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A vibrant iron and steel sector is necessary for the infrastructural and technological development of any nation. Nigeria is blessed with all the raw materials required for steel development including iron ore, coal, naturalgas and limestone

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ABSTRACT

A vibrant iron and steel sector is necessary for the infrastructural and technological development of any nation. Nigeria is blessed with all the raw materials required for steel development including iron ore, coal, naturalgas and limestone. At the third national development plan (1975 – 1980) specifically between 1976 and 1978, Nigeria commenced the construction of two integrated iron and steel plants located at Ajaokuta (ASC) and Aladja (DSC) and three rolling mills at Oshogbo, Jos and Kastina. The 1.3 mtpa ASC is basedon blast furnace/basic oxygen furnace (BF/BOF) technology with rolling product capacity of 5.2 mtpa. DSC has a 1.0mtpa steel melting plant for the production of 0.96 mtpa of billets and 0.32 mtpa of rolled products, while supplying 210,000 tonnes of billets each to Oshogbo, Jos and Kastina rolling mills. These projects were expected to kick start a vibrant iron and steel sector in Nigeria. However, due toseveral factors including political, technical, logistical and managerial challenges, all these publicly-owned iron and steel companies folded up in Nigeria. The privately-owned iron and steel companies, which are mostly rolling mills that dependent on the integrated mills for billets are now threatened dueto lack of raw materials. The publicly-owned iron and steel companies (ASC, DSC and the three inland rolling mills) were privatized in 2000- 2005, but most of them are still moribund, except DSC that functions below her capacity. Except all these challenges are tackled, iron and steel development in Nigeria will be a mirage

TABLE OF CONTENTS

COVER PAGE

TITLE PAGE

APPROVAL PAGE

DEDICATION

ACKNOWELDGEMENT

ABSTRACT

CHAPTER ONE

  • INTRODUCTION
  • BACKGROUND OF THE STUDY
  • OBJECTIVE OF THE STUDY
  • SIGNIFICANCE OF THE STUDY
  • SCOPE OF THE STUDY

CHAPTER TWO

LITERATURE REVIEW

  • LITERATURE REVIEW
  • POLICY AND LEGAL FRAMEWORK AND THEIR EFFECTS ON STEEL DEVELOPMENT IN NIGERIA
  • REVIEW OF IRON ORE EXPLORATION SUCCESSES AND CHALLENGES
    • OPERATIONAL CHALLENGES
  • SUSTAINABILITY OF STEEL PRODUCTION
  • CONTRIBUTION OF STEEL TO THE ENVIRONMENT, SOCIETY AND THE ECONOMY
  • REVIEW OF AJAOKUTA STEEL COMPANY LIMITED

CHAPTER THREE

3.0      METHODOLOGY

  • RESEARCH DESIGN
  • SOURCE OF DATA

CHAPTER FOUR

4.0      RESULTS AND DISCUSSIONS

CHAPTER FIVE

  • CONCLUSION
  • REFERENCES

CHAPTER ONE

1.0                                                        INTRODUCTION

Nigeria is a fast developing country but lacks some basic infrastructure especially in the rural sector. The country has fared well in certain sectors of the economy such as oil and gas, telecommunication and recently in the cement manufacturing subsector. Nigeria currently produces over 2.6 million barrels of crude oil per day and has therefore installed extensive oil and gas facilities including nearly 200 flow stations, 3 refineries, 5 coastal terminals and extensive networks of pipelines, flow lines and bulk lines (Ohimain et al. 2004). In the last 10 years, the Nigerian telecommunication coverage has improved with the sector installing thousands of masts and associated cables. In April 2011, Nigeria had over 117 million connected lines with a teledensity of 64.70 (Okpanachi and Obute, 2011).

