AJAOKUTA STEEL MILL AND THE DEVELOPMENT OF THE NIGERIAN ECONOMY: THE ISSUES AND THE WAY FORWARD Introduction Steel is an iron alloy, which means that it is composed ofiron and small amounts of elements such as Carbon, Silicon, Manganese, Phosphorus, Sulphurand Oxygen. It is made by refining iron ore, to remove impurities, and then combining it with other elements depending on the desired chemical composition and application. According to World Steel Association (2021), there are over 3,500 grades of steel in the world which is testament to its wide range of application. It is one of the world's most important engineering and construction material. This is because it is used makinga variety of items such as cars, construction products, refrigerators and washing machines, cargo ships and surgical scalpels. Other characteristics of steel that promotes its use globally is that it does not rust easily, it can withstand significant tension, it is difficult to fracture, it can be made to offer high strength at a low weight, and can be recycled over and over again without loss of property. Considering the economics and mankind's desire to minimize waste disposal so as to protect the environment, steel is a material that is not only popular now, but would remain pivotal in making products for the foreseeable future. In 1855, Henry Bessemer introduced the Bessemer process in refining iron ore, thus enabling the mass production of cheap steel (Lumen, 2021). Since then, the steel manufacturing process has been developed to produce various types and grades of steel to satisfy different applications. According to Das (2021), the global demand for steel is set to hit 1.925billion metric tons in the year 2022. Considering that the price of steel per metric ton ranges from $300 to $2,500, depending on the type and grade of steel, the global market size would lie between $577.5billion and $4.8 1 3trillion in the year 2022. This shows why several nations that have significant iron ore deposits, have invested in steel mills to meet both local and international demands. China, Japan, India, the United States and Russia are the highest producers of steel, in that order, with China producing about 25% ofall steel exported globally (Seth, 2020). China's journey to global prominence in the steel industry began in 1978 when its Vice Premier Deng Xiaoping visited a state-of-the-art steel plant in Japan owned by Nippon Steel Corp, as documented by Yap (2018). This visit was in preparation of setting up its own manufacturing beachhead called Baosteel in Shanghai, as the country aimed to transformits agrarian economy into an industrial powerhouse. At the time, this was an ambitious move because Baosteel's initial pricetag was $6 billion, 36 times its foreign-exchange reserves. Yap highlights that this move was the needed trigger for an industrial revolution in China as the nation overtook USA in 1993, and Japan in 1996 in steel production. Riding on the wings of government subsidies, cheap loans and tax breaks, China became a steel powerhouse with the largest shipbuilding and auto-making industries in the world. This turned the nation from one of the poorest into having the largest economy globally. Due to the wide use of steel, other industries in China have hugely benefitted from it becoming a steel giant, especially in the area of manufacturing, Steel is an important material for making products in several industries. Currently most manufacturing companies in Nigeria are suffering duc to difficulty in accessing foreign exchange to acquire raw materials from outside the country. Those industries that need steel would benefit immensely if they can locally access steel as this will reduce production costs and enable them expand operations. Nigeria has a thriving oil and gas industry where most equipment such as pipes, valves, drilling machines and offshore production structures are made from steel. In early 2018, Total Energies took delivery of the world's largest floating production storage and offloading (FPSO) unit in Lagos, Nigeria. This vessel is being used at its Egina offshore field for the production of oil and gas, and was manufactured in South Korea by Samsung, Heavy Industries (SHI) at a hefty cost of $ 16 billion Opara, 2018). Majority of this structure is made of steel, and a fair amount of the fabrication was done in Lagos due to new local content laws as prescribed by the Nigerian Content Development and Monitoring Board (NCDMB). However, it safe to assume that if SHI had access to enough steel in Nigeria, then the entire fabrication of the vessel could have been done locally, bringing about more jobs and significant foreign exchange into the country. Furthermore, Nigeria is home to the first made-in-A frica automobile brand, Innoson Vehicle Motors (IVM). Akpan (2020) reports that IVM currently imports its engines and a few other raw materials from China, Japan and Germany. Steel is a major constituent ofa car engine as well as other parts. It can be argued that with a local thriving steel industry, Innoson Motors would have the required platform to compete with its foreign contemporaries and begin to export its products to other African nations. Other industries in Nigeria would also benefit if significant amounts of steel are