Powder Metallurgy

NIGEIAN STEEL INDUSTRY – HISTORICAL DEVELOPMENT INTRODUCTION Planning for the Nigerian Steel Industry started around 1958. Many international organizations and consulting firms had been commissioned at various times to study the feasibility of steel plants under the aegis of the Federal Ministry of Industries. Parallel efforts were also made to identify and analyze the principal raw materials needed for the steel industry. In 1971 an extra-ministerial agency was established by Decree to focalize efforts required to actualize a steel plant. That Agency was called “Nigerian Steel Development Authority” (NSDA). Under the NSDA, organized efforts were intensified in market survey of the steel market in Nigeria; on in-depth geological investigation of local raw materials, on aeromagnetic survey for alternative sources of iron-ore etc. The discovery of the Itakpe iron ore deposit in 1972 by the Soviet aero-magnetic survey team catalyzed the formal signing of a Global contract in 1975 with the Soviet state-owned firm of Tiajpromexport for an integrated steel plant of 1.3 million tones of long products to be immediately expanded to 2.6 million tones in flat products while the third phase will raise the annual production to 5.2 million tonnes. The first phase was to be completed in 1981. The plant was to be based on the traditional Blast Furnace/Basic Oxygen Furnace Technology of steel production. After the Soviet’s finding on the viability of a steel industry in Nigeria in the seventies, (in the height of Nigeria’s new found economic wealth - oil), European countries which hitherto had advised Nigeria to concentrate on Agriculture rather than venture into the high-tech steel business, began to flood the Federal government with proposals on alternative technologies for new-breed steel plants based on the “Direct Reduction (DR) Process”. In 1975 the Federal Government signed a “Turn-Key” contract with a German-Austrian Consortium for a DR plant to be located in Aladja, Warri (DELTA STEEL COMPANY). It was financed from a guaranteed loan from Deutche Bank. Thus, in the 1970/1980 periods Nigeria embarked on two integrated steel development programmes. Unfortunately the Federal Government dissolved the NSDA; the only viable agency that could have scientifically managed the situation. Their functions were returned to the non-technical bureaucrats of a new Ministry of Steel. A lot of activities were then haphazardly embarked upon; lots of inflated subsidiary projects were being simultaneously chased. In 1981, due largely to the tidy “turn-key” contract with the German – Austrian Consortium, and the even tidier financing arrangement, the Delta Steel Plant was completed and commissioned on schedule. On the contrary the Ajaokuta Plant had become more complicated by sheer Ministerial mishandling than anything else. Subsidiary contracts outside the main contract were awarded faster than total national fund could sustain. In consequence the principal contract of the steel plant received lesser and lesser attention. The Federal Government was continually defaulting on the payment to the Soviet Company and other European civil engineering contractors who

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were the main steel plant contractors. To worsen issues the national economy turned sour in the mid-eighties and worse still the so called Structural Adjustment Programme (SAP) and its consequences on on-going government projects spelt doom to Nigeria's hope for industrialization. Thus, Ajaokuta plant that was programmed to last five/six years lingered, limped, and repeatedly got grounded over the period. BACK GROUND TO THE NIGERIAN STEEL INDUSTRY Planning for the Nigerian Steel Industry started around 1958 as earlier stated. The starting point was the search for appropriate local inputs, the characteristics of which determined the particular technologies that would be adopted. 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. Market surveys were commissioned and the construction of the Kainji Hydro-electric Dam promised an abundant source of electrical energy. 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. The view, then, was that the available raw materials could not be used in conventional Iron and Steel making technologies. The “Strategic Udy Process”, a direct reduction (DR) process still in the pilot plant stage in the USA, was then considered by Nigeria. The idea was accepted and a joint venture company, the Nigerian Steel Associates was formed with Westinghouse and Koppers as the foreign Partners. This programme failed because it did not prove capable of meeting commercial scale requirements. 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, and, the arrival of Soviet steel experts in Nigeria to conduct a feasibility study. The experts recommended the Blast Furnace/Basic Oxygen Furnace (BF/BOF) process of 570,000 tonnes per annum capacity of rolled products. They also confirmed the availability of raw materials and recommended further geological surveys. In 1970 a contract was awarded to TiajPromExport (TPE) of defunct USSR to conduct a study to identify sources of feedstock, quality and quantity of materials for the proposed integrated iron and steel plant. By this time the second National Development Plan (1970 – 1975) had envisaged the construction of a 750,000 tonnes per year capacity Plant. Apart from Government Ventures there were a few private initiatives in the lesser capital-intensive steel industry of rolling mills coming up. The Nigerian Steel Development Authority:- In April 1971, the Nigerian Steel Development Authority (NSDA) was established by a Military Decree (No.9 of April 14). Thus, the first formal body to be charged with the supervision of the steel programme in Nigeria was born. NSDA was charged with the following:

