Privately owned steel companies are pumping billions of naira into building new plants, as the need for housing, road and bridge construction expand in the country. This is despite the fact the Federal Government has not been able to revive the Ajaokuta Steel Company years after it was built in 1979.
“We have invested $500 million in Nigeria. We believe that the steel sector is the backbone of any major economy in the world. Without steel, there cannot be any other industry in the real sector of any economy,” said Raj Gupta, chairman of African Industries Limited, which has 12 subsidiaries, including African Steel Mills, Ikorodu Steel Mills, African Foundries, and Abuja Steel Mills.
Similarly, Aarti Steel Nigeria Limited, one of the biggest steel mills in Nigeria, has completed a cold-rolled mill in Ota, Ogun State, with capacity to produce 120,000 tonnes of products per annum.
The steel maker spent about N300 billion to complete the mill in March this year. The mill is expected to serve the downstream steel makers in Nigeria, using cold-rolled steel products for the production of home appliances, roofing sheets, metal furniture and filing cabinets, tables and chairs, among others.
“The mill just started in March and it is now fully stabilised. It is producing already. It is a big investment and it will also be good for the Nigerian economy,” Aniket Singal, Aarti Group’s vice chairman, told BusinessDay in Lagos.
Singal said Aarti is already exporting steel to West African countries such as Togo and Mali and is expanding to Central Africa, Ivory Coast, Benin and other parts of the continent, in order to earn more foreign exchange for the Nigerian economy.
Nigeria, Africa’s biggest economy, spends about $3.3 billion on steel imports every year. Eighteen of the 30 steel manufacturers in Nigeria produce about 2.2 million tons a year, with scraps and billets imported mainly from China.
An average of steel products such as standard plates, hot-rolled coil, cold-rolled coil and rebar is $464.7 using Chinese prices, which means Nigeria imports roughly 7.1 million metric tonnes of steel annually.
Steel makers, made up of players in the basic metal, iron and steel and fabricated metal, invested N202.97 billion in the second half of 2016 as against N37.05 billion in the first half.
The sector pumped N1.69 trillion into the Nigerian economy from 2013 to 2015, said the Manufacturers Association of Nigeria (MAN).
Already, Standard Metallurgical Company Limited (SMC) is set to launch a billet mill to produce standard wire rods in Nigeria. The mill will likely create 1,000 jobs in the country.
“This will be the first factory to produce billet suitable for producing standard wire rods in Nigeria. All wire rods produced today in Nigeria are being made from imported billets, but in three months from now, we are going to start producing billets in Nigeria,” Mohammed Saade, managing director, SMC, told BusinessDay.
“Currently, we are producing 300,000 tonnes of wire rods per year. With phase two, we would produce 260,000 tons of billets in Nigeria. Nigeria today is a big market and we are committed to meeting local demands and the surplus can go to the ECOWAS market,” he said.
Qualitec Industries Limited is investing up to N100 billion in Ogun State, according to Oluyinka Kufile, CEO of the firm, who is also the chairman, Basic Metal, Iron and Steel Group of MAN.
A steel company, HongXing Steel Company Limited pledged to pump $100 million in plants and machinery in Nigeria last year.
Nigeria has pumped over $5 billion into Ajaokuta Steel but all to no avail, as the Federal Government is now shopping for a buyer.
A functional Ajaokuta should provide the majority of inputs used by manufacturers, but long years of improper due diligence before privatisation of the complex, have cost Nigeria billions in naira and wasted tax payers’ money.
Nigeria is hit by a housing gap estimated at 17 to 18 million and an infrastructure deficiency that will require more than $300 billion to fix. Railways and roads in many states are still in bad shape, while many bridges have outlived their life span of 50 years.
China has emerged as world’s biggest exporter of cheap steel, driving down prices and forcing Europe to place restrictions.
Low global demand is hitting hard on steel firms, while some steel firms complain of being owed by governments at various levels.
“In 2015 and last year, we had to sack workers because government, federal and states, refused to pay us,” said a major player in the sector, who does not want his name in print.
Credit: Business Day