produced locally include: the construction industry, with steel being a major part of bridges and high-rise buildings; the transport industry, for the fabrication of rail lines and coaches; and the medical industry, for making sur; blades and other apparatus. Overall, having a vibrant steel industry could be theneeded stimulus to drive the Nigerian economy into fulfilling its potential as one of the largest in the world. Aims and Objectives With a brief overview of the essence of steel and how its industry has blossomed globally, issues surrounding the Ajaokuta Steel Mill and the development of the Nigerian economy, the subsequent sections of this article aim to take a more elaborate look into these challenges, and proffer sustainable solutions. The objectives of this study include: * A brief look into the history of the Ajaokuta Steel Mill, and the challenges faced by it as well as the Nigerian economy as a whole. * Compare the steps taking in the development of the Ajaokuta Steel Mill to its global contemporaries. * Recommend steps to be taken to get the Ajaokuta Steel Mill full functional and profitable, as well as steps to getting the Nigerian economy to be one of the fastest growing globally. Brief History of Ajaokuta Steel Mill and the Failing Nigerian Economy Ajaokuta is a Local Government Area in Kogi State, Nigeria, and it is situated on the left bank of the popular Niger River, which cuts across nine African nations. Ajaokuta is home to the largest steel mill in Nigeria of which construction began in 1979, under a cooperation agreement between Nigeria and the defunct Soviet Union (Oluyole, 2017). The mill was setup to produce liquid steel from the iron ore fed to it from another town in Kogi State called Itakpe, by the National Iron Ore Minning Company (NIOMCO). The steel products were then to be transported by rail to the Warri seaport, which borders the Atlantic Ocean, for export into other nations. Several years down the line and with over $5.1 billion invested by various administrations, the project is yet to deliver any significant returns to Nigeria. This has been no secret as even the current Minister of Mines and Steel Development, Olamilekan Adegbite, was quoted saying: “Ajaokuta Steel Company has not been able to produce liquid steel since it was built.” (Agency Report, 2021). It was only in September 2020 that the 326-kilometre Itakpe-Ajaokuta-Warri rail line was inaugurated, 4 lyears after the inception of the steel mill project (News Agency of Nigeria, 2021). This turn of events is a source of concern and demands investigation into the feasibility and the management of the project.The story of the Nigerian economy since independence is similar to that of the Ajaokuta Steel Mill — much going in, but little coming out. Despite having all the necessary ingredients for economic growth such as solid minerals, oil and gas, sca ports, and a young population, there seems to be no clear path to success for the country often referred to as “The Giant of Africa”. In 2020, the Nigerian National Bureau of Statistics reported that 40% of Nigerians live in poverty (Maina, 2021). This figure is expected to increase to 45% by 2022. The rising rate of poverty has been attributed to be one of the causes of the overwhelming increase in insecurity across the nation, with terrorism, kidnapping and banditry being the order of the day. Most recently, two military officers were killed and a Major abducted during an affront on the Nigerian Defence Academy by unknown gunmen (Aljazeera, 2021). Anattack on the country’s elite military academy was a big blow, and exhibits the dire state of the security architecture that is struggling with armed uprisings in various parts of the nation. Another evidence of the downward spiral of the Nigerian economy has been the significant brain drain seen across the nation. Due to the high level of unemployment, poor educational system, and failing industries, a lot of the brightest minds have been seeking opportunities beyond the shores of the country. As reported by Akinkuotu (2021), about 862 Nigeria trained doctors were licensed in the UK between July 24, 2020 and September 21, 2021, thus bringing the overall figure to 8,737 doctors who obtained degrees in Nigeria, but are practicing in the UK. To make matters worse, no fewer than 500 Nigerian medical doctors participated in a recruitment exercise organized by the Saudi Arabia health ministry in the nation's capital Abuja on August24, 2021 (Sahara Reporters, 2021). It was documented that the specialties ofthe health practitioners involved in this exercise include anesthesia, ICU, pediatric surgery, family medicine, obstetrics and gynecology. All these happening amidst an ongoing strike embarked on by the National Association of Resident Doctors in the country as the federal government reneged on promises regarding pay arears, hazard allowance and insurance benefits. In the face ofa global pandemic, such happenings could lead to a total collapse ofan already ailing health sector. In all these, corruption and the over-reliance on the oil and gas sector are seen as the root ofall the economic woes experienced in Nigeria. The county is the sixth largest oil producer in the world and its oil exports account for over 90% of her export value (Varrella, 2020). Crude Oil was discovered in commercial quantities in Niger Deltaregion of Nigeria in 1956, with the first oil field coming on stream in 1958 producing about 5,100 bpd from Oloibiri in Bayelsa State as documented by the Royal Dutch/Shell Group (n.d.). Since then, the country has not looked back in terms of crude oil production, as other aspects of the economy being largely abandoned, and focus placed firmly on the petroleum industry. Unfortunately, the funds realized from oil exports have been misappropriated by successive administrations, whether it be military of civilian. This has left the country in a state of poor infrastructural develop ment, a fragile health sector, dilapidated schools, anda largely impoverished population. Challenges Facing Ajaokuta Steel Mill Before elaborating on the issues that have hindered the success of Ajaokuta Steel Mill, itis necessary to havea high-level review ofhow steel is produced from plants. Steel is primarily produced using either the Blast Furnace or the Electric Arc Furnace, with the former being the adopted method at Ajaokuta. The figure below, obtained for an Op-Ed Contributor (2018), shows a schematic of the steel making process used in Ajaokuta. "WE OREDIENTS HELP MELT THE RE 1. Coal is dumped ino large ovens 3. The-elomenis are histed where tig heeted 1 up 1 2,400 tone top of the furnace degrees Falverhet, wh inked, lyr, ost of coals Gases ai fo cove, Coke is used because Durne wih ivenss heatanditle 4, Hot ae ising smcke smelt tho faling ore AND REMOVE IMPURITIES. 2. The coke, atong wit ron we ond Coke Oven ron Ore Limestone Schematic of Blast Furnace Operation at Ajaokuta Steel Company (Op-Ed Contributor, 2018)Firstly, coal is converted to coke by heating it up at very high temperatures. The coke obtained is then put along with iron ore and limestone into the blast furnace where hot blasts of air melt the ore to obtain liquid stecl. Other elements may be added into the furnace depending on the desired grade of steel, but the presence of coke and limestone are pivotal because they help in melting the ore and removing impurities respectively. Now that we havea fair idea ofhow the steel making process in Ajaokuta should be, the subsequent paragraphs highlight the issues that have made themill unable to produce still since inception. The raw materials needed for the production of steel are not readily availableat the mill. This comes as a shock considering that over $6 billion has been invested in setting up the mill, but not much thought seems to have been given to how it would produce steel after its completion. Iron ore, which is the major raw material, is to be supplied by NIOMCO from mining sites in places such as Itakpe and Agbaja, but the national mining company is yet to start operations. As reported by Oluyole, the federal government has concessioned NIOMCO to foreign investors in 2003 and 2005, but non-performance and a lingering court case has crippled both the mining and milling operations since then. With respect to coal, Adcloye and Oyeyinka (1988) report that the known deposits in Nigeria are found in Lafia and Enugu. The deposits in Lafia have coking properties — turns to coke when heated, but has a lot of impurities. While the Enugu deposits are reasonably free of impurities but are non-coking. This renders both dep osits unsuitable for steel production so coal needs to be imported when the stec! mill begins operations. Another issue that has delayed the production kick-off at the steel mill is the prolonged absence of transport lines to bring in raw materials into Ajaokuta, and also take the finished products to export bays or to local consumers. Because iron oreis significantly heavy, it is transported on rail lines to avoid damaging roads. As stated earlier in this article, it took 4 1 years from inception of this project to complete the Itakpe-Ajaokuta-Warri rail lines which are to be used in transporting iron ore to the mill and steel for export. Other raw materials like coal and limestone also need dedicated rail lines from their mining destinations into the steel mill to ensure uninterrupted supply when in operation. This is because blast furnaces are difficult to startup and shut down so operate continuously for 4 to 10 years with brief stops for maintenance (Ricketts, 2000). Outside the technical challenges the steel mill project is facing, the federal government has not done itself any favors with the way it has handled this venturefrom the onset. The budgetary allocation towards the completion of the Ajaokuta steel mill has been largely insufficient. This could be attributed to the government's decision to establish two steel mills, one in Ajaokuta and another in Delta, and three rolling mills, in Jos, Katsina and Osogbo, all at the same time (Okpighe and Alajemba, 2016). Till date, all of these projects remain largely unproductive as they have suffered from inadequate financing. Also, the government's liberalization of steel importation has not helped the local industry to thrive. As most projects can easily import the steel needed, little effort has been put into developing a vibrant steel industry locally despite the abundance of iron ore in the nation. Another fault in the government's policies in the steel industry is the