The Sorry Tale of Nigeria's Failed $80 billion Steel Mill

The Minister of State for Mines and Steel Development, Abubakar Bwari, on Monday said the federal government has no money to complete the Ajaokuta Steel Company Limited.

Ajaokuta Steel Mill was incorporated in 1979 but has never produced steel. Referred to as the “bedrock of Nigeria’s industrialization,” the project which was started by the Soviet Union under a cooperation agreement with Nigeria, reached 98 percent completion by 1994, with 40 of the 43 plants at the facility completed. 

Mismanagement and failed attempts at privatization has seen the mill remain non-operational. But now, the government wants to give it another try.

The steel which has gulped about $80 billion since its inception, needs another $652 million for it to be ready for production, money the government says it does not have.

Nigeria’s House of Representatives had disagreed with the Minister of State for Solid Minerals Development Abubakar Bwari in June, with the lawmakers in favour of the government completing the project and running it as a state-owned enterprise. 

But Bwari explained that “with concession, the government will not put more money, but will appoint a reputable transaction adviser to move forward. Right now, the government does not have the funds. It is important that we hand it over to those who have the resources.

“The government is even borrowing to run services. That is to tell you that there is no money,” he said.

Nigeria has one of the highest deposits of iron ore in Africa, nay the world. The steel industry is strategic for providing feeds for the housing, construction, railway, automobile, shipbuilding, arms, and ammunition industries of any nation.

The Ajaokuta Steel project, sitting on 24,000 hectares, out of which only 800 hectares have been built, should provide 10,000 skilled direct jobs, and another 500, 000 unskilled jobs. The project that can produce 55 MW electricity, also has a 10,000-housing units residential estate, out of which only 4,000 have been completed.

Phase One is expected to produce 1.3 million tonnes of liquid steel per anum. Phase Two should double production to 2.6 million tonnes of flat iron and steel products, while Phase Three would expand production to 5.2 million tonnes of various steel products, including heavy plates.

Sadly, all of these are on paper as successive governments have failed to pay any attention to this project, despite its potential to turn the Nigerian economy around for the better.

If Nigeria could spend over $80 billion on the project, why can't the country generate the $652 million required? 

$80 billion down the drain through one project is indeed disheartening for a country which is currently regarded as the poverty capital of the world, how sad.

Header Image Credit: Premium Times Nigeria