The Challenges and Prospects in Steel Industrial Development in Nigeria, Journey So Far

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Steel plays an essential part in the growth of any modern society. The state of steel production and consumption in Nigeria as well as in construction industry is a very important sector of every nation’s economy. It is one of the most important steel-using industries, accounting for more than 50% of world steel demand.

The fact that the establishment of a steel industry in any country in the world is most desirable for rapid economic development is undisputable. In a lecture titled “Steel Development and Nigerian Power Status” organised by the Nigerian Institute of International Affairs, Victoria Island, Lagos on 26th July, 1980, the then Steel Development Minister Mr. Paul Unongo declared that with a well-planned and fully established iron and steel industry by Nigeria, the path towards achieving power status for herself is guaranteech

“The greatness the world attaches to any country today is on the basis of her power status which is based on her military, economic and cultural influence and not on the number of her muscular citizens, geographical size or bottom power. The Minister said that although Nigeria was able to purchase sophisticated military weapons from super powers, she stood vulnerable to derision because the hardwares are not ours.

Unless we are able to use our steel to build our nuclear technology, warships, bombs, war aircrafts etc, we cannot create wealth for our people or maximising the nation’s power status, he remarked.

Minister wondered why Africa with all her richness in every respect could not boast of a single powerful country and called for indigenous power status via steel industrial development.

For Nigeria, he continued, she should be able to protect her own internal capability in order to ward off the culpable effects of British Colonialism which swept the initiations of our forefathers under the carpet, in the name of maintaining law and order.

“Nigeria should aspire to power status through the establishment of steel industry.

On the role, Nigeria could play in helping other African States exonomically through the establishment of steel industry, Mr. Unongo said she could rescue them by assisting to establish steel-based industries. According to the statement:

“Nigeria remains an extremely important economy and has a major role to play in the continent’s crusade for economic liberation” by the guest speaker Benjamin William Mkapa, Former President of the United Republic of Tanzania during 2017Annual General Meeting of Manufacturers Association of Nigeria.

“Nigeria can help to tap the extensive ‘iron and steel untapped resources in Liberia which exports her iron ore and Guinea which also exports similar resources. All these are credible sources of power status”, he declared,

The Minister therefore urged every Nigerian to do his or her best especially scientists in seeing to the successful establishment of the steel industry.

Group Executive Director, African Industries Group, Uche Iwuamadi, noted that the company has invested over $1.1bn in Nigeria as total investment of the group and plans to invest more in upcoming projects, adding that exporting steel saves the nation over $650mn yearly.

“In the past, many people have been importing steel into this country; nobody talks about that because imported steel cannot compete with our own. We are in the same standard so you don’t need to waste your money importing steel”, he added.

Chairman Basic Metals, Manufacturers Association of Nigeria, Chief Oluyinka Kufile, said: “On behalf of Basic Metals Sector of MAN, I congratulate you and thank you for contributing to the Nigerian economy. We want to see more because our sector is the backbone of Nigerian economy. If you talk of anything, no matter the project you do, no matter the industry you do, steel takes nothing less than 70-75 percent whichever, whether it is fertilizer, refinery, etc, steel takes 70-75%”.

In Nigeria, the domestic industry has been greatly hurt by poor provision of electricity. Ajaokuta Steel Company with theoretical capacity of 1.3m tonnes of long steel products have been lying inactive due to neglect of successive governments, managerial inefficiency, poor power supply and lack of fund to complete the final phase. Nigeria currently spends about $3.3bn annually on steel and iron imports.

For instance, in 2013, the local industry produced an estimated 100,000 tonnes of crude steel, which is just about 0.6% of Africa’s total. Data on Nigerian’s steel capacity is appalling when compared to other nations of similar size and economic might around the world. The current number of functional steel rolling mills in Nigeria is estimated at about 21 up from about 5 functional steel rolling mills 5 years ago. There are 15 steel rolling mill producing reinforcing bars, about three cold rolled steel mills producing cold rolled flat plates and about three producing wire coils.

According to Comptroller-General of the Nigeria Customs Service, Hameed Ali, who was represented by the Area Controller, TINCAN, Bashir Yusuf, said: “MAN and SON should put heads together to see how best they can approach the government to see how they can help manufacturers to improve on their steel productions so that we can export more and more as African Industries are doing.

While the President of the Nigerian Metallurgical Society, NMS, Prof. Benjamin Adewuyi, said the nation’s steel sector, as pillar of industrialization, is heading for “final burial” if government implements a second privatization of public steel firms without adequate infrastructural base.

