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Govt Playing Politics With Steel Industry  print

Published on December 10, 2012 by   ·   No Comments

Dr Sanusi Mohammed

Dr. Sanusi Mohammed is the Executive Secretary of African Iron and Steel Association. In this interview with OLUOKUN AYORINDE, he spoke on the state of the Nigerian steel industry, especially Ajaokuta Steel Company, and on other issues. Excerpts:

With the revocation of the sale of Ajaokuta Steel Company to the Indian company, the government seems confused on the way forward for the steel industry. As a key stakeholder, what will be your advice to government?  

The African Iron and Steel Association has done all it could, has said all it wanted to say about the steel industry, but we have stopped talking because we have nothing new to say. What we have been saying is still valid today. The steel industry is the backbone of any nation’s industrial and economic development and without industrialisation, there will be no economic development. All the nations that have developed have taken one form of industrialisation or the other as a priority.

Unfortunately, the World Bank has taken keen interest in Nigeria’s steel development programme since around 1987 for a number of reasons. In 1987, the World Bank insisted Nigeria must carry out economic assessment of its steel industry, and then dictated the company that will carry out the review – a Canadian firm, Hacht Associates. The firm picked a few Nigerians to do the work and they came up with a 139-page report condemning the Ajaokuta Steel Company particularly. It is cheaper to import steel than produce, according to the report. We attacked that report because it was not genuine; it was just something to kill Africa’s eagerness to get out of the enclave of colonialism.

Again, in the 1990s, the same Hacht Associates was invited through a privatisation agency and they wrote a report in which they said they conducted an extensive tour of the market and the industry, including the Ajaokuta Steel Company, in two weeks. They came out with another damning report – Ajaokuta was not worth it! Now, we’ve learnt that there is another committee, or is it a consultancy firm, that has been given the mandate to assess the steel sector in Nigeria and part of what they have been mandated to do is to advise the Nigerian government on whether to continue with the steel industry development programme or encourage importation of steel. They were also to look at the possibility of continuing with the Ajaokuta steel plant whether through a joint venture, outright sale or concession, or whether to close it permanently.

Everybody knows that Ajaokuta has gulped not less than $5 billion in investment, but some individuals or groups who do not want progress for Nigeria are now talking of the permanent closure of that facility. We suspect that a certain game is on; they have already arrived at their conclusion and are just working from the answer to the question. To my surprise, I learnt they have just set up this body to carry out the task and report back to government. They said the committee should meet the main stakeholders in the industry. But who are the main stakeholders as far as the iron and steel industry is concerned? The Nigeria Metallurgical Society is one of them; it has the cream of metallurgists in this country and they know the in and out of iron and steel production all around the world. But nobody in this group knows about this clandestine arrangement. The National Assembly – both the House and the Senate committees on steel – don’t know anything about this. The Nigeria Society of Engineers and the African Iron and Steel Association headquartered in Nigeria know nothing about this group.

There is some funny game at play. If the people taking these decisions are ignorant about the steel industry and industrialisation, it would be unfortunate. Most of them have even lived or have been visiting developed countries and they know the importance of industrialisation to those countries. So, why can’t they repeat what they have been seeing there to develop Nigeria? If the industrialisation process in Nigeria is killed, we will become perpetually subservient to the developed nations.

What is your reaction to the recent announcement by a foreign company that it will soon start exporting raw iron ore which ordinarily should be the raw materials for Nigeria steel industry?

Ajaokuta Steel Complex is located in Ajaokuta because of the volume of raw materials available in Kogi State. Iron ore, limestone, dolomites; all sorts of raw materials to make steel are available within 100 kilometres axis of Kogi State. Unfortunately, our leaders see grabbing money as a means to an end, but they don’t think about what will bring that money in a sustainable manner to the country. If they have a long-term focus for the development of Nigeria, they will know that those foreigners are just coming to extort our raw materials and earn cheap money for themselves, to destroy Nigeria, to leave us with poverty and a hunger-stricken populace. It is ridiculous for our leaders to be bragging that Nigeria will make so much money by exporting solid minerals. Why can’t we add value to those raw materials so that we can give our teeming youth employment?

 So what happens to Ajaokuta because government said it doesn’t want to involve itself in business anymore and that it doesn’t even have funds to complete the steel complex?

The government is not serious. It is the same government that was pumping money to sycophants – the President called them cabals – to the tune of N2.5 trillion in the name of importing petroleum products and government is saying it doesn’t have money to develop Ajaokuta. How much does Ajaokuta require to produce? Just about N150 – N170 billion, just about $1 billion for its completion, including the infrastructure and the mines to supply the raw materials to the plant. Nigeria has already spent $5 billion on the plant.

Is the technology installed at Ajaokuta Steel not moribund, as some argue?

That is the argument of the World Bank. And that is why it is ridiculous for Nigeria to keep on hanging to the World Bank for advice. I have the document in which the World Bank said the technology in Ajaokuta is obsolete. Today, this same obsolete technology produces over 50 per cent of the world’s steel production. If it is obsolete, those people would have stopped using the technology. And the Ajaokuta technology is one of the youngest in the blast furnace industry. In fact, there was a German who visited the plant and when he saw it, he shed tears. He said, “With this kind of facility here, you are importing?” We have said there are genuine investors who can come and turn the fortune of the Ajaokuta Steel industry around if the government is really serious. Even the statement by Obasanjo that government has no business in business is very ridiculous. Go to China, the largest iron and steel production company is government-owned. There are still steel production companies in India today owned by government. Some of them have been in existence for over 50 years and they are still producing. They are the largest steel producers in India. The government is running them, in a professional way and they are making profit.

If you are corrupt and you put corrupt people in important positions, you can never expect anything you put your hands in to be profitable. That is the situation in Nigeria. The Indian firm, Global Infrastructure that was brought in as concessionaires to Ajaokuta came in through fraudulent arrangements. We advised the government that these are not the right people. But before we knew it, Delta Steel Company, an investment of $1.5 billion of public money was sold to them outright for $30 million. To even show how corrupt the system is, Obasanjo himself approved $45 million to rehabilitate a rolling mill in Delta Steel Company and $45 million was paid fully to the companies given the contract for the rehabilitation. They brought in spare parts, they started work on the rehabilitation before Obasanjo suddenly decided to sell Delta Steel Company two years after for $30 million. The so-called investors ran the company down, destroyed it and did not bring a single dollar to Nigeria. They were taking loans from Nigerian banks using the assets of the Delta Steel Company as collateral. Today, AMCON has taken over Delta Steel, the Indians went to court and the court delivered judgment about a month ago that the Indians wanted to destroy the plant and AMCON was right to take over the company.

So, the so-called Indian Infrastructure Holding Company is a failure. They could not even manage the only the company they owned in India, a three million tonne plant and they had to sell it out. If they cannot run a steel plant in their own country, how can they come to another country and be successful?


Posted by on December 10, 2012, 12:21 pm. Filed under Interview, News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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