 

Recently, the Nigerian cement manufacturing subsector has become self-sufficient producing over 28 million tonnes of cement, while the country’s demand is nearly 20 million tonnes per annum. However, in the rural sectors certain basic facilities are still lacking such as good roads, portable water, railways etc. Agriculture, which the rural area is known for, is not optimal as they lack farm mechanization and facilities to preserve agricultural produce. Electricity in the country is poor and unstable with less than 45% of the people connected to the national grid (Adenikinju, 2003; Ibitoye and Adenikinju, 2007). Apart from the cement subsector, manufacturing activities is low due to shortage of electricity. The country’s population is increasing at the rate of 3% and the population has now reached 167 million.

Yet there is no adequate housing in the country. Iron and steel is required in all the aforementioned sectors. It has been recognized that the growth of Nigeria is slow due to lack of domestic production of iron and steel. Iron and steel is very important for the growth of any modern society. Iron and steel plays a major role in the industrialization and infrastructural development. Though, Nigeria has the potentials of becoming a regional economy in the West African sub-region, but the economy of the country cannot be strong and vibrant without growth in its iron and steel sector or without the use of iron and steel in the manufacturing sector (Agbu, 2007). For instance, Nigeria is attempting to gather associated gas, which is currently being flared. Lots of gas utilization projects are emerging in the country including several thermal power plants, 2 additional LNG (Brass and Olokola), extension of West African gas pipeline beyond Ghana to other West African countries and installation of the trans-Sahara gas pipeline to Europe. All these infrastructural development requires iron and steel. Nigeria is attempting to boost the agricultural sector and have released policies for the partial substitution of wheat in flour and inclusion of biofuel

in Nigeria’s automotive fuel mix (Ohimain, 2010, 2012). Nigeria is also implementing key millennium goal development (MGD) projects, which involves infrastructural developments such as irrigation, farm mechanization, food processing infrastructures, road and bridge construction, housing development etc. All these developmental activities requires iron and steel products.

Nigeria is blessed with all the major raw materials needed for the production of iron and steel including 3 billion tonnes of iron ore (Adebimpe and Akande, 2011; Bamalli et al., 2011; Nigerian Embassy, Hungary, 2012; Alafara et al., 2005), 3 billion tonnes of coal (Agbu, 2007), and limestone in excess of 700 million tonnes (RMRDC, 2001) and 187 billion SCF of natural gas. Meanwhile, the annual estimated per capita consumption of iron and steel in Nigeria has increased from 5 kg in 1968 (Adedeji and Sale, 1984) to 130 kg in 2012 (Uzondu, 2012). Planning for the Nigerian steel sector started in 1958 (Mohammed, 2002), but over 50 years after the country is yet to establish a stable iron and steel sector despite after huge investment of over $ 7 billion. Despite the huge investments in the sector, the Ajaokuta Steel Company (ASC) failed to take off while Delta Steel Company (DSC) and the three government-owned inland/satellite rolling mills in Oshogbo, Jos and Kastina are moribund, working under low capacity utilization. The reasons for the poor performance of the Nigerian steel sector include inadequate funding, poor planning and implementation and political influences (Agbu, 2007). Until recently, the nation’s steel requirement was met since independence (1960) by imports from western nations particularly US, Great Britain, Germany,Japan  and recently, by relatively cheap and sub-standard steelfrom some Asian nations (Agbu, 2007). The country is now spending a large portion of her foreign exchange for the importation of steel products, while still investing heavily in the domestic production of steel. This is double jeopardy. The privatization that was carried out in 2004 –

2005 did not revive the sector, but rather transformed the companies to private monopolies (Mohammed, 2008). Because the two integrated iron and steel companies in Nigeria (ASC and DSC) are unable to produce billets for the 20 steel rolling mills in the country, the sector is dependent on imported billets. But due to the high cost of billet importation, many steel companies are unable to function. The few steel companies that are operational though at low capacities, is now dependent on recycling of scrap iron and steel obtained mostly from municipal solid wastes (Ohimain, 2013; Ohimain and Jenakumo, 2013). The aim of this study therefore, is to appraise the Nigeria iron and steel sector with the view of suggesting the way forward. The study also provided an opportunity to update the information concerning iron and steel development in Nigeria. The methodology of this study is based on literature survey.