The president stated this during the sensitision of  stakeholders at the 33rd NMS National Conference and General Meeting held in Effurun, Uvwie Local Government Area, Delta State, Adewuyi lamented abandonment of the nation’s steel industry to the self interest of a few at the detriment of national interest.

Adewuyi said: “The steel sector, as vital as it is, has been toyed with for too long. Presently, there is little to show that government is eager to reactivate the Ajaokuta Steel Plant. Nothing indicates serious plans in the metallurgical sector to alleviate the suffering of the people.”

“Issues of infrastructure and political willpower that brought the Ajaokuta plant to standstill without completion are being brushed outside and remain the same till date.

Former Minister of the Industry, Trade and Investment, Mr. Olusegun Aganga, said the number of functional steel mills in the country had increased to 21 from less than five a few years ago due to the implementation of the Nigerian Industrial Revolution Plan.

 

Aganga stated this when he inaugurated a N60bn integrated steel rolling mill in Sagamu, Ogun State built by Standard Metallurgical Company, adding that the government was committed to repositioning the steel sector to access a substantial share of the global wealth of the industry, estimated at $10tn.

 

“Before this administration came on board, we had less than five functioning steel rolling mills and no cold-rolled steel mill; but today there are more than 15 functioning steel rolling mills producing reinforced bars; about three functioning cold rolled steel mills producing cold rolled flat sheets; and about three producing or about to commence the production of wire coils. This is a visible evidence that our policies are working,” he said.

 

According to him, steel is at the heart of any country’s economic development and is one of the most important materials widely used for both domestic and industrial purposes throughout the world, hence the priority given to the sector in the NIRP.

 

 

He said, “In addition to accelerating the industrial development of a nation, a vibrant steel sector contributes to the growth of the Gross Domestic Product and exploitation of Nigeria’s abundant natural resources.

 

 

“A vibrant steel sector also generates economic activities in downstream industries, creates job opportunities and acquisition of technical skills, and helps in the transfer of technology and provision of machine parts and tools. This particular project is being executed with 100 per cent locally-sourced raw materials.”

 

The minister noted that the establishment of the first phase of the SMC steel mill and the ground-breaking of the second phase would complement the company’s existing investments in the agri-business sub-sector, pointing out that the mill ranked among the largest private sector investments in the steel sector in Nigeria.

 

Aganga said, “I am assuring existing investors like SMC and prospective ones of government’s support in the pursuit of self-sufficiency in local steel production. The implementation of game changers in the sector is already opening up a lot of downstream sector activities, with the attendant massive job opportunities and economic empowerment for our engineers, technicians, artisans and fabricators alike.

 

“To date, a number of sectoral policies have been developed under the NIRP. The Sugarcane to Sugar under the National Sugar Master Plan has attracted over $3bn in investments.”

Breakdown shown 13 rolling mills, 7 mini mills and 2 integrated steel companies (a total of 22 steel companies) with their Locations below in the Country:

  1. South-East: Onitsha (Allied Steel Co.), Owerri (Metcombe Steel Co.) and Enugu (Nigersteel Co.),
  2. South-South: Aladja-Ovwian (Delta Steel Co.,), Asaba (General Steel Mill,) and Eket (Qua Steel Products)
  3. North-Central: Ajaokuta (Ajaokuta Steel Co. Ltd.), Ilorin (Union Steel Co. and Commercial, Metal & Chemical Industries) and Jos (Jos Steel Rolling Company)
  4. North-West: Kano (Nigerian Spanish Eng. Co.,) and Katsina (Katsina Steel Rolling Co)
  5. Abuja: (Baoyao Futurelex))
  6. South-West, Ikeja (Asiastic Manarin Ind, Continental Iron & Steel Co. and Universal Steel Co,), Ikorodu (Kew Metal Industries, and Mayor Eng. Co.,) Otta (Federated Steel Industry, Selsametal), Ibadan (Alliance Steel Co.) and Oshogbo (Oshogbo Steel Co).

According to experts steel is essential to all solutions of the society’s daily needs as it is indispensable to housing, infrastructure, transport systems, manufacturing, agriculture, water and energy supply.

Mr Celestine Ukpong, an astute investor said, MAN should put more “efforts to improve production which have to contend with the issue of cheap steel import that is frustrating the efforts of indigenous companies from growing. Dumping of finished foreign steel products is taking people out of business in Nigeria and Africa, he added.

Mr Ukpong cited the current National Industrial Revolution Plan (NIRP) that is positively poised to help attracts $25 billion to the manufacturing revenues in the next three years.