continued use of foreign entities to resuscitate the Ajaokuta steel mill. Within the last 20 years, two failed attempts have been made to concession the mill, one of which led to a court battle that lingered for about a decade. During this period that the Ajaokuta project has struggled to launch, several privately owned mills have begun operation in Nigeria. This shows that the expertise required to successfully run a steel mill is available within the shores of the country. In summary, it is clear to see that the challenges that have plagued the Ajaokuta steel mill are multifaceted. A lack of appropriate planning on the side of the government has been exposed by the insufficient funding the project has received, as well as the disjointed order in which the mining and the milling aspects of the projects have been completed. Currently, the mill is said to be ready to start production but access to raw materials renders it incapacitated for the time being as mining operations at Itakpeare still at the nascent stage. In addition, although the Itakpe-Ajaokuta-Warri rail line has been commissioned, the required cargo coaches to transport iron ore and finished steel along this line remain unavailable. All these errors can be attributed to the inexperience of the government as this was the first steel mill project in the country, and poor decision making due to non-economic reasons. The Way Forward and Recommendations One of the advantages of doing what has been done before is that there are modes to learn from. About 40 to 50 years ago, China found itself in a similar situation to what is obtainable in Nigeria, but was able to turn around its fortunes and become the largest economy in the world with significant inputs from its steel industry. The following paragraphs focus on using the lessons learnt from the Chinese model in developing its steel sector, to overcome the current challenges disrupting the progress of steel projects such as that in Ajaokuta.From the early days of the steel production in China, they soughthelp and learning opportunities from countries already established in the industry such as Japan. In 1978, the Vice Premier visited a steel plant in Japan in preparation of China's own being set up as documented by Yap (2018). These visits were to learn the technology and other approaches followed to achieve success, rather than to solicit funding. The American School & University (2013) reports that for decades, China is the nation that sends the highest number of students to colleges in the US. On return to China, the students were fixed in various sectors of the economy to replicate what was learnt in other nations. This shows thenation's strategy to keep improving local manpower to handle its industries. Throughout the development cycle of China's steel industry, the country has maintained local ownership of the mills amongst the private sector, local authorities and provincial governments. This has minimized issues with conflicts of interests associated with having foreign owners involved as has clearly disrupted the Ajaokuta Steel Company. After two failed concession attempts at revitalizing the steel mill, the federal government needs to look inwards for a solution. Several private mills are successfully running in various parts of the nation. Although these private mills focus on recycling metal scrap into rods, sheets and bars at much smaller amounts compared to the magnitude at Ajaokuta, concerted efforts from industry players could ead to a reboot of the project. The advantages of such a move arenumerous. There would bea sense ofnational pride amongstall the industry players involved in the project. The income from the project would be retained locally and can be reinvested in improving the steel sector and other sectors of the economy. There would be a significant improvement in local expertise as a lot of lessons would be learnt and applied to achieving similar or bigger projects. Another step the Nigerian government can take in reviving the Ajaokuta Steel Company is by laying out clear policies that govern the mining and steel manufacturing sectors. Since independence, several sectors of the economy have suffered due to varying policies of the government. Intemational and local investors have been tepid and skeptical in their approach to investment because of uncertainties in the political system of the nation. Now, with over twenty years of return to democratic rule, the country's leadership needs to map out clear and favorable regulations that will boost investor confidence and draw the needed resources to develop the steel sector. This can be achieved by extensive consultation with the local industry players, financial institutions and the host communities of the raw materials and milling projects. Some policies which could aid the local steel industry in Nigeria are increasing tariffs on imported steel to encourage localinvestment, and offering cheap loans and tax breaks to firms investing in local steel production. A similar thing has been achieved in the petroleum sector with the Petroleum Industry Bill recently enacted as a law in the federation. An equivalent effort in the steel industry would be a stimulus that will get the Ajaokuta Steel Company to begin to fulfill its potential as an