• Nigeria saving $300m yearly from barite ban
Minister of Mines and Steel Development, Arc Olamilekan Adegbite, yesterday said 11 companies are presently involved in the concession bid for Ajaokuta Steel Company.
Adegbite spoke in Abuja at the presentation of the achievement of his ministry during the 9th edition of PMB Scorecard series, organised by the Ministry of Information and Culture.
He said that the Buhari government had been able to resolve all contending legal issues with the steel company and was in the process of concessioning it to a competent bidder.
He said payment $496 million to Global Steel Holdings Limited became necessary as part of effort to resuscitate Ajaokuta Steel Company Limited.
He explained that out of the 11 companies bidding, three were Russian.
“We are talking of companies who intend to bring their own monies into Ajaokuta to make sure that it works. The plant is still good if we put in the right amount of capital, it will start producing in less than two years,” Adegbite said.
He said the outbreak of Covid-19 pandemic distorted the plan of government to restart the steel company before the termination of this administration.
The federal government resolved the outstanding contractual dispute with Global Steel Holdings Limited (GSHL) over Ajaokuta Steel Company Limited.
GSHL entered Nigerian steel industry in 2004 following five major concessions and share purchase agreements by the President Olusegun Obasanjo administration.
The Nigerian government in 2008 revoked GSHL’s 10 year concession of Ajaokuta Steel on the grounds that the firm was involved in asset stripping.
The revocation prompted Global Steel to opt for arbitration against Nigeria.
Explaining what government did Adegbite said: “There’s a committee called Ajaokuta Presidential Project Implementation Team. Having set out to work quickly, we identified the problems of Ajaokuta steel.
“We went there and we also set up a committee, under the Ministry of Justice, headed by the director here.
We ascertained the debt of Ajaokuta steel…some of the foreign problems that we had, especially the court case that ran for 12 years, was successfully resolved and of course, we paid off the litigants who took us to court.
“The major albatross on Ajaokuta steel was the concession that occurred during the President Olusegun Obasanjo administration. Things went sour and I won’t want to go into all those details.
That case has been on for 12 years but, thankfully, we had a very patriotic Nigerian, practising law in England, who did very well and made sure Nigeria didn’t pay the $7 billion asked by Global, the concessionaire.
But, he was able to puncture most of their claims, gathered evidence for us and at the end of the end, Global settled for $496 million.
“At Arbitration, Global said they had a receipt given to them by the Obasanjo administration for $250 million.
In 2022, if you look at the date, 15 years after, we paid only $496 million, less than double the receipt.
The lawyer was consistent, fought bravely for Nigeria and we are paying them only $496 million.
Even the $496 million, we have the chance to spread it out. We’ve started paying and we can spread monthly.
“As of today, the process is on. In 2019, I had promised that Ajaokuta steel would start (operations) before we leave office.
“That is not possible anymore; not because of lack of efforts but, especially because of COVID-19.
We started the process in October 2019, when we went to Sochi, Russia, to attend a summit with Mr. President.
On the sidelines of a bilateral meeting, we met with the Russian government and we requested, among other things, that they should help us to resuscitate Ajaokuta steel because the Soviets built Ajaokuta steel and they acceded to that request.
I came back to Nigerian and explained our plans to resuscitate Ajaokuta steel and we will make sure it worked.
The first thing we were to do was the technical audit, what was wrong, what needed to be done, what needed to be serviced and all that.
That was what the technical audit was meant for. And, the Russians were going to come in March 2020; to start the technical audit for three months.
“We agreed on the price, everything was concluded and made available by the Nigerian government and everyone would recall that COVID-19 started and we couldn’t do the technical audit. It was put in abeyance.
“That went on, all through 2020 and 2021. Then we said, ‘let’s go another route, let’s expand our net.’ Now, we are no longer talking to only Russians, we are talking to 11 foreign interests.
Of the 11 interests I mentioned, of course, three are Russians. People are interested in bringing their money to invest in Ajaokuta steel and make sure it works.
If we put in the right amount of money, people would start producing steel in the next two years.
The process is ongoing and, before we leave office, we will concession Ajaokuta to people who would bring money and make sure it works.
We started the process to resuscitate Ajaokuta steel and we had a two-year timeline. Unfortunately, the COVID-19 pandemic stopped that process.
“As of today, we have about 11 foreign interests in Ajaokuta steel. We want those who would come in, not just on concession but on some equity participation.
“What Ajaokuta steel has been trying to achieve all these years is what African Steel has achieved in Southern Kaduna.
“Ajaokuta steel was meant to produce single steel and a private firm has done it in the last four to five years
“Ajaokuta-There’s been no major spending there so crept recurrent. The fact that that place still exists is because government is still paying salaries.
“We’re going into partnership now. There are staff there who keep the place running. When you visit they would do a dummy run for you. The machines are running.”
-On reclamation of abandoned mine sites, the minister said his ministry had been able reclaim:
A total of 45 abandoned mine sites across the states of the Federation have been reclaimed.
MIREMCO has been established and supported in 33 states of the Federation and the FCT.
Some mine ponds in abandoned mines have been rehabilitated and are being used for economic activities that generate employment and revenue to the government.
Adegbite said the federal government has been saving $300 million or about N195 billion every year as a direct result from the ban on importation of barite, an essential mineral in oil drilling.
He said the ban on barite importation was part of the efforts of the federal government to ensure the downstream mineral policies took effect.
“When we came into office in 2019, we realised that the oil and gas industry use barite in their oil drilling and they were importing the mineral from Morocco to the tune of 300 million dollars every year,
“We also realised that the country has abundance of barite deposits but the problem was that we were not processing it.
“So, the ministry took it upon itself as a project and in 2021, we were able to produce made in Nigeria barite with American Petroleum Institute (API) standard.
“Now, nobody is importing barite in to Nigeria anymore saving the country 300 million dollars annually that was being spent on imports of barite to the country,” Adegbite said.
The minister said within a year of production, Nigeria had attained excess capacity of barite and making plans to export the mineral into places like Ghana and South Africa.
“These are places that have just discovered oil and of course they need barite as well. We will ensure they can get it cheaper to buy from Nigeria than to go to northern part of Africa,” Adegbite said.
The minister also disclosed that his ministry had discovered new minerals that they did not know existed in the country.
According to him, the minerals included nickel, cobalt chromium and tracks of lithium.
He said the newly discovered minerals were called the “future metals”, adding “this is where the whole world is headed”.
The minister also disclosed that they were auctioning bitumen blocks to 26 serious investors which had shown interest in its mining.
Adegbite said the process would culminate in concession of some of the blocks to the investors which would be given fairly limited time to start producing in Nigeria.
He said the process would make the country sufficient in bitumen, lower the cost of building roads and create import substitution.
According to the minister, Nigeria has sufficient quantity of bitumen deposit in Edo, Ogun Ondo and Lagos states.