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(i) Planning, construction and operation of Steel Plants.

(ii) Carrying out geological surveys, market surveys/studies and metallurgical research and training.

The Authority was to examine various process routes including natural gas-based direct reduction processes that require high-grade iron ores, which were not available in Nigeria. In 1973, the presence of good grade ore (though not of high-grade quality) was confirmed at Itakpe that led to the NSDA commissioning TPE to prepare a Preliminary Project Report (PPR) for the proposed BF/BOF Plant. The PPR was submitted in 1974, scrutinized and finally accepted in 1975. With the source of Iron Ore confirmed it was proposed that coking coal would be imported and blended appropriately with local coals. A three-phased development program (1st phase to produce 1.3 million tonnes, which will be expanded to 2.6 million tonnes incorporating the flat sheet production in the 2nd phase, and the third phase to increase capacity to 5.2 million tonnes) was accepted. The initial product mix proposal suggested 50% long products and 50% flat products. This was based on the product demand profile revealed by market surveys. The Government decided that Ajaokuta Steel Plant should produce only long products in the first stage of 1.3 million tones per year, and flat products in the 2.6 million tones expansion which was planned to dove-tail the first phase completion and this is to be followed by a third phase of 5.2 million tonnes per annum. This decision was advised by the need to take advantage of economy of scale since flat-product mills of capacity below 1 million tones were considered uneconomical. An additional consideration was to use the relatively simpler technology of long-products rolling to rain up an otherwise virgin and inexperienced Nigerian Workforce of the time. The NSDA was dissolved by the federal Government in 1979 and this metamorphosed in to several organizations, thus: (i) Ajaokuta Steel Project, Ajaokuta (ii) The Delta Steel Company, Ovwian - Aladja

(iii) Jos Steel Rolling Company, Jos (iv) Katsina Steel Rolling Company, Katsina (v) Oshogbo Steel Rolling Company, Oshogbo (vi) National Iron Ore Mining Company, Itakpe. (vii) National Steel Raw Materials Exploration Agency, Kaduna. (viii) National Metallurgical Development Center, Jos. (ix) Metallurgical Training Institute, Onitsha. The last three establishments, (vii), (viii), (ix) are to be fully funded by the Government, through the Ministry. The organizations (i) to (vi), are supposed to be companies that should be self funding, because at one time or the other, they had been incorporated as limited liability companies.

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The Nigerian Public Steel Sector:- To industrialize, there is the need to have a sound industrial base. This will provide the solid foundation on which the industrial super-structure will be built. This industrial base is nothing other than a well developed iron and steel industry that will be producing such critical industrial raw materials as:

(i) Cast iron (different categories) (ii) Rods and bars (both high tensile and mild steel varieties) (iii) Wires (in all its ramifications) (iv) Structural steels (light, medium and heavy structural) (v) Flat sheet steels (plain, and galvanized, and also the entire spectrum

classified as flats) (vi) Stainless and other special alloy steels (vii) Rails and pipes (viii) Plates (various sizes in width and thickness)

