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After gulping $8 billion in 39-years, Ajaokuta Steel Factory yet to commence production

After gulping $8 billion in 39-years, the Ajaokuta steel factory was built with Soviet assistance, it is yet to produce a single bar, coil or rod.

  • 39-years after the Ajaokuta steel factory was built, the $8 billion investment has become a complete shadow of it’s envisioned glory.

Thirty-nine years after the sprawling facility that is known as Ajaokuta steel factory was built with Soviet assistance, it is yet to produce a single bar, coil or rod.

The production plant was built in 1979 under President Shehu Shagari’s administration to produce as much as 3 million metric tons of steel annually at full capacity. However, it has become not only a dilapidated factory complex but the $8 million investment has become a complete shadow of it’s envisioned glory.

With Nigeria in possession of vast deposits of iron ore, much of it in Kogi State, the same region where Ajaokuta is located, the production plant was conceived to transform iron ore into steel and make domestic industries, such as construction, far more viable. The vision was an attempt to broaden and develop a sustainable economic base beyond oil.

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Several administrations - both military and democratic - have failed in positioning the Ajaokuta steel into a market leader in the production and export of steel. The process had always been hamstrung by repeated stops and starts, ownership changes, poor governance and sheer incompetence.

A national asset rots away

Sadly, the Ajaokuta steel factory complex wasn’t just built to produce steel, it was conceptualised to become the largest steel manufacturing company in Africa.

However, much of the facility beyond the central administration block is rotting away with little or no care.

Bloomberg reports that the blast furnace, conveyor belts, and giant cranes to move materials have left unattended to and idle in scrubby fields. In the same vein, pipes as wide as manhole covers are coated in creeping grass while areas meant to store coal for the furnace have been taken over by cattle grazing in the clearings.

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As designed in the original plan of the Ajaokuta steel factory, 10,000 houses were envisioned for workers, while a combined 120 kilometers (75 miles) of internal roads and railroads, as well as the school, the library, and the hospital,  were designed and built for workers and their families.

Disturbingly, only 4,000 of the 10,000 houses were completed and these buildings are mostly occupied by retirees of the factory, who didn’t produce one bar, coil or rod.

Bloomberg also reported that the current workforce of about 1,500 civil servants is tasked primarily with keeping parts of the plant in serviceable condition. While other facilities built for the workers are largely unused.

Also worthy of note is the runway of an airstrip built to serve the Ajaokuta steel factory is not only out of date but urgently needs a resurfacing.

Challenges

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The Ajaokuta Steel Factory has been repeatedly challenged and crippled by repeated stops and starts, ownership changes and poor governance.

Before the Nigerian government took over the control of the plant under President Muhammadu Buhari’s administration, it was managed by the private-sector operator, Global Steel Holdings Ltd through a concession.

Till now, the government is yet to decide who should own and operate the plant despite efforts to sell off the plant.

As much as the record of privatization in Nigeria is mixed, the cement industry has proved to be a large success with the story of Aliko Dangote. However, this story is in contrast to efforts to privatise the power sector and break the unending power failure in the country.

Another challenge which the steel plant factor has faced and which seems the most critical piece of infrastructure is lack of a rail line. The plant lacks a rail line that would connect the plant to iron-ore mines and deliver the finished product.

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Though work has begun on the long-awaited rail line, it is unsure if the scheduled test trains will commence in August 2018 or not.

Fixing Ajaokuta is of national priority - Minister for Solid Minerals

Agreeing that several years have been wasted with the Ajaokuta plant rotting away, the Minister for Solid Minerals and natural resources, Dr. Kayode Fayemi has expressed that the Nigerian government is serious about transforming Ajaokuta from an embarrassment into a viable asset.

“It didn’t quite work out as planned, which is the Nigerian story sometimes but the government is committed to making it work. Ajaokuta is central to our diversification strategy and the least we could do for ourselves as a country and for our manufacturing sector,” Fayemi told Bloomberg.

Fayemi was further quoted as saying “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.”

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