The coming on stream of Western Metal Products Company Limited (WEMPCO) has provided the vista of hope required to ignite the comatose state of the steel sector, SIMEON EBULU, Deputy Business Editor, reports
The steel sector so widely recognized as essential for industrialization, but largely neglected, is gradually receiving attention. Steel, in all its ramification, is regarded as the pivot around which economic activities and development revolve worldwide. Its relevance has universal appeal, but for some inexplicable reasons, Nigeria, despite of its gifting in this resource, has not lapped on its advantage. But all that is changing now, perhaps.
The successful execution and commissioning of the Western Metal Products Company Limited (WEMPCO)s, a private sector initiative by President Goodluck Jonathan last month, may well be the elixir needed to ignite both government and private sector interest required to harness and unbundle the untapped resources in the sector. WEMPCO is evidently a privately owned entity, but its bold initiative in the steel sector is “a clear evidence of commitment to the industrialization, job and wealth creation for the nation,” said the Group Managing Director, Mr. Lewis S. N. Tung, stressing that “steel is very crucial and fundamental to any industrial development in any country.”
Mr. Tung underlined the WEMPCO’s commitment to making a success of the venture, just as it has done with its other 12 subsidiaries, saying that the firm sources almost 90-95 per cent of its raw materials locally, and has gone ahead to obtain two licenses towards actualizing the first backward integration agenda in steel making.
Jonathan could agree less, While inaugurating the plant, he said: I strongly believe that self-sufficiency in steel production will open major downstream sector activities with the attendant massive job opportunities and economic empowerment for our engineers, artisans, fabricators,” and all those that have to do with the steel sector.
He assured existing and prospective investors of government’s support to collectively strive for self-sufficiency in local steel production, but enjoined WEMPCO to continue to strive to expand its current production capacity, which presently stands at 700,000Metric Tonnes, “to gradually meet the nation’s demand of flat sheet steel,” estimated at three million Metric Tonnes by the end of 2013, and 12million Metric Tonnes by the year, 2020, and fast-track its backward integration drive in the steel sector, saying that with such a move, the problems of Ajaokuta will be addressed.
The President’s avowed commitment to promote the steel sector and WEMPCO’s leap in actualizing the dream, mark a turning point in the nation’s quest to be counted among steel producers, a journey that started over 50 years ago.
The starting point was the search for appropriate local inputs, the characteristics of which determined the particular technologies that would be used. To this end, Iron ore was located at Agbaja, Itakpe and Udi; suitable Limestone at Jakura, Mfamosin and other parts of the country. Coal deposits were always there at Enugu, while potential coke-able coal was struck at Lafia.
Between 1961 and 1965, many firms from the industrialized nations of the West submitted proposals for the construction of an integrated Steel Plant in Nigeria. In 1967, a UNIDO survey identified Nigeria as a potential steel Market. This led to the signing of a bilateral agreement between the defunct Soviet Union and Nigeria, leading to the arrival of Soviet steel experts to Nigeria to conduct a feasibility study.
The overriding objectives of the steel industry is to be able to meet the demands for cast iron, rods and bars, wires, structural steels, flat sheet steels, and also the entire spectrum classified as flats, stainless and other special alloy steels, rails and pipes, as well as Plates in its various sizes in width and thickness.
Former President of the Manufacturers Association of Nigeria and technocrat of many years in the Federal Civil Service, Alhaji Basir Borodo, gives insight into the steel sector unfolding development. “I think this thing started right from our independence. I recall when we were in the universities in the ‘60’s, we were among the students who were saying that Nigeria should start steel production. So the idea was there. During the time of Yakubu Gowon, we also thought about it. It was a very important thing in his agenda. The thing started in the ‘80’s when we had some rolling mills that were working – the one in Katsina, Jos and in Delta – were all doing well. We were all waiting for Ajaokuta to be completed and the thinking was that we were going to get the materials from either Guinea or some other place.”
Borodo explained that the drive to develop the steel sector was well on stream, until the advent of military coups that led to the incessant change of governments altered the equation.
