Steel-an industrial white elephant?

Author:Dhliwayo, Dominic

Nigeria's steel industry which promised so much 20 years ago, has now become one of Africa's major industrial white elephants. But the ailing industry may have one last chance of survival as DOMINIC DHLIWAYO reports.

In the 1970s, Nigeria embarked on an ambitious programme to build a steel industry that, when completed, would produce 8m to 10m tonnes a year of this strategic industrial raw material thereby rivalling the continent's industrial giant, South Africa. Years later, the endless delays, set-backs and billions of dollars of investment have seen the creation of little more than perhaps one of sub-Saharan Africa's most conspicuous industrial white elephants.

Two years ago the largest functioning mill, Warri-based Delta Steel, saw its production reach an all time low of 3.6% of its 1m tonne per year capacity.

Indeed, production has never exceeded 24.4%. Today, although the flagship of the country's steel industry, the massive integrated Ajaokuta plant, is said to be "98% technically ready", the Nigerian Government has not honoured payments of $173m to Russian developers, Tyazhpromexport, which has pushed the failure through to the finish.

In mid-1996, the Government decided to attempt to lease the mills to foreign companies but viable investors lacked interest in this largely defunct industry. A few approaches were made by Asian economies interested in furthering their political influence on the African continent. Chinese, Indian and North Korean companies toured the plants but only North Korea made a commitment to complete and lease the 100,000 tonne per year Epe billet mill until 2001.

The situation was not always this bleak for the notorious West African state. After initial plans in the 1950s, the newly independent Government of Nigeria spent the 1960s trying to interest its former colonial power, Britain, and other Western nations, in providing the requisite aid and technical assistance to bring these plans to fulfilment. The Biafran civil war and prolonged political instability thwarted such attempts and eventually the Government used Cold War politics to attract the Russians.

Originally, the aim was to commission eight rolling mills through a programme whereby finished steel production facilities would be built in advance of their raw materials suppliers; the intervening period could be bridged by a period of imports. However, this was not to be. The failure of the programme is often ascribed by critics, to poverty and the...

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