It became evident that it is only governments that could provide the initial developmental funds in view of the high capital costs and the long gestation period of such projects. This is the trend worldwide where all pioneer steel industries and accompanying infrastructure of any nation is public owned. It is after several such facilities are available and have proven themselves in a country then the industry is privatized to allow the government to move on to other strategic areas of development. This is how today’s industrialized nations became what they are. Taking cognizance of the above, many third world countries followed suit and have been able to lift their economies away from third world poverty and starvation, and seriously threatening the developed countries of the world in economic well being for their people. A few examples will suffice, thus; India, South Korea, Pakistan, Egypt, Iran, Iraq, Algeria, Libya, Turkey, Venezuela, Indonesia, Singapore, Malaysia and Mexico. The steel projects in all these countries started as serious national projects, with their Governments taking active interest in the steel development. Pandit Nehru of India once called the giant steel structures coming up in Bhilai, Durgapur and Ruerkela in the late 50s, as the “TEMPLES OF MODERN INDIA”. Saudi Arabia, Algeria and Libya with their fabulous oil reserves also have developed viable steel industries. Other third world oil producing countries with very well developed steel industries include Indonesia, Venezuela and Mexico. It is important to note that one other parameter for measuring development is the per capita consumption of steel in any nation, whether the economists believe it or not, not just Gross Domestic Product.

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In response to the market information available at the time together with near surplus revenue from crude oil exports, the Nigerian Government between 1976 and 1978 signed agreements for the construction of two integrated steel plants - the Delta Steel Project at Ovwian-Aladja together with the Satellite Rolling Mills at Katsina, Oshogbo, and Jos and the Ajaokuta Steel Project. The Delta Steel Project became fully operational in January 1982 and has remained so up till now albeit at disturbingly low capacity corresponding to the low funding level from the owner, the Federal Government of Nigeria. The installed steel melting capacity is 1 million tonnes per annum achievable through electric arc furnace steel making using in-house Direct Reduced Iron. The full annual production of Delta Steel would have resulted in 960,000 tonnes of billets, and designed to be consumed jointly at the rate of 320,000 tonnes per annum within the in-house rolling mill at Delta Steel, and 210,00 tonnes a piece by each of the three Inland Rolling Mills at Katsina, Oshogbo, and Jos. These mills all produce long products; wires and reinforcing bars, in the case of the Inland Rolling Mills, and reinforcing bars and light sections in the case of Delta Steel. The Ajaokuta Steel Company, based on its backward integration construction concept, has its finishing mills; wire rod mill, rod and bar mill, and the Medium Section and Structural Mill (MSSM) facilities completed and ready for use. The blast furnace, and liquid steel making facilities however, are yet to be completed, although available indicators had penciled every year from 1991 as the year of commissioning. The installed liquid steel making capacity of Ajoakuta was planned to be 1.3 million tonnes under the present project phase. The available in-house rolling capacity is 1.49 million tonnes per annum of wires, reinforcing bars and light and medium structures. Private Sector Steel Companies:- The additional steel making facilities available in Nigeria are largely complementary ferrous scrap based plants (mini mills) operated by the private sector. The total installed capacity in this area is a mere 580,000 tonnes. However rolling mill facilities are capable of adding another 570,000 tonnes of finished steel to the market annually. The public steel mills are spread all over the country with the largest concentration in the South Western part of Nigeria. The current total National long products rolling capacity is 2.64 million tonnes annually from the existing public and private companies comprising 13 rolling mills, 7 mini mills and 2 integrated steel companies as detailed below:-

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S/No Plant Location Type of Plant

Iron-making Process and capacity (per year)

Casting Process

Rolling Capacity (per year)

Product Mix

i. Ajaokuta Steel Co. Ltd. Ajaokuta

Inter-grated (Public)

Blast furnace, capacity 1.35m.ton

3 no. 4-strand for blooms

540,000 tons long products

Bars, rods, light sections

ii. Alliance Steel Co., Ibadan Rolling mill - - 20,000 tons long products

Bars

iii. Allied Steel Co., Onitsha Rolling mill - - 20,000 tons long products

Bars

iv. Asiastic Manarin Ind., Ikeja

Rolling mill - - 60,000 tons long products

Bars; sections

v. Continental Iron & Steel Co., Ikeja

Mini mill - - 150,000 tons long products

Bars; sections

vi. Delta Steel Co., Ovwien/Aladja,

Inter-grated (Public)

2 Midrex 600 series Direct Reduction furnaces; capacity1.02 m.t

3no. 6-strand for billets

320,000 tons long products

Bars; rods; sections

vii. Federated Steel Industry, Otta


Bars; sections

viii. General Steel Mill, Asaba Mini-mill - - 50,000 tons long products

Bars

ix. Jos Steel Rolling Company, Jos

Rolling mill (Public)

