Skyscraper City Forum banner
1 - 14 of 14 Posts

·
Registered
Joined
·
276 Posts
Discussion Starter · #2 ·
Nigerian MPs Are Said to Seek $1 Billion for Steel Plant

Nigerian lawmakers who want to block President Muhammadu Buhari’s plans to sell an idle steel plant are moving to approve $1 billion of spending from oil savings to retain state ownership even before audits to determine its value are completed.

Buhari’s administration has commissioned two audits on Ajaokuta Steel Co., one by Pricewaterhousecoopers LLP and another by the plant’s new management, with a view to award a contract to private investors to fund the complex’s completion and run it.

The Senate plans to follow the House of Representatives in swiftly approving the Ajaokuta Steel Company Completion Fund Bill, according to two people with knowledge of the matter. It could be as early as next week, but almost certainly by end of June, said the people, asking not to be identified because they are not authorized to comment on the matter.

The bill, seen by Bloomberg, outlines the plan and shows that the $1 billion would come from the Excess Crude Account, Nigeria’s savings from sale of crude oil above the benchmark price. That would leave about $320 million in an account that held $2.32 billion in December, before government took out $1 billion to help fight Boko Haram Islamist militants in the northeast.

Tapping Reserves

Ajaokuta Steel ComplexPhotographer: David Malingha Doya/Bloomberg
Additional money from appropriations, loans and grants would be paid into the fund, according to the documents. Some lawmakers have also suggested tapping foreign reserves or the nation’s sovereign wealth fund if needed, according to the people.

Presidential spokesman Femi Adesina didn’t answer calls seeking comment, while the phone of another spokesman for Buhari, Garba Shehu, was switched off.

Nigeria started building the Ajaokuta steel complex on the Niger River in 1979 as part of plans to diversify an oil-dependent economy. It’s cost about $8 billion in public investment without delivering an ingot of steel. Buhari, who came to office three years ago, promised to ensure the plant starts production, spurred by a decline in oil prices that contributed to the economy contracting in 2016 for the first time in 25 years.

Read more on plans to restart the Ajaokuta steel plant


This week’s resignation of Mines Minister Kayode Fayemi, one of the administration’s biggest supporters of Buhari’s plan to sell Ajaokuta, has encouraged lawmakers to pursue their effort. He publicly criticized them for approving a budget of 2 billion naira ($5.5 million) last year to prepare for the concession and then turning against the idea. The House of Representatives passed a no-confidence motion in Fayemi in March that didn’t require the president to fire him. Fayemi left to contest in a gubernatorial race.

“I am yet to see a nation that ever concessioned the bedrock of its industrialization and succeeded,” House Speaker Yakubu Dogara told Abuja-based PremiumTimes newspaper in a February interview.

Under the lawmakers’ plan, after the fund is created, the government will be required to hire a contractor to complete the plant, according to the people. Some companies including those who originally helped build it have already expressed interest in the job, the people said.

The money raised will be used for “construction, improvement, extension, enlargement and replacement of infrastructure and works,” according to the documents. That will include “provision, acquisition, improvement and replacement of other capital assets like vehicles, vessels, machinery, instruments and equipment required in respect of the completion of Ajaokuta steel.”

https://www.bloomberg.com/news/arti...rs-are-said-to-seek-1-billion-for-steel-plant
 

·
Banned
Joined
·
11,651 Posts
better to be sold. not sure why the state wants to run a steel plant. FG hasn't shown it has the capacity to run these sort of profit making ventures anyway. I wonder if the buyers would be Nigerian, foreign or a mix. that makes a difference
 

·
Registered
Joined
·
276 Posts
Discussion Starter · #5 ·
Nigeria: Steel factory will open after 40 years​


Nigeria's largest steel plant will finally start production, four decades after it was built.

The Ajaokuta mill has cost the country more than $8bn, but has never produced any steel.

It is hoped that getting the facility off the ground will save Nigeria billions of dollars in steel imports.

Al Jazeera's Ahmed Idris reports from Ajaokuta,in central Nigeria.

https://www.aljazeera.com/news/2018/06/nigeria-steel-factory-open-40-years-180616102446497.html
 

·
Registered
Joined
·
402 Posts
IMHO Ajaokuta should be scrapped altogether. The problem is the technology of the plant. Its a Blast furnace. These are very efficient for ultra large scale production, but cannot be shut down once started. So no flexibility. That's why only large global producers still use them. Like POSCO in South Korea.

The journalist did not mention that the coking coal fuel used to power the blast furnace would have to be imported and it has to be a continuous supply because if there's disruption in the supply of fuel leading to a plant shutdown, The furnace has to be rebuilt from scratch.

The Electric arc furnace at Delta Steel in Aladja has better potential. It is more flexible and can be throttled in response to market demands, whereby a blast furnace has a fixed production capacity where the market demands it or not.

The German contractors built the Delta Steel Mill as a turnkey project in record time within 2 yrs and was operational from about 1982. Meanwhile the Russian built Ajaokuta Steel mill only reached 98% completion in 1994 despite having a 1yr head start for construction.

Delta Steel's production was just mismanaged due to nepotism and lack of vision. That should have been the country's premier steel plant not Ajaokuta.