“Everything was on course until we had a change of government. This has been our major problem, lack of consistency. If we had been consistent about all these things (six steel production mills), we wouldn’t have been in this mess,” he said, adding that the main challenge was that every Minister, or person that came introduced their different views. “So the key thing really is that things went wrong in the steel industry because we are not consistent,” he stressed. He however expressed satisfaction that the private sector has taken up the gauntlet. It is very encouraging that people in the private sector are going into the steel industry on their own, and are moving ahead, he said.
Borodo agreed with Mr. Tung that Nigeria is well positioned to be a giant in steel making because she is endowed with oil and gas which are essential raw materials, iron ore, coal, human resources, as well as a huge internal market, adding that the only thing lacking is the machinery and the technology, which Tung said can be sourced from countries like China, Japan, Germany and the United States of America. “ If it is steel, oil or gas, God has given us all that, it’s only a matter of we actualising the potentials,” Borodo said.
He said the WEMPCO venture is a clear demonstration of implicit confidence of the management to the nation, as well as the industry.
He said: “It’s a matter of state and commitment. I’ll go further to say that they have been in this country for over 60 years. They started from a humble beginning. Some of the people in the management did their secondary schooling here, in Abeokuta. You can say they’re foreigners, but in terms of what they have done and what they are doing, they are Nigerians and that is the key. Sometimes, it takes somebody who is from a place and who has the love for a place to take this big investment risk. We have seen some foreigners who when they have made their money and when there is no adequate infrastructure, they just pack to more favourable economies, or just go home. The question about why they took this huge risk is because in their heart, they are Nigerians and they have the interest of Nigeria in mind. There are some other foreigners who have also demonstrated this.”
The former MAN helmsman, said there were obstacles, but that government remained consistent and lent the required support. He was pleased WEMPCO did not disappoint anybody that had faith in them. “It is a very positive development and I hope others will follow. In this country, without adequate government support, hardly will there be any meaningful industrial development. This applies to whether it’s a new investor, a foreign investor or a Nigerian investor, but what we need are people that will deliver and transform this country,” he stated.
Borodo assured WEMPCO that MAN will take care of its own stakeholders no matter what, saying that government should take steps to ensure adequate protection for manufacturers, no matter the sector. “I remember we had this issue on cement some years back when government allowed people to import cement into this country. I said then that, look, you can’t do this, if you do this you are going to burn those who have invested in cement and nobody will come and invest. Government should continue to support them, whether they are in steel or cement. If you look at the history of this country, most of the industries that were supported or protected have survived. Any industry that is 50-60 years old- the breweries, the flour millers, they are still around and they are growing. If you remember, we had only one company that was milling all the flour, but today, they’re probably ten or more and its better for Nigeria,” he argued.
“I think the issue now has to do with the government. Our government has to be very clear that if it is steel, we want at least 60-70 per cent of it with Nigerian materials, otherwise, the danger is that subsidised steel could come in. Even though WEMPCO for example, has done a lot of local value addition, with several people working there, a subsidised product could come in and they may not be able to compete over price. This is something, one has to look at carefully and protect the local manufacturers. In doing so, it is not only protecting WEMPCO, but also others who are producing steel in different ways. That is the important part, but we have to appreciate the fact that the critical thing about steel is that if you want to industrialise, you must be able to produce steel, otherwise, you are almost wasting your time, Borodo, cautioned.
Cognitive support for the sector was also echoed by the Minister of Steel Development, Musa Sada, and his Trade and Investment counterpart, Dr. Olusegun Aganga, who stressed collaboration between the Federal Government and the private investor in moving the steel industry in the country forward. The said government has provided an enabling environment suitable for private investors to enable them participate in the production of steel and its bye products.
Sada, underscored government’s resolve to develop the steel segment, including mining, saying they provide huge employment opportunities. He said government will only regulate the activities of the sector, and give support to companies when necessary. “To the best of our understanding, the Federal Government has taken the right position. No country in Africa has the highest steel manufacturing companies than Nigeria. The steel industry is the backbone of industrialisation in any country, and Nigeria is not an exception. The steel industry also has the highest employment in countries of the world and Nigeria is ready to develop its steel industry to boost the economy,” he added.
