grass, and cattle graze in
clearings meant to store coal for the
furnace.
‘Made in USSR’ adorns a rusty crane at the Ajaokuta
Steel complex. Photographer: David Malingha
Doya/Bloomberg
Of the 10,000 houses envisioned for
workers, the 4,000 that were completed
are occupied mostly by retirees. The
current workforce of about 1,500 civil
servants is tasked primarily with keeping
parts of the plant in serviceable
condition. The combined 120 kilometers
(75 miles) of internal roads and railroads,
as well as the school, the library, and the
hospital for workers and their families,
are largely unused. The runway of an
airstrip built to serve the area needs to be
resurfaced.
Nigeria’s government says it’s serious
about transforming Ajaokuta from an
embarrassment into a viable asset. The
plant’s biggest booster is Kayode Fayemi,
the mines and steel development
minister. While Fayemi concedes, with
significant understatement, that the first
30-plus years of Ajaokuta “didn’t quite
work out as planned, which is the
Nigerian story sometimes,” he said fixing
it is now a national priority.
“Ajaokuta is central to our diversification
strategy,” he said in his office in Abuja.
Building up domestic steelmaking, he
said, is “the least we could do for
ourselves as a country and for our
manufacturing sector.”
“This is an alternative
to oil”
Work has begun on the long-awaited rail
spur line, which may accept test trains as
soon as August. The government also will
need to decide who should own and
operate the plant. Ajaokuta is currently
controlled by the state after a previous
private-sector operator, Global Steel
Holdings Ltd., had its concession
terminated.
While the government has said it plans to
solicit bids for Ajaokuta from new
investors, a group of lawmakers, with
some union support, is pushing to keep
the plant under public ownership. They
argue that only paltry offers are likely for
a facility that still requires huge
investment. Senate Majority Leader
Ahmad Lawan proposed legislation to
that effect in the upper house on May 8,
against the government’s wishes.
Fayemi says he’s convinced that Nigeria
can no longer afford not to process its
own resources. “The idea that we must be
taking our iron ore out, our gold out,
every raw material, for others to add
value, and then send back to us to pay
probably 10 times what it’s worth when
we send them out is unthinkable,” he
said.
He won’t be around to see if that pans
out. He said May 14 that he will leave at
the end of the month to run for governor
in his home state of Ekiti. And Sumaila,
the Ajaokuta administrator, said he
doesn’t know whether he will return to
Shell or not when his term at Ajaokuta
ends in October 2020.
Wearing moccasins, a black short-sleeved
and collarless suit, with a pen in hand,
Sumaila says he remains optimistic as he
walks around his spacious office.
“This is an alternative to oil,” he said.
“The complex can be up and running two
years after the government makes the
strategic decision on the direction it wants
to take.”
— With assistance by Samuel Dodge
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Before it's here, it's on the Bloomberg Terminal.
The dilapidated Ajaokuta Steel complex.
Photographer: David Malingha Doya/Bloomberg
Business
Nigeria’s Ajaokuta complex was built with
Soviet aid. Now the government says it’s
finally serious about opening it.
By David Malingha Doya
Thursday May 24, 2018 05:00:11 GMT+0100
A Steel Factory Gears Up
to Start Production. Afte

source: https://www.bloomberg.com/news/articles/2018-05-24/a-steel-factory-gears-up-to-start-production-after-40-years?utm_medium=social&utm_content=business&cmpid=socialflow-facebook-business&utm_source=facebook&utm_campaign=socialflow-organic#15271609724102&{"sender":"offer-0-lAqyu","displayMode":"inline","recipient":"opener","event":"resize","params":{"height":159,"iframeId":"offer-0-lAqyu"}}

Its a shame that Ajaokta steel has never contributed even a bar of steel to Nigeria's economic development.

The failure of Ajaokuta Steel project is a major contributor to Nigeria's current economic malaise.

It's quite sad really

Ajaokuta was to have been third largest steel plant in the world on completion

Even if purely for LOCAL Steel consumption this facility makes sense

Nigeria requires HUGE amounts of steel for the development of a comprehensive nationwide Railway system.

At the moment we are importing rail sleepers and coaches.

Tolu Ogunlesi who by the way sees and unsees Railway lines has been proclaming Railway Revolution as it suits his current narrative.

It is a mystery then how even after Fayemi's commitment to revisit the Ajaokuta conundrum the best he could do was perpetuate the missteps of the allegedly evil previous government.

The report submitted was a word for word (including typographical errors) copy of the previous document.

Tolu and Fayemi are not on the same page

What a pity.