“Steel is at the center of world economy and worldwide, the steel industry adopts approaches that enhance sustainable development striving to meet the present needs without compromising the ability of future generations to meet their own needs. This delivers wealth for all nations, wealthy and poor alike, while preserving and enhancing the planet’s resources. The very many challenges experienced by the developing nations such as population growth, inability to meet up with urbanization needs, high level of unemployment and ever increasing rate of poverty by can alleviated by steel. Steel industry and allied factories transforming steel to fmished products absorb a lot of labor force in any society, it was noted.

“Research and development strategies adopted by the steel industry since industrial revolution till have contributed immensely to the advancement of the world.”

“The quality of steel such as strength, recyclability, availability, versatility and affordability makes it a unique material. In fact, once steel is produced it becomes a permanent resource to the society because it is 100% recyclable without loss of quality and has a potentially endless life cycle. The recyclability and versatility have brought about countless innovations. While the steel industry is energy and carbon intensive, research and development investments are cushioning the environmental impacts.

“Steel industry is one of the most efficient manufacturing processes as most by products processed to finished products or used in manufacturing process such as cement factories. Over 22 billion tonnes of steel has been recycled worldwide since 1900 owing to steel’s 100% recyclability.

“A look at the trend of steel industries worldwide shows that the largest economies of the world produce and consume large quantities of steel whereas the less-performing economies including Nigeria have a very low steel production and consumption capacities. Given the great potentials of steel materials and how it is impacting on the economies of the advanced nations, this paper researches into the state of steel production and consumption in Nigeria. Data collected on Nigerian steel industries and the best practices in the international scenes are statistically analyzed. Particular attention will be placed on the steel used for buildings and infrastructural development.

From steel reinforced concrete residential buildings, to industrial buildings, to structures for public use, to high rise buildings. All these structures rely on steel for their strength and ductility. Steel is also used on roofs and as cladding for exterior walls. Construction industry consumes as much as 52% of World steel.

Steel can be adopted in two major ways in construction: as reinforcing bars for reinforced concrete structures or as stand-alone material for construction. In developing nations like Nigeria, steel have been used mainly for reinforced concrete structures while in the developed nations, steel frame structures are well developed and practiced.

Construction industry is a very important sector of every nation’s economy. It is one of the most important steel-using industries, accounting for more than 50% of world steel demand.

From steel reinforced concrete residential buildings, to industrial buildings, to structures for public use, to high rise buildings. All these structures rely on steel for their strength and ductility. Steel is also used on roofs and as cladding for exterior walls.

Steel can be adopted in two major ways in construction: as reinforcing bars for reinforced concrete structures or as stand-alone material for construction. In developing nations like Nigeria, steel have been used mainly for reinforced concrete structures while in the developed nations, steel frame structures are well developed and practiced.

Reinforced concrete is a composite material per excellence and is widely used because of the complimentary properties of concrete and steel. Very good concrete compressive strength is efficiently combined with the high tensile strength of steel to provide the world with the most accepted material for buildings and infrastructures.

Concrete and steel provide complementary support to each other, compensating for the weaknesses in their properties and thereby making the material a very ductile construction material. The reinforcing steel bars are produced in specialized industrial set up and generally come with certified quality. The quality of cement, the binder of concrete, is also produced in specialized factory similar to steel factories and is guaranteed by the manufacturer in a manner similar to that of steel. Unlike the choice of steel for structural applications, the choice of concrete mixes is virtually infinite and therefore the selection has to be made with a sound knowledge of the properties and behavior

State of African Steel

In 2013, it was predicted that sub Saharan Africa’s construction industry will grow from $75bn to about $180bn by 2025. Currently, African producers are unable to meet the demand for steel especially the reinforcing bars which is why steel import is high. To meet up with the high demands, fraudulent activities are rife in the steel sector as poor standard products are easily supplied leading to frequent building collapse that have been verified in Nigeria. The need for increased local investment in the steel sector and the enforcement of international standards cannot be over-emphasized. These needs create great opportunities for African investors to see off competitors and help to boast African economies. Apart from South Africa and Egypt that are leading the way, most African nations are in a very bad shape. Kenya produced about 20000 tonnes of crude steel which is too far off from the national demand of about 1.2 million tonnes.

In 2013, Africa’s share of World crude steel production was 1% and finished steel products for the same year stood at about 2%. Annually, Africa import over 25 million metric tonnes of finished and semi-finish steel products with Algeria, Egypt, Nigeria, South Africa and Morocco leading. Apparent steel use per capita for 2013 were 105.8 kg and 88.9 kg for South Africa and Egypt,

Having seen the importance of steel to the World economy with the highlighted examples of steel production and consumption in the World, Africa and Nigeria with particular emphasis on the applications to the construction industry, we now analyze data on steel production and usage in Nigeria, Africa and the World.


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