1.1                                           BACKGROUND OF THE STUDY

There is no doubt that Nigeria is now at a critical crossroad concerning her economy. Noisy discussions have continued to remind us about the enormous wealth in the country, which until now has remained untapped or tapped in an unserious manner. Nigeria is blessed with solid mineral resources, which have not been explored in ways that had been anticipated. Iron ore remains one of such sources of national wealth, but past administrations did not take full advantage of its rich potentials as a building block for industrialization.

Structures built for the purpose of extracting and processing Iron Ore are today abandoned with disused, dilapidated buildings and rusty equipment to show for it. I speak specifically about the Nigerian Iron Ore Mining Company (NIOMCO) in Itakpe, and the abandoned Itakpe–Ajaokuta Rail link. These two edifices located in Kogi State now lie in shambles; the sobriquet “Land of Mining”, virtually meaningless. The vision of the rail link was for the steel plant in Ajaokuta to be connected to its supplier of Iron Ore, in Itakpe. A drive past the rail link station reveals that right now that laudable vision is off-track, but I hope not permanently.

My concern for the untapped iron ore resources in Itakpe, Kogi State are written from the perspective that my State, Kogi, like many other states, suffers from high rates of youth unemployment. Can we imagine what impact the revival of economic and commercial activities would have, if NIOMCO and Ajaokuta Steel Complex also in Kogi State, roll back into life to reignite the dream of Nigeria becoming a force in the global iron and steel sector? The Steel sector is the heartbeat of any national development plan for industrialisation.

This IS why recent announcements by the Minister of Mines and Steel Development, Dr. KayodeFayemi, about a new solid mineral policy and his statement that “Nigeria is aiming to hand over the $4.5bn Ajaokuta Steel complex to private operators this year as part of a plan to kick-start its industrial and mining industries” are causing ripples of excitement.

What the sector really needs now is for the promises of government to be backed by focused and coherent action. For too long, the sector has been subjected to inaction which has resulted in half- baked privatisationprogrammes, non-functional steel firms in Aladja, (Delta State), AjaokutaKogi State), Jos (Plateau State), Katsina (Katsina State) and Osogbo (Osun State), a weak Iron Ore mining complex and equipment worth millions of Naira left to rot.

Nigeria stands to gain a great deal when her iron and steel sector rumbles back to life. Many advanced industrial nations built their power on iron and steel. India is a member of the BRICS, the economic block comprising of five major emerging economies of Brazil, Russia, India, China and South Africa. Economic intelligence reports in 2012 declared that the BRIC countries (excluding South Africa) play a dominant role in the global iron and steel industry in terms of reserves, production and consumption. Industry watchers have projected that Nigeria has large reserves of unexplored iron ore and this places her favourably in a position to become a prominent producer of steel. Of course, none of these can be realised if we do not activate certain practical measures and harness our collective political will to develop the nation’s steel sector once and for all.

Painful decisions may have to be made. Nigeria should reduce her steel imports, raise import duties on iron rods etc and embark on becoming a major exporter of various steel products in addition to satisfying local demand.

Nigeria is not short of the relevant natural resources and to all intents and purposes, we expect to sustain the sense of exhilaration from the news that the Minister has mapped out a new solid mineral policy, which includes the steel sector.

Certainly, the revival of the sector will have multiplier effects on the fledgling automobile industry, push expansion in our rail sector. It will facilitate the exploration of Iron Ore and other solid minerals such as Limestone. In terms of direct and indirect employment, steel is reputed to be the biggest sector for employment. Nigeria’s army of unemployed youths can have hope for jobs and training in new skills.

As a revenue earner, examples abound in other parts of the world in places such as South Korea, reputed to be a “big automative exporter as well as a big steel consumer”. The role steel production plays in the country’s economic growth is well-documented. According to Korea Iron and Steel Association: “ The steel industry is the nation’s key industry with high impact on the inter-industries and has played a crucial role in the economic growth of Korea by steadily providing materials to demand industry such as automobile, shipbuilding and construction”.