- - 210,000 tons long products

Bars, rods

x. Katsina Steel Rolling Co. Katsina



Bars, rods

xi. Kew Metal Industries, Ikorodu

Mini-mill - - 20,000 tons long products

Bars; sections

xii. Kwara Commercial, Metal and Chemical Industries, Ilorin


Bars

xiii Mayor Eng. Co., Ikorodu Rolling mill - - 220,000 tons long products

Bars. sections

xiv Metcombe Steel Co., Owerri


Bars; sections

xv. Nigerian Spanish Eng. Co., Kano


Bars

xvi. Nigersteel Co., Enugu Mini mill - - 40,000 tons long products

Bars; sections

xvii. Oshogbo Steel Co., Oshogbo



Bars; rods

xviii. Qua Steel Products, Eket Rolling mill - - 60,000 tons long products

Bars, sections

xix. Selsametal, Otta Rolling mill - - 100,000 tons long products

Bars

xx. Union Steel Co., Ilorin Rolling mill - - 20,000 tons long products

Bars

xxi. Universal Steel Co., Ikeja Mini mill - - 80,000 tons long products

Bars, sections

xxii. Baoyao Futurelex, Abuja Rolling mill - - 20,000 tons long products

Bars

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Status of the Various Steel Projects 1. THE AJAOKUTA STEEL COMPANY The Ajaokuta Steel project has suffered so much neglect in the hands of the policy makers that one questions whether we have leaders that have the long-term interest of the Country at heart. Inconsistent policies and haphazard and selfish implementation of whatever policy that have been arrived at are some of the reasons that makes one to doubt the sincerity of the leaders. Let us study some of the advantages that the country will benefit if honest and determined policy formulation and implementation are the guiding principle. The benefits that accrue in the development of a viable steel industry are many folds; Employment generation, social services (including educational, medical, technological, housing etc), proliferation of up and down stream industries with their attendant benefits, industrial development as well as economic development are but to mention a few. Let us take a cursory look at Ajaokuta Steel Company, referred to as the bedrock of Nigeria’s Industrialization. This Company has a multiplier linkage effect on the national economy. If Phase 1, that is, production of 1.3 million tones of liquid steel is completed and put to commercial use, the nation has the following direct benefits to derive:

i. Employment of 10,000 workers in the Plant; ii. Employment of not less than 20,000 Nigerians in the raw materials

industries providing feed-stock to the plant;

iii. Employment of not less than another 30,000 Nigerians in the industries that use the products of the plant;

iv. Conservation of foreign exchange used for importation of steel

products annually;

v. Contribution of not less than 30% of the inputs to the automotive industry in Nigeria, in the first instance;

vi. Ajaokuta Steel Plant has the capacity to meet most of the national

requirements of Chemicals and tar (as by-products of the steel production process) and Refractory bricks, using locally available raw materials and the Alumino-Silicate Refractory Plant;

vii. Export potential to ECOWAS sub-region;

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viii. Most industries in Nigeria have problem sourcing for their machinery and spare parts. The Ajaokuta Steel Company's well-equipped Engineering Works Complex can assist to a large extent.

The details of the facilities in Ajaokuta Steel Company are as below: S/No. Plant Unit Capacity (p.a.) 1. Light Section Mill 400,000 tonnes 2. Wire Rod Mill 130,000 tonnes 3. Billet Mill 795,000 tonnes 4. Medium Section & Structural Mill 560,000 tonnes 5. Thermal Power Plant 110 MW 6. Engineering Works Complex comprising: i. Foundry & Pattern Making Shop 7,000 tonnes ii. Forge & Fabrication Shop 8,800 tonnes iii. Machine & Tools Shops 19,000 tonnes iv. Power Equipment Repair Shop Repair of electric

motors/generators etc. v. Rubberizing shop Repair of conveyor belt;

