Back to the future as Nigeria turns to Russia on Ajaokuta steel project

By Ruth Olurounbi
Posted on Wednesday, 30 October 2019 18:06

Nigeria's President Muhammadu Buhari is counting on Russia to get Ajaokuta steel running. REUTERS/Carlo Allegri

Shehu Sharagi and Leonid Brezhnev led Nigeria and Russia when the two countries first started to build the Ajaokuta steel rolling mill in 1979.

Forty years later, Nigeria is again banking on a bilateral agreement with Russia to resuscitate the now derelict steel factory complex.

The accord to revive the Ajaokuta project was reached during a meeting between Nigerian President Muhammadu Buhari and Russian President Vladimir Putin in Russia this month.

The partnership will help get sections of the factory into production before the end of 2019, says Olamilekan Adegbite, the country’s minister of Mines and Steel Development.

Russian President Vladimir Putin is trying to regain old Soviet ties and build influence new influence on the African continent. At present, the dilapidated steel factory complex has failed to produce a single bar, coil or rod, despite billion of dollars in public funding and multiple ownership changes.

Nigeria’s rich deposits of iron ore, much of it in Kogi state, the region where Ajaokuta is located, makes steel a viable target for government’s revenue campaign, and also offers the scope to develop other industries.

  • The plant has a 68 kilometre road network, and is meant to accommodate 24 housing estates, a seaport and a 110mw power generation plant.
  • If operational, it could provide nearly a million jobs.

Details of the new deal with the Russians are sketchy at best. “The Federal Government is working round the clock to ensure that sections of the company start production before the end of the year,” Adegbite said.

“As the Federal Government strives to diversify the economy through mining and steel sector, the revitalization of Ajaokuta Steel Company to produce optimally is of utmost concern to the present administration.”

Old song

Construction of the Ajaokuta steel complex, which was supposed to produce as much as 5mn metric tons of steel a year, began in 1979. Thousands of Russian engineers descended on Nigeria in the years that followed. However, work stalled due to government’s failure to pay the builders, Russia’s Tyazhpromexport, on schedule.

By 2004, when it was taken over by India’s Ispat Industries Ltd., the plant was yet to produce any steel. Ispat’s concession was revoked in 2008 and it took Nigeria eight years to come up with a renegotiated concession agreement. Vice President Yemi Osinbajo in 2016 called the saga “a tragedy of immense proportion.”

“We’ve sang this song before, and frankly we are more than a little tired of hearing the same tune over and over again,” said a source in the mines ministry who didn’t want to be identified.

“At the risk of being accused of apathy, I personally believe that it will take a miracle to see any positive result from this new deal,” the source said.

Requests for comment to a spokesperson for President Buhari received no response.

Bottom Line: Finally getting Ajaokuta running would send a signal that Nigeria is open for business – but no-one’s betting on it yet.

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