We have not given up on the Ajaokuta Steel Plant – Adegbite


Daniel Terungwa

The Minister for Mines and Steels Development, EngrOlamilekan Adegbite, has said that although works on the Ajaokuta Steel Plant was stalled owing to the COVID-19 pandemic, the President Buhari led admiration has not totally given up on the project.

The Minister who made this known in a recent interactive session with journalists in Lagos also intimated the public on a number of projects being carried out by the ministry to fast-track the development of the value chains in the mining sector. Below are the excerpts:

What is the update on the rehabilitation of Ajaokuta Steel Plant?

It is always good to let the people know what we are doing even when these things are not obvious. We have had some misfortunes especially since I came to office. We started out very well with the promise to achieve certain goals from inception. The advent of the COVID-19 pandemic put a lot of our plans in abeyance, chiefly the Ajaokuta Steel Plant. It was one of our major targets to achieve that. Our target was to start the Ajaokuta plant before President Muhammadu Buhari will leave office. We went to Russia in 2019 and shortly after I became a minister in October 2019, when we had the Russian African Summit, and on the sideline of that summit, we had bilateral talk with the Russian Federation. One of the proposals or requests put forward by our Nigerian side was for the Russian Government to help us resuscitate the Ajaokuta plant, especially been that they were the original builders, and they acceded to that request. Work started in earnest from that October; a lot of paper works went back and forth which was supposed to lead to what you call a technical audit that was supposed to take place last year March. The technical audit is a 90-day exercise where you have professionals on ground to look at the plant the way it is and to look at what needs to be replaced, what needs to be changed. But as God will have it, the pandemic set in and even as we speak, with waves after waves, the Russians are yet to come. The 60-man team that was supposed to come down, we have prepared for them accommodation and transportation, everything is intact.

Has the government given up on that?

We have not totally given up on it. I’m praying and hoping we could start something that would become irreversible; because the plan given to us possibly is about two and half year’s thing. So, we thought starting from 2020, which means by the end of 2022 or middle of 2022, we would have finished. So, we are thinking the opening will start around 2022 third quarter. But if we were to start again, I don’t think this government has up to two and half years to go, but I pray and hope that we will be able to start something that is irreversible so that even if President Muhammadu Buhari has left office, the Ajaokuta Steel plant we still come on and Nigeria will be better for it.

What project is the ministry currently carrying out to enable the mining sector survive post COVID-19?

During the pandemic when everyone was locked down, the administration said, look: what can we do in the sector as a post COVID-19 palliative because everybody knew the debilitating effects of the pandemic on businesses on every sector? So, government called us and said, look at what can be done in your sector to ameliorate some of the situations that had happened post COVID-19, something to help to kick-start the sector again. We submitted a proposal and we were given some funds to do that and that is what has led to what we have started doing now -the money has been released. We are doing what I will call regional projects in the six geopolitical zones of the country. So, we look at each zone and look at their strength and decide what we will do. Looking at the North-east, we chose Bauchi. Bauchi is very rich in Kaolin. This is another policy of government. We have a lot of minerals that are used in the industrial cycle but the problem had been that people just exploit those minerals and send them out as raw materials and later bring them back to Nigeria as semi-process industrial materials. So, we look at Bauchi for the North-east zone and said, look, we have kaolin; kaolin is used in the pharmaceutical and the paint industry. We are building a plant now to process kaolin in Bauchi. That is our project for the North-eastern region. Upon conclusion of this, we should be able to beat our chest and say, yes, Nigeria should not import industrial kaolin again. All the local requirements we should be able to satisfy from that end. If you go to North-central, we chose Kogi. Kogi has gold, so, to help the artisanal miners there, we decided to have gold smelting plant in Kogi, which is the project for Kogi. They get their gold and they have some crude methods of smelting which often lead to disaster. You have the leaching in the water, into their stream and all these undesirable chemicals. Of course, we had a lead poisoning in Zamfara. These are some of the local methods of extracting gold. You know, when you find gold you don’t find it in pure form, it comes with a lot of dirt. So, to extract it that is what causes all that. We are building a modern gold smelting plant that will avoid all these harsh chemicals for them in Kogi. For the North-West, we have chosen Kano and what we are doing in Kano is essentially a gold souk (by the way souk is just a name for market, an Arabic word for market). We are doing a gold souk in Kano. Kano has been known for gold trade along the international gold trade routes in West Africa. Kano was part of that route, so we are just trying to bring the whole glory of Kano back by creating a gold souk in Kano. But not just that, we find out that a lot of our gold when it’s exploited, when it’s smelted and you have the door bars, in Nigeria, we smuggle them out mostly. I used that world deliberately because very few of them come to the process they take them out. Yes, you are allowed to take out your gold if you want to trade and all that but if you come through government, we give you an export certificate and then of course you pay some royalty and you can take out your gold safely. But a lot of people will choose to ignore that part and they take the gold (doorbars) to mostly Dubai. What you realise is, you take a gold worth N100,000 to Dubai as a door bar, with that ounce of gold, with some expertise, skills, you turn that same gold into jewelry. You could sell that for a million naira. So we were losing value to Dubai. You got gold worth a N100, 000, all you need to make that gold N81 million is skill; you are not adding any gold; you could turn it to earring, into bangle, necklace, even cufflinks and into so many things and we are losing a lot of value on that. So what we are doing in Kano, essentially is not just a market, we are going to have people in the market who can turn the gold into products. We are training people for this as well and it’s another programme we are going to have this year. For the South-west, we have chosen Ibadan and we are building a gemstones market in that area. A lot of gemstones are found around Ibadan. In fact, there is an existing market for gemstones. It’s an international market; people come from far and wide. It’s an informal market, so people come from West African countries and China to come and buy gemstones there. But then, like I said, it’s an informal market -it does not involve government, government loses a lot of revenue there. So, what we are doing is organising the same market under a roof for formalizing it, so that the market takes place in more secure and serene environment and at the same time, government gets its value. Gemstones is mined generally around Ibadan, Ife, Oyo axes and that is not to say there are no gemstones in other parst of the country. So, we are building a gemstone market in Ibadan and we are adding value in Ibadan as well. Few Nigerians are already into it, apart from doing jewelries, the stones are set as additional ornaments and that stone is found in raw form in Nigeria. What makes it to that ring is what is called cutting and faceting -you cut it into shape, you polish it and it comes glistering and you fix it on the ring, pendance, earring and then adding value. We are also doing that in Ibadan. It’s not just to sell the gemstones, there are going to be people in that market who would add value to the stones. They will cut them, polish them and make them ready. Some of course will sell them into jewelries, most cufflinks have their stones and they set them and sell, we are doing that in Ibadan. For the South-east, we have chosen Ebonyi State for its lead. The lead found in Ebonyi is probably one of the purest in the world. But it is exported in that raw form with its impurities there. What we are doing simply is to build a processing plant in Ebonyi for lead, so that what we are going to be exporting from Ebonyi is what you call lead ingots. Ingots are simply when all the impