Buhari Fails in Resuscitation of Ajaokuta Steel Mill

Considered one of the biggest steel mills in Africa, the Ajaokuta steel mill complex was designed to be the cornerstone of Nigeria's industrialization efforts. In 1971 the FG signed a contract with the Soviet Union (USSR) to build the Ajaokuta Steel Complex in Ajaokuta, Kogi State, construction of the steel mill began in 1980 with assistance from the Soviet Union. The complex was designed to have several units, including blast furnaces, steel-making facilities, rolling mills, and other supporting infrastructure. The initial phase of the project was completed in the early 1980s.

Despite the initial progress, the Ajaokuta Steel Mill faced several challenges that led to significant delays and hindered its full operationalization. These challenges included technical issues, funding constraints, mismanagement, corruption, and political instability. The collapse of the USSR in 1991 also affected the project, leading to a decline in support and expertise from the Soviet Union.

After the return of democracy in 1999, the Obasanjo-led government made numerous attempts to privatise the mill and attract foreign investors to revive its operations. However, these efforts were unsuccessful due to various factors, including legal disputes, disagreements over valuation, and a lack of clear policy direction. In 2004, the government reached an agreement with the Global Steel Holdings Limited (GSHL), an Indian company, to manage the mill for 10 years. However, the agreement was terminated in 2008 by the Yar’adua administration due to contractual disputes, leading to a legal battle with the concessionaire seeking $7 billion.

President Buhari in 2019 made a promise in his Next Level Agenda to resuscitate the moribund mill. In a meeting later that year, Buhari in discussions with Russian President Vladmir Putin at the Africa-Russia Economic Summit in Sochi, Russia, came to an understanding to have a team from TYAZHPROMEXPORT (TPE), a Russian company which focuses of metallurgy, the original builder of Ajaokuta steel to conduct technical audits of the steel company to ascertain the level of work to be completed. 

In 2020 the Federal Government in a bid to fast track the resuscitation process inaugurated the 13-person Ajaokuta Presidential Project Implementation Team (APPIT) chaired by the Secretary to the Government of the Federation. The Chairman stressed the importance of the Ajaokuta steel plant to the country and explained that it presents a unique opportunity to make it to become West Africa’s largest fully integrated producer and most importantly, to accelerate industrialisation in steel related industries. 

The Minister of Information, Hon. Lai Mohammed, disclosed In January 2023 that the Federal Government had finally been able to settle the dispute between it and GSHL regarding the ownership of the Ajaokuta Steel mill, The minister stated that the FG had paid a sum of $446m out of $496m judgement debt meant to be paid and that the final instalment of $50m would be settled before the end of the first quarter 2023. With the decision to regain control of the steel mill the FG was once again faced with the option of signing another concession agreement. 

It must be said that a lot has been done by Buhari and his team to revive the activities of the Ajaokuta Steel Mill complex, but nonetheless that effort has not led to any meaningful gain in the aspect of Steel production as a lot still needs to be done for the Mill to reach operational capacity and run efficiently. The Ajaokuta Steel Mill reached a 98% completion rate in 1994 and since then has been unable to produce a single iron bar till date. Although the minister of Mining and Steel Development, Olamilekan Adegbite, initially stated that the mill will begin full operations before the end of President Buhari’s tenure, he made a recourse in May 2022 stating that it would no longer be possible for the Buhari Administration to complete the project citing Covid-19 and the Russia-Ukraine war as reasons. 

Moreover, in April 2023 a Federal High court sitting in Lokoja Kogi state restrained the Ministry of Mines and Steel Development  from concessioning the Ajaokuta Steel Company Limited (ASCL) and the National Iron Ore Mining Company (NIOMCO). This restraining order was given after a non-governmental organization, Kogi Heritage Protection Advocacy called the concession “hasty’ and not in accordance with due process. The spokesperson for the group noted thus- “It is very unrealistic for the 20 days threshold given for response to the adverts and grossly inadequate for any serious pre-bidding preparations is clearly at variance and in breach of ICRC which specifies six weeks for tender advert and responses”.

“In other words, the 20 days response cannot realistically bid for the steel plant, nor will their bids reflect in any meaningful way, the realities of a gigantic steel complex like the Ajaokuta Steel Company and Itakpe Iron”.‍

Considering these challenges and unfulfilled promises, it is not feasible for the Buhari-led administration to complete the Ajaokuta Steel Mill project before May 29th, 2023. Therefore, the promise made by President Buhari to revive the mill is deemed "BROKEN" by AdvoKC.

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