There is a global demand for Iron Ore and steel and Nigeria must seize the moment of low oil prices and tap into the steel market for her economic renaissance and diversification.
Ajanah is a member of the House of Representatives representing Adavi/ Okehi Federal Constituency in Kogi State.

The steel industry is a key sector in Nigeria’s economy that should have been the bedrock of the country’s industrialization. The sector provides industrial items such as iron rods, barbed wires and coils, as well as metal doors and windows.

The sector should also have been providing employment to millions of Nigerians, particularly in steel rolling companies which produce steel materials, if the federal government had developed it over the years.

But instead, the sector has experienced perennial neglect which consequently inhibited its growth. Now, stakeholders in the sector stress that genuine efforts be made to address the challenges and save the sector from total collapse.

Global steel production grew enormously in the 20th century from a mere 28 million tonnes at the beginning of the 20th century to 781mn tonnes at the end. Over the course of the century, production of crude steel had risen at an astounding rate to a production level of about 1.6bn tonnes per year. Today, it is difficult to imagine a world without steel.

During the 20th century, the consumption of steel increased at an average annual rate of 3.3 per cent. By 1900, the United States of America was already producing 37 per cent of the world’s steel. With the post-war industrial development in Asia, that region now (at the turn of the 21st century) accounts for almost 40, with Europe (including the former Soviet Union) producing 36 per cent and North America 14.5 per cent.

Planning for the Nigerian steel industry started around 1958. Many international organizations and consulting firms were commissioned at various times to study the feasibility of steel plants under the aegis of the Federal Ministry of Industries. Parallel efforts were also made to identify and analyse the principal raw materials needed for the steel industry. In 1971, an extra-ministerial agency called the Nigerian Steel Development Authority (NSDA) was established to focalize efforts required to actualize a steel plant.

At one time, the Delta Steel Company (DSC), Aladja, was, rather than import super-concentrate, sourcing it from Itakpe (in Kogi state). The DSC was then supplying steel billets to the inland rolling mills at Jos, Oshogbo and Katsina. The steel produced in Aladja was said to have met international standard.

It is also on record that the Ajaokuta Steel Company, which was designed to operate on a “backward integration model”, had, by 1983, completed the rolling mills – namely the light section, billets, wire rod, medium section and structural mills – envisaged to provide the needed funds for the completion of the remaining five per cent of blast furnace yet to be completed. The Ajaokuta Steel is believed to be the largest integrated steel company in West Africa and has cost the federal government an estimated $7 billion (N1.1 trillion) since it was commissioned by the ShehuShagari administration in the second republic.

SaliuOtori, the national chairman of the Iron and Steel Senior Staff Association of Nigeria (ISSSAN), who at different fora had spoken to journalists on the state of the ASC, blamed the comatose state of the plant on lack of political will by the government to complete the plant and bring it on stream.

“In our estimation as key stakeholders, the missing link in the gap that had hitherto existed in the real desire of the people of Nigeria to see Ajaokuta Steel plant completed and operational is the required political will by the government,” he said.

Experts in the steel sector say that as a developing nation, Nigeria’s steel production is supposed to be far more than her consumption as a country eager to develop. They estimated Nigeria’s present steel production at about 300,000 tonnes per annum, while consumption, as shown by recent studies in 2010, is above 20 million tonnes per annum.

Already, the Minister of Solid Minerals Development, Dr. KayodeFayemi, saddled with the burden of developing the country’s solid minerals sector, has started to smoke hot. On his first official visit to the company immediately after being sworn in as minister, Fayemi said President MuhammaduBuhari’s government has resolved to revive the Ajaokuta steel company once and for all.

“I want to let you know that the president is very passionate about the Ajaokuta steel company. We will take a look at the company holistically with a view to making it work for the benefits of Nigerians. I’m here on a fact-finding mission. I have read much about the steel complex and have been briefed by the sole administrator. We will make a final decision on the complex, which Nigerians would be happy about.

“We are looking at the entire steel complex. We will not segment the plant. We are told that the captive power plant has been reactivated. After taking the one needed by the company, we will be happy if Kogi and its environs could benefit from the remaining megawatts,” Fayemi said.