The advantage of Electric arc furnace mini mills have taken away market share from the big blast furnaces because of flexibility of operation, lower start up cost due to commoditization and quick set up. No Steel company is building a new blast furnace and the shortcomings are too great to continue throwing money at it due to sunk costs already invested.

It's best to scrap it. or better replace it with an Electric furnace. There is already a gas pipeline to the Geregu power plant right next to the Ajaokuta steel mill so gas supply is not an issue. To start a blast furnace that would require continuous shipment of coking coal from China to function and cannot be shut down once started is just too risky of an operation.
 

·
Registered
Joined
·
276 Posts
Discussion Starter · #9 ·
IMHO Ajaokuta should be scrapped altogether. The problem is the technology of the plant. Its a Blast furnace. These are very efficient for ultra large scale production, but cannot be shut down once started. So no flexibility. That's why only large global producers still use them. Like POSCO in South Korea.

The journalist did not mention that the coking coal fuel used to power the blast furnace would have to be imported and it has to be a continuous supply because if there's disruption in the supply of fuel leading to a plant shutdown, The furnace has to be rebuilt from scratch.

The Electric arc furnace at Delta Steel in Aladja has better potential. It is more flexible and can be throttled in response to market demands, whereby a blast furnace has a fixed production capacity where the market demands it or not.

The German contractors built the Delta Steel Mill as a turnkey project in record time within 2 yrs and was operational from about 1982. Meanwhile the Russian built Ajaokuta Steel mill only reached 98% completion in 1994 despite having a 1yr head start for construction.

Delta Steel's production was just mismanaged due to nepotism and lack of vision. That should have been the country's premier steel plant not Ajaokuta.

The advantage of Electric arc furnace mini mills have taken away market share from the big blast furnaces because of flexibility of operation, lower start up cost due to commoditization and quick set up. No Steel company is building a new blast furnace and the shortcomings are too great to continue throwing money at it due to sunk costs already invested.

It's best to scrap it. or better replace it with an Electric furnace. There is already a gas pipeline to the Geregu power plant right next to the Ajaokuta steel mill so gas supply is not an issue. To start a blast furnace that would require continuous shipment of coking coal from China to function and cannot be shut down once started is just too risky of an operation.
It's 10 million metric tonnes per year!! You can't scrap that.. that would be a huge waste.. Especially now that steel prices are going higher as a result of trade wars.. You are right it's risky... But we can still have ample supply of coking coal... warehousing large stocks

What i would suggest is that first the project is restarted and starts working and then over time the project would be handed to the private sector...

Previous concessions of Ajakouta have proved unsuccessful, it's up to the government to get this project going before anything else...

My only worry is that Buhari's government doesn't have time especially since he might not get re-elected..
 

·
Registered
Joined
·
276 Posts
Discussion Starter · #10 · (Edited)
There are two essential projects needed for Ajakouta to be successful..

1. The National Iron Ore Mining Company (NIOMCO) needs to be functional... The plant processess the low-quality iron ore from Itakpe to iron ore suitable for Ajaokuta Steel

2. The rail line from Itakpe to Ajakouta needs to functional in order for iron ore to be transported from Itakpe to Ajakouta effectively
 

·
Registered
Joined
·
402 Posts
It's 10 million metric tonnes per year!! You can't scrap that.. that would be a huge waste.. Especially now that steel prices are going higher as a result of trade wars.. You are right it's risky... But we can still have ample supply of coking coal... warehousing large stocks

What i would suggest is that first the project is restarted and starts working and then over time the project would be handed to the private sector...

Previous concessions of Ajakouta have proved unsuccessful, it's up to the government to get this project going before anything else...

My only worry is that Buhari's government doesn't have time especially since he might not get re-elected..
I believe the initial capacity of phase one was 1.3 million metric tonnes with room to expand to 5 million metric tonnes. But they never completed the first phase. My suggestion is to switch out the first phase of 1.3 million tonnes from Blast furnace to Electric Arc Furnace(EAF), and make all future expansions EAF. Delta steel was 1 million metric tonnes with also room for expansion but only ever peaked at 200,000 tonnes. Obasanjo selling the plant to the Indian firm Global Steel Holding Limited in 2005 ruined it. They revoked the concession and now it's back under concession with another Indian firm Premium Steel and Mines.



There are two essential projects needed for Ajakouta to be successful..

1. The National Iron Ore Mining Company (NIOMCO) needs to be functional... The plant processess the low-quality iron ore from Itakpe to iron ore suitable for Ajaokuta Steel

2. The rail line from Itakpe to Ajakouta needs to functional in order for iron ore to be transported from Itakpe to Ajakouta effectively
Yeah and another option is to develop the Agbaja Iron ore mine which is north of Lokoja and right on the banks of the Niger river. A 45km distance by barge to Ajaokuta compared to the 65km rail link from Itakpe to Ajaokuta.
 

·
Registered
Joined
·
1,738 Posts
My only worry is that Buhari's government doesn't have time especially since he might not get re-elected..
As things stand now, I think he has a higher chance of winning next years elections, than any of his opponents. He's actually turning out to be a much smarter politician. I also agree that Ajaokuta cannot be scrapped just like that. Especially not after it has been revived. Nigeria certainly stands to make huge benefits at a time like this.
 
1 - 14 of 14 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top