I am delighted for the opportunity to lead the delegation from the Federal Government of Nigeria to the 4th International India Steel Conference and Exhibition in view of the role Steel plays in the modern economy. I thank the organizers of this conference especially the Ministry of Steel, Government of India, and the Federation of Indian Chambers of Commerce and Industry, for the assemblage of Steel stakeholders from different parts of the world and for inviting me to this conference.
Aware of the role of the Steel sector in creating a base for Nigeria’s industrialization, the Nigerian delegation attending this conference consists of the technical heads of our regulatory agencies in the sector, as well as the Manufacturers Association of Nigeria. This conference offers us the opportunity to share our potentials with the world audience and make meaningful contributions on the selected topical issues during the sessions.
WORLD STEEL OVERVIEW
As the Minister in charge of Mines and Steel Development in a country endowed with over 3 billion Metric Tonnes of iron ore amongst other steel making raw materials, and a population of over 190 Million, we are concerned that out of a global production of 1,689 Million tons and African production of 15 Million Tonnes, Nigeria only produced an estimated 100 tons – according to the World Steel Association, 2017 year statistics. This is the narrative we are set to change by all means since estimates from audit studies put our production at 1.3 Million tonnes of steel for 2017.
NIGERIAN STEEL PERSPECTIVES
Our desire to develop a vibrant steel industry is evident. We are certain of our ore resource base and the requisite additives for steel production namely: limestone/dolomite, clay/silica sand and coal. Our proven reserve estimate of iron ore stands at 2,542 Million Tonnes with an average quality of 36% iron content.
Over 95% of the current steel production in Nigeria is from scrap metal. Consequently, our focus is on developing the upstream mining sector, as we are endowed with huge iron ore deposits.
We have a total of 43 Steel plants and fabricating outfits in the value chain, 90% of which operate in the downstream sector. Indian companies, in particular have been very reliable players in this sector which makes it more imperative for us to be here.
OVERVIEW OF THE NIGERIAN STEEL PROJECT
The Federal Government of Nigeria established the Ajaokuta Steel Project in September 1979, to serve as a base for Nigeria’s industrialization. The project is designed as an integrated Iron and Steel complex, based on the conventional Blast Furnace (BF) route for Iron Making and Basic Oxygen Furnace (BOF) for Steel making.
The first phase was designed to produce 1.3 million tonnes (Mt) of liquid steel per annum with inbuilt facilities to expand to 2.6 Million tonnes of liquid steel per annum in the second phase and to 5.2 Million tonnes per annum in the third and final phase.
Delta Steel Company, Aladja, now under private control of Premium Steel is an integrated Steel Plant with a capacity of 1Million Tonnes per annum based on Direct Reduction and Electric Arc Furnace.
Owing to the green-field location of the Steel Plant in Kogi State, the Federal Government of Nigeria, in line with what obtains globally, considered it necessary to embark on the extensive development of an economic corridor around Ajaokuta within 100km radius of the raw materials. Consequently, a lot of the external infrastructure which is critical to the completion and operation of the project are being put in place.
This includes a number of rail lines to link Ajaokuta with the national rail line and deep sea ports for bulk handling of materials; the development of Port facilities and lowering of oil pipelines; and the dredging of the inland waterways to link the area with the Atlantic so that Imported inputs can now be shipped directly to the plants at low cost.
Apart from the 110 MW captive power plant at the project site, we have a 414 MW power plant, which supplies its unused energy to the national grid; in addition to the two existing electricity feeder substations of 132KVA and 330KVA capacity.
Telecoms facilities have increased the promotion of ICT development in the region tremendously and massive road construction connecting the area with the major cites and access road projects to the captive mines have been embarked on.
A Natural Gas Line from Warri in Delta State to Ajaokuta in Kogi State for natural gas was built primarily for the sector.
We seek to encourage rapid growth in steel and other metals production & consumption; by developing deep and functional linkages between the steel sector, and other strategic sectors of the economy (Oil, Gas, Power, Transport, Agriculture, construction & Manufacturing);
Our Target is to increase present total mining sector contribution to the national GDP from 0.3% to 3% in 2019 & 10% – 15% by 2025; increase steel consumption per capita from less than 10kg to 40kg by 2025; and increase contribution of the steel sector to the basic raw material input of other strategic sectors.
OPPORTUNITIES/POTENTIALS OF THE NIGERIAN STEEL SECTOR
The potentials of the Nigerian Steel sector, both the upstream and downstream subsectors are enormous. It is therefore imperative that we share these potentials with the global Steel family.
The investment opportunities in the steel sector of the Nigerian economy are premised on:
Abundance of major Steel Raw Materials in Nigeria, which include: Iron ore, limestone/Dolomite, Clays/silica sand.
Favorable Key Enablers for the Nigerian Steel Industry which include duty Free Imports for Mining/Steel Plant Equipment.
- The Nigeria mining policy allows for 100% ownership of companies by foreigners with free transferability of earnings.
- Ease of Doing Business in Nigeria is a major focus of the present Administration. Company registrations can be executed online and processing of mineral titles accomplished within 45days.
- The existing capacities in the Nigerian Steel Industry is encouraging; the country spends about $3.3Million USD on importation of different Steel products according to the Nigerian Bureau of Statistics report – a gap which presents great opportunities for investment.
NIGERIA’S STEEL DEMAND DRIVERS
Nigeria has a huge unrealised potential for steel demand growth. This is suggested by the apparent steel use per capita for finished steel products, which stood at less than 10 kg in 2017, far below the world average of 214.5 kg, according to the Word Steel Association.
We have identified the construction sector and the oil and gas sectors as the main demand drivers of the Nigeria steel sector. This is premised on the strong infrastructural development and housing demand. We are planning new towns initiative which will further boost urban infrastructure investment.
Our industrial corridor projects will connect existing industrial cities and develop manufacturing sectors to Ajaokuta. This will increase connectivity and reduce logistical costs of transportation of steel derivatives across the Nigerian states.
All these factors point to a high potential for the growth of steel demand in Nigeria.
We are here to assure you of our commitment to accomplish our steel development targets in record time. We want to assure investors that we are committed to providing a conducive environment for steel production and business to thrive.
I want to conclude by inviting all genuine investors in the industry to explore the opportunities available in the Nigeria steel sector in view of the conducive business climate, abundant steel raw materials and the obvious huge market due to its population, as well as the scope of our infrastructural development projections.
I wish you all successful deliberation as we look forward to engaging you more in the course of the conference sessions.
Honourable Abubakar Bawa Bwari