income generation channel for the country. For thetechnical aspect of the Ajaokuta steel project, the govermentneeds to invest more in research and development. As identified by Adeloye and Oyeyinka, the enormous coal resources available in Enugu are not suitable for steel production because they are non-coking. This means that coking coal has to be imported for the steel mill to operate, thereby increasing production cost. In recent times, some studies have been done beyond the shores of Nigeria to overcome this challenge by using various methods to convert non-coking coal to coking coal as can be seen in articles written by Nandi, Ternan and Belinko (1981), and Tiwari et al. (2015). Because coal is a major resource used in steel production, investment into finding ways to convert the non-coking coal found in Nigeria into one suitable for steel production would be worth the time and resources. It would also be necessary to carry out more geological studies to discover deposits of other raw materials used in steel production such as Bauxite and Manganese. If such deposits are found in commercially viable quantities, then rail lines should be established to move them from mining sites to the steel mill. Conclusions The importance of steel to mankind cannot be overemphasized. Its application cuts across a wide range of activities ranging from construction to the manufacture of machines and tools. With several regions in the world experiencing fast paced development, the global demand for steel remains sustainable despite the recent pandemic and associated economic challenges. This is why nations such as China, USA, Japan, South Korea and India have made significant investments in stecl production, which has been used to satisfy local demand and rake in enormous foreign exchange. The story of China's economic revolution on the wings ofits steel sector has been the focus of this study. Tattered and tom from decades of war ranging from the World Wars and its own civil wars, the Chinese economy was ina state of comatose heading into the 1950's. This was when China began its task of rebuilding its economy with the steel sector being a major focus of the government due to the abundance of iron ore deposits in the country. Despite not having the technical know-how to manufacture steel, sheer political will from the government was theinitial driving force of the nation's economic revolution. Through patience, focus and effective planning, China was able to draw expertise from nations already established in steel production, while maintaining local ownership of its steel companies in order to protect national interest. The government encourage investmentin its steel industry by offering cheap loans, subsidies and tax breaks to investors in the steel sector. The uprise of the steel industry led other sectors of the economy to develop, turning China intoa global hub for manufacturing. By patiently employing the right strategies, China went from being a poor nation into the largest economy in the world. Knowing all these, the key conclusions obtained from this study are: © The Ajaokuta Steel Mill has been largely unproductive for several reasons which include poor planning and a lack of political will on the side of the Nigerian government to complete the project. Evidence of poor planning is highlighted by the fact that the steel mill is over 95% complete but the channels to bring in raw material into the mill and the finished products out of the mill remain under construction. Thus, leaving billions of dollars in investment wasting away for several years. Another costly error made by the Nigerian government was concessioning the mill to nations that have major interests in steel production. The government should have made use of local expertise just as China did. Although this process would have seemed slow and mistakes made along the line, but it would not have taken over 40 years to get the mill runningas is the current situation. © Theres still hope for the Ajaokuta Steel Mill. In recent years, private steel mills have sprung up in various parts of Nigeria. None are operating at the magnitude that the mill in Ajaokuta is designed for, but it shows that local expertise is capable of delivering results in the steel sector. Through concerted efforts from the government, industry players and financial institutions, Ajaokuta Steel Mill can be put back on track to bea revenue generator for the nation. The buck still stops with the federal government to create favorable policies that would encourage local investors to take interest in the steel mill such as obtaining loans with low interest rates, discouraging the use of imported steel through tariffs, offering tax breaks to institutions that invest in Ajaokuta Steel Mill, just to mention a few. By implementing these, both the technical and economic challenges facing the Ajaokuta steel project can be overcome and it would begin to fulfill its potentialReferences Adeloye O. and Oyeyinka O. (1988). Technological Change and Project Execution in a Developing Economy — Evolution of Ajaokuta Steel Plant in Nigeria. Retrieved St October, 2021, from [Link] [Link]/bitstrean/handle/10625/8420/IDL-8420 pdf?sequence=1 Agency Report (2021). 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