FG Announces Three-Year Concession Plan For Ajaokuta Steel Company

Eko Hot Blog reports that the Federal Government, through the Ministry of Steel Development, has announced its continuation with the concession process in a determined move to revive the long-dormant Ajaokuta Steel Company.

This decision is aimed at catalyzing the commencement of operations and steel production within a three-year timeframe, adhering to President Bola Tinubu’s directive for the industrial revival.

Minister of Steel Development, Shuaibu Audu, revealed these plans during a press interaction on Friday in Abuja, marking a significant step towards ending the 45-year stagnation of the steel manufacturing giant.

The announcement comes despite a previous legal hurdle in 2022, when a High Court in Kogi State issued a restraining order against the government’s proposed concession of Ajaokuta Steel Company Limited and the National Iron Ore Mining Company located in Itakpe.

Under the administration of former President Muhammadu Buhari, the Federal Executive Council had approved N853 million for the engagement of transaction advisors to oversee consultancy services for the steel company’s concession.

This move, however, faced considerable resistance, halting the progress towards revitalizing the facility that has the potential to significantly reduce Nigeria’s reliance on steel imports, which currently stands at 90 percent.

Minister Audu expressed optimism about the concession plan, emphasizing its role in the government’s three-year road map to transform Ajaokuta Steel Company into a productive entity.

He highlighted the strategic importance of reducing steel importation and fostering domestic production capabilities to bolster the Nigerian economy and industrial sector.

He said, “About the three-year plan for Ajoakuta Steel and whether we should assume that it would start working, I think the short answer is yes.

“The three-year plan is to enable us to start production of some form of steel in the next three years, so we should be able to get the light steel mill working, the engineering workshop working, we should be able to get some of the lines plants working and operating at near full capacity or full capacity.

“Part of what we would also do within that three years is to concession it to a concessionaire that has the required skill set to be able to have liquid steel production coming out of blast points. Ideally, in a perfect scenario, that’s what we would like.

“And I suspect that the concession agreement to be worthwhile for the concessionaire would have to be a minimum of let’s say, 10 or 30 years agreement where they would be able to recoup their capital.”

According to him, the implementation of the road map which requires an investment of $5bn will create 500, 000 jobs and a possible revenue of $10bn.

Audu added that the ministry is considering all available options with stakeholders to avoid the misdeeds of previous administrations, adding that ongoing litigation have been resolved.

The minister added, “Based on the advice I’ve been provided with and based on some of the data that I’ve seen and the technical analyses that have been done, we would need between $2bn and $5bn to revive this entire Ajaokuta Steel Complex but certain things can be done in piecemeal before we resolve the entire issue with the plant.

“What we plan to do is to restart the Light Steel Mill section, which will cost us about N35 billion for us to be able to produce 50,000 metric tonnes of iron rods. When we achieve all of these, we expect to bring $10bn into the economy and 500,000 direct and indirect jobs for Nigerians. Right now, 90 per cent of our steel demand is imported and we spend in excess of $4bn annually on the importation of steel and we are going to reverse that trend.

“We have also engaged with foreign investors to start new steel plants in the country. We have met with Chinese investors to look into how to set up a new steel plant in Nigeria and I am sure all of these plans will come to fruition soon.

“Part of what we need to do for this is to identify a new location, would it be a green field location or ground field location that has enough land mass with the needed infrastructure? Ideally, where we intend to get is to have 90 percent local production and 10 percent import.”

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