manufacturing of seals etc. vi. Erection base Fabrication/assembly of

various structures/components. Vii Raw Materials Preparation & Handling System 2,640,000 tonnes Viii Alumino-Silicate Refractory Plant 43,400 tonnes ix. Tar-Bonded Dolomite Refractory Shop 8,800 tonnes x. Lime Plant 91,000 tonnes xi. Coke-Oven Battery (1 of 2 completed) 440,000 tonnes xii. Oxygen Plant 36,000 cu. M/hr. 2. THE DELTA STEEL COMPANY The steel plant at Ovwien/Aladja (Delta Steel Company Ltd), a Midrex Direct Reduction Technology, was commissioned in 1982 and produced steel from imported iron ore and local steel scrap. At one time DSC had taken super-concentrate from Itakpe (in Nigeria) to do away with importation. DSC supplied steel billets to the Inland Rolling Mills at Jos, Oshogbo, and Katsina. DSC has been on the verge of collapse for the past few years (since 1994), due to a multiplicity and inter-play of factors:- ministerial strangle-hold and insincere directives; under funding; misuse of scarce fund; over-costing of inputs; under-costing of products; and the general attitude (or lack of it) towards government-owned enterprises. With the near-collapse of DSC came the paralyses of the Inland Rolling Mills. One notable achievement worthy of mention is that in 1994/95 Nigerian Scientists, Engineers and Technologists teamed up to develop a process of upgrading the Itakpe Iron Ore to the super concentrate (65/67%) grade without addition of any beneficiating

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plant, contrary to the original technology designer’s provision. This development lead to the production of the first all Nigeria Steel (sample of which is available at the Secretariat of the African Iron and Steel Association), the iron ore of which hitherto had to be imported at colossal foreign exchange volume from Brazil or elsewhere. The unfortunate thing is that immediately this achievement was made known to the Government, then the Government of the day starved the entire Nigerian Steel sector and did not allocate a kobo in its 1996 budgetary allocations. Following this, most of the members of the team that developed the Itakpe iron ore to the super concentrate grade were rewarded with mass retrenchment by the authorities. This action grounded all efforts and virtually killed off the Nigerian Steel Sector with resounding implication on not only the public steel sector, but also to the private sector, till this day. This encouraged the massive importation of long products, which in most cases are poor quality products. The history of many collapsed buildings in the country that led to the loss of several lives is a testimony to the poor quality of most of the imported products. The over-all genuine intention and strategy of Government remains mysteriously unclear or deliberately undefined. Katsina, Oshogbo, and Jos Steel Rolling Companies operate epileptically in consonance with their mother, Delta Steel Company. 3. THE PRIVATE STEEL COMPANIES The Private Steel Mini and Rolling mill operates a little more efficiently than the public ones but are far from meeting the installed capacities of the mills. FACTORS MILITATING AGAINST THE INDUSTRIAL DEVELOPMENT OF NIGERIA To appreciate the problems of the Nigerian Steel Industry one has to look at the entire National development programmes. Take a look at the essential public services (like Electricity Company, Communication industry, Transportation industry, Educational establishments, Medical establishments, and particularly agricultural establishments) you will then see a clear pattern. If all these efforts have not yielded the desired positive results over the years, the Government should re-asses its approach. A little background information on Delta Steel Company is required if one is to understand the reason for the perennial crises in the steel sector. The DSC project started as a turnkey project with an Austro-German Loan of US$750 million covered by the German Insurance Company, Hermes. This loan was secured in 1976. What the concept of turn-key project means, is that the Austro-German Consortium of Seven Companies, completed the plant, commissioned it and handed over the key to the owner of the plant (i.e. the Federal Government) for continuous operation. The Consortium completed the plant, and did bring in commissioning raw materials like Iron Ore from Liberia and Brazil, Graphite electrodes, ferro-alloys, scraps and so on. They also brought in some spares (called commissioning spares).

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After the commissioning raw materials were exhausted, it then became necessary that the Federal Government should provide adequate working capital, so that the plant could attempt proving itself to design capacity, which was 1 million tonnes of liquid steel. Adequate working capital has never been given to DSC since commissioning till date.

Government’s inconsistent monetary and financial policies as well as poor public services and excessive tariffs on utilities have added to the negative performance of both the public and the private sector industries. Similar deliberate neglect and interference by the Government has made all the other public sector facilities to fail the taxpayer. This is the trend of things up to date. Dr. Sanusi Alhaji Mohammed (FNMS) Secretary General AFRICAN IRON AND STEEL ASSOCIATION (12th October, 2002)

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