African Foundries seeks FG support to facilitate steel production from ironore

African Foundries Limited is seeking the support of Federal Government to allow it have access to iron ore and coal mines in the country, in line with its Backward Integration Programme.

The company, which is the largest steel maker in the country, says having such mines will solidly support beneficiation, pelletizing and DRI processes as well create power to increase efficiency in the firm.

“The plant will employ thousands of people and will bring billions of Naira investment into the country, but the project cannot take off until there is an allocation of these mining sites,” Parduman KurmarGupta told Kayode Fayemi, minister of solid minerals development, at a tour of the factory in Lagos.

According to Gupta, the suspension of the Export Expansion Grant (EEG) was stalling the export of steel products and preventing Nigeria from earning the desperately needed foreign exchange.

“It is difficult for steel firms to compete with the Chinese. We need to create new jobs. It is not proper to have graduates every year roaming the streets without jobs, and one way to help create jobs is to look at the EEG suspension again,” the chairman said.

Nigeria has large deposits of iron ore and coal. These deposits have been abandoned over the years because of the country’s penchant for oil. Enugu, particularly, is known for coal production, but most of its mines have long been neglected and requires rejuvenation.

African Foundries is an affiliate subsidiary of the African Industries group, which has six other steel plants with a combined capacity of one million tonnes of steel products. It has invested over a billion dollars in the country, creating 8,000 direct employment and 100,000 indirect jobs through the spectrum of its products.

While Nigeria is seeking economic diversification through sectors such as solid minerals, manufacturing, agriculture and export, these sectors are hindered by institutional and man-made challenges.

Alok Gupta, managing director, African Foundries, said steel makers often bought gas locally at twice its international market price, adding that poor patronage of made-in-Nigeria iron rods was stalling the growth of the firm.  “There is the issue of policy inconsistency – especially when various free zones and oil projects are allowed to import iron rods at zero duty. African Foundries in the only company in the Sub-Saharan Africa other than in South Africa to be CARES UK certified to produce British Standard Grade BS4449. There is also the issue of multiple tax regimes from State and Federal authorities. Something has to be done to ensure that the steel industry will not go the way of the textile industry, which was killed by imports,” said the MD.

According to him, the company would further support Nigeria’s industrialisation drive should the government allocate such mines, pointing out that the group was a genuine investor, supporting the Nigerian economy to grow. He further said the company had been exporting iron rods to many West African countries and would contribute more to the economy if given the necessary support.

Responding, Kayode Fayemi said the federal government was identifying various solid mineral reserves and would encourage companies in need of the resource to locate their plants close to them. The minister promised to look at all the policy recommendations of the company, saying that the government would review all options and come up with what was good for Nigeria and the company.

Fayemi further said the Federal Government was not going to spend public funds on Ajaokuta Steel but would invite experts to take over and revive the complex.

“Government will not spend money on Ajaokuta Steel. It will be taken over by those who know what to do with it,” Fayemi said.

According to the minister, the Federal Government was desirous of supporting exports, alluding to the Central Bank of Nigeria’s decision to allow exporters unfettered access to repatriated foreign exchange as evidence of government seriousness to move the segment forward.

The minister further said the government was willing to support serious investors like African Foundries. BusinessDay had last Tuesday reported that Ajaokuta Steel Complex was no more viable owing to obsolete technology and machinery there.

The report saw private sector experts expressing fear that pumping money into the complex will be a waste of funds.

ODINAKA ANUDU