In his inaugural press briefing, he hinted that the government would partner with relevant stakeholders that would help fix the moribund company for the country to be able to produce its own liquid steel for consumption by local industries.

“We want to build a sector that will support Nigeria’s industrialization, expansion of low- cost coal-generated power, earn foreign exchange and generate tax revenues for governments at all levels. Our strategic aspiration is to build a sustainable, globally competitive mining and related supporting sectors that will prudently use the finite resources available to improve the quality of life for Nigerians,” he said.

Speaking with journalists recently, NuhuAudu, a former Deputy General Manager (Administration) with Ajaokuta Steel, who disagreed with the International Monetary Fund (IMF) option that importing steel is cheaper for the country, said, “Yes, it is cheaper, which is true, and the money government is spending on maintenance of the steel company was much. But it was an advice that is in the interest of the western world and not in the interest of Nigeria and Nigerians, because the advantages of the steel plant cannot be measured in naira and kobo.”

Audu stressed that for any nation to develop and attain industrialization, steel development is a major catalyst. “In fact, steel is everything; making of cars, ships and even airplanes.”

To him, the western world does not want their hold on the steel market in Nigeria and by extension Africa to collapse and this is why they have been discouraging steel production in Nigeria through the IMF and World Bank’s advice.

Audu said, “At a time, the ASC was reputed to have the highest concentration of engineers. The engineers were trained in India and Russia but could not utilize their knowledge because of the collapse of the company.”

There is no doubt that the steel industry in Nigeria can be developed productively provided there is the will, commitment and genuine patriotism. Although it has been stagnant for so long, it could still be reactivated to provide the necessary vehicle for industrial transformation and growth.

1.2                                               OBJECTIVE OF THE STUDY

The objective of this work is to provide information on what makes steel a sustainable material, and provide an overview of the actions we as an industry are taking to address global challenges on many different fronts. We also continue to report on our sustainability indicator performance and progress in fulfilling the commitments outlined in our sustainable development policy

1.3                                           SIGNIFICANCE OF THE STUDY

Sustainability, or sustainable development, is aimed at improving the quality of life for everyone, now and for generations to come. It encompasses environmental, economic and social dimensions, as well as the concept of stewardship, the responsible management of resource use.

Steel products help to meet society’s needs and as producers of steel, it is our responsibility to meet the demand for steel in a sustainable way. With companies all across the world, we face a broad range of challenges and we are committed to taking action, individually and together as an industry, to address them.

The steel industry welcomes the UN Sustainable Development Goals (SDGs) launched in 2015 and reaffirms its commitment to shaping a better future for our planet. As the new agenda commits every country to take action to pursue a sustainable future, worldsteel members and associations also commit to taking action towards building a sustainable future for our industry and for the wider world.

1.4                                                   SCOPE OF THE STUDY

Steel’s combination of properties such as availability, cost, durability, strength, and ductility (the ability to be stretched or shaped without breaking) is what makes it unique. Steel’s properties enable it to suit a variety of product applications for which there are no energy and cost-effective substitutes.

There are thousands of different types of steels. They have evolved to support housing, food supply, transport and energy-delivery solutions.

CHAPTER TWO

2.0                                                    LITERATURE REVIEW

2.1       POLICY AND LEGAL FRAMEWORK AND THEIR EFFECTS ON STEEL DEVELOPMENT IN NIGERIA

Policies and legal framework are very important to guide development activities of any nation. Nigeria has released several fiscal and economic development policies. Vision 20: 2020 economic blueprint as approved by the federal executive council clearly recommended that the nation shall produce 12.2 million tonnes of steel per annum by the year 2020 out of which Ajaokuta steel plant is to produce 5.2 million tonnes/ annum, DSC to produce two million tonnes per annum and the remaining by private entrepreneurs if Nigeria is to join the league of 20 industrialized nation by 2020. Collier et al. (2008) presented economic policy option for a prosperous Nigeria

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