Special Features
Latest Interest In Ajaokuta Steel Project: Same Old Story Of Failure?
Last week, President Bola Tinubu renewed the Nigerian government’s perennial, often fruitless interest in the notorious Ajaokuta Steel Project. He talked about investment prospects that may never come — as usual.
The steel plant, built on 24,000 hectares of land in Ajaokuta, Kogi State, was started by the Soviet Union in 1979 under a cooperation agreement with Nigeria but has been plagued by mismanagement and lack of infrastructure and has never produced any steel.
Wasted Efforts
Since the 80s, successive governments have made efforts to revitalise the Ajaokuta Steel Project with little or no success to show for it. President Shehu Shagari began the project, which was 84% completed by the time of his removal from office in 1983. The steel mill reached 98% completion in 1994, with 40 of the 43 plants at the facility having been built during the administration of Head of State Sani Abacha (1993-1998).
Almost 30 years later, the project has stagnated and is uncompleted. In 2002, the Nigerian government under President Olusegun Obasanjo (1999-2007) concessioned the project to Japanese Kobe Steel in an attempt at revitalisation; however, it was without much success.
In 2004, President Obasanjo’s government transferred the project again, this time to Ispat Industries. The deal was financed by Global Infrastructure Holdings Limited (GIHL) (now Global Steel Holdings Limited, GSHL). The concession ended in 2008 during the administration of President Umaru Musa Yar’adua (2007-2009) after the government accused GIHL of asset-stripping. GIHL then sued Nigeria at the International Chamber of Commerce, and the government paid $496 million to the company to settle the claims in 2022.
Yar’adua’s successor, President Goodluck Jonathan (2009-2015), had little interest in making another failed effort to resuscitate the steel project and hardly made budget provisions for it. But his own successor, President Muhammadu Buhari (2015-2023), was interested in another revival journey that never ends.
Former Nigerian President Muhammadu Buhari and Russian President, Vladimir Putin
In 2019, at the Russia-Africa Summit in Sochi, Buhari and his Russian counterpart Vladimir Putin agreed on a revitalisation of the steel mill with Russian support.
A task force within the Nigerian government was set up with a view to revamping the project with funding from the Afreximbank and the Russian Export Center. However, the COVID pandemic allegedly delayed and ultimately thwarted these plans. Another failed effort.
By 2016, the Nigerian government had spent over $10 billion on the Ajaokuta Steel Company in 35 years without results, according to former Minister of State for Solid Minerals Development, Mr. Abubakar Bawa-Bwari. Wasted investments.
Ajaokuta Steel Plant
Renewed Hope?
On January 4, 2023, President Tinubu received a briefing on investment prospects in the steel sector from the Minister of Steel Development, Prince Shuaibu Abubakar Audu. He emphasised that a revitalised steel development industry is both a catalyst for robust economic growth and a doorway to immense opportunities for Nigeria’s massive pool of talented entrepreneurs. But it was the same old story Nigerians have heard more than 100 times with no substantial results.
The president announced that his administration has discussed with a Chinese company, Luan Steel Holding Group, to build a new steel plant in Nigeria and commence the production of military hardware in the Ajaokuta Steel Plant. The president’s spokesperson, Ajuri Ngelale, said the Chinese company is expected to invest billions of dollars in Nigeria to build the new steel plant.
L-R, Minister of Steel Development, Shuiabu Abubakar-Audu, President Bola Tinubu and Minister of Defence, Mohammad Bagudu at the Presidential Villa to brief the President on their recent trip to China.
Minister Audu briefed Tinubu, following his approval to restart the Light Steel Mill (LSM) section of Ajaokuta Steel Complex for the production of iron rods, on the progress made on restarting the section, which will cost N35 billion at the first stage.
According to the minister, upon the completion of ongoing discussions, about $10 billion worth of new investments in both new and existing steel plants in Nigeria will be established, “which will create over 500,000 direct and indirect jobs in the steel industry.”
But Nigerians have heard this promise before, haven’t they? In December 2022, former President Buhari estimated that the complex would not only generate about 500,000 jobs but would raise an additional $1.6 billion in revenue for the federal government annually when completed.
The million-dollar question for 45 years is: When will the Ajaokuta Steel Project finally be completed and create the so-called 500,000 jobs? No one seems to know. The project has lived up to its description by the late novelist Chinua Achebe. He described the project as a “poster child of corruption and white elephant projects in Africa.”
Achebe was right. The Ajaokuta Steel Project has proven to be a racket for corrupt government and private sector officials. It seems the project’s continued failure is their own gain.
If the Tinubu administration is serious about renewing Nigerians’ hope in government, the project presents a huge opportunity to prove its seriousness. If the latest efforts fail, the administration will find itself on the infamous list of governments that have promised and failed Nigerians.
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