President Bola Tinubu has authorized the formation of an inter-ministerial committee dedicated to executing three major steel development projects in Nigeria, including the revival of the long-dormant Ajaokuta Steel Mill.
This development was revealed by the Minister of Steel Development, Shauibu Audu, following a meeting with President Tinubu at the State House in Abuja, which also included the Minister of Defense, Abubakar Badaru.
The committee comprises prominent figures such as the Minister of Finance and the Coordinating Minister of the Economy, Wale Edun, Minister of Industry, Trade and Investment, Doris Uzoka, Minister of Solid Minerals Development, Dele Alake, along with the Minister of Defence, Muhammadu Badaru, and the Minister of Steel Development, Shuaibu Audu.
Audu outlined the committee’s key responsibilities, which include sourcing funding for the Ajaokuta Steel Company Limited’s revitalization, facilitating the establishment of a steel plant by China’s Lu’an Steel Holding Group, and locating a site for an Indian firm, Jindal Steel, to set up a proposed steel plant.
The minister highlighted the significant potential of these projects, noting that the successful execution of the committee’s objectives, especially the revival of the Ajaokuta steel mill, could create around 500,000 jobs under President Tinubu’s administration.
Audu also mentioned that two committee members had already engaged with Lu’an Steel Company, a leading Chinese steel manufacturer committed to establishing a new steel plant in Nigeria.
Following this agreement, the Chinese company is set to send an advanced team to Nigeria after the Chinese New Year, expected by the end of February 2024.
The minister said, “We were in China on the 1st of January 2024. We were there till the 8th of January. And met with the Lu’an Steel Company, which is one of the largest steel companies in China, and the top 20 steel companies in China. They produce about 20 million metric tons of steel per annum.
“We had very meaningful discussions with them, the Minister of Defense and I, and they agreed and made a commitment to set up a new steel plant in Nigeria, where thousands of jobs would be created, and they would invest billions of dollars in foreign direct investments into Nigeria.
“In that same regard as well, basically, in our discussions with Lu’an Steel Group, they mentioned that they would send an advanced team to Nigeria after the Chinese New Year. Sometime at the end of February 2024. We briefed Mr. President that when the team is on the ground, we would like to also give them an audience with Mr. President, which he approved. Mr President was very happy with the development.”
The Minister also revealed that reviving the entire Ajaokua Steel plant will cost Nigeria between the sum of $2 to $ 5 million while restarting the living steel section of the mill will cost the nation about N35 billion.
Audu said that President Tinubu had approval in late 2023 to raise funds locally to restart and rebuild the light steel mill of the Ajaokuta Steel plant to be able to produce iron rods, he said the iron rods would be used by the Ministry of Works to drive the plans to construct 30,000 kilometres of roads across Nigeria.
He further disclosed that the light steel mill will produce about 400,000 tons out of the 7 million iron rods needed by the Federal Ministry of Works if the committee can restart the steel plant.
“Mr President approved for us to raise money locally. The first phase of the project. For Ajaokuta Steel Plant, to revive the entire steel plant will cost somewhere between $2 to $5 million however to restart the living steel section of the mill is going to cost us about N35 billion. So we’re going to the market to show proof of consent to raise this money from local financial institutions to be able to restart that.”
The Minister further made known that the Jindal steel company which pledged $5b on the sidelines of the G-20 Summit in India, had made a further commitment with the Nigerian government to secure an ideal location to begin operations in Nigeria.
He said that Jindal Steel would either set up a greenfield or acquire an existing plant such as the Delta steel plant.
“The last item on the agenda was feedback to Mr. President on Jindal Steel. If you recollect on the sidelines of the G-20. Meeting in India, Jindal Steel committed to invest $5 billion. So I briefed Mr. President and I’ve met with representatives of Jindal Steel, and they’re very serious about their commitment and we’re currently looking for a land that is close to a gas station that has a port and is close to the natural or mineral resources such as, you know, iron ore and the likes to be able to get them the ideal location. Either they set up a greenfield or they acquire an existing plant, such as, you know, the Delta steel plant.”
Further speaking on the establishment of military hardware in Nigeria, the Minister of Steel hinted that the Chinese team has agreed to help Nigeria build the military hardware capabilities in one of the production units of the Ajaokuta steel plant.
He said, “The reason the minister of defence and I jointly met with Mr President was that we’re setting up a military hardware capacity and capability in Ajaokuta steel plant and based on that the Chinese team would help us to build that military hardware capabilities in Ajaokuta, in one of the production units. And so that’s the first agenda on the table for the joint meeting.”
Meanwhile, the Minister has revealed plans to investigate why the moribund Ajaokuta Steel Company Limited accumulated N33 billion in electricity debt which caused the Transmission Company of Nigeria (TCN) to disconnect the company from the national grid.
The TCN announced the decision this week to disconnect the steel company over the debt owed to the Nigerian Bulk Electricity Trading PLC (NBET) and service providers.
The debt is made up of N33,071,002,129.49, comprising N30,849,749,981.01 for energy and capacity delivered by NBET and N2,221,252,148.48 owed to service providers.
Reacting to the development in a chat with correspondents, the minister affirmed that the issue will be clearly looked at to get to the bottom of it.
He wondered why the company will accumulate such debt in electricity consumption when it had not been in operating in full capacity.
He further stated, “I mean these are some of the things that there needs to be clearly looked into. Like you mentioned. One of the things I spoke to the MD of Ajaokuta today, and this was one of the questions I asked and we’re going to get to the bottom of it, why consumption of so much electricity in a place that is not operating at full capacity.
“Part of what we also need to do is that we’re trying to revive Ajaokuta in a collegiate system, in piecemeal, and so we may not have the capacity to be able to pay all those outstanding amounts immediately.
“Part of what the MD of Ajaokuta told me is that most of them money is in interest payments. And NBET, the electricity company that has disconnected it is also a government agency.”
Noting the role of NBET in the disconnection, Shuaibu hinted that government will that not allow its agency to hinder the effort to revive the steel company, which has not been in operation for about 45 years.
He added, “So, if we as a government ministry, government agency are trying to revive Ajaokuta working hard to do that, we should not have another hand within the same government making things very difficult for us.
And so, part of what we plan to do is to sit down on the table in the next few days as quickly as possible to be able to come up with a plan so that they can put it back on the grid and put things back in order.
“Is a gradual process Ajaokuta cannot be revived overnight. This is an institution, this is a plant that has not been working for 45 years, it is a difficult task to try and get it back on track.
“So, we need the support of the entire government apparatus, we need support of stakeholders, we need support of everyone to be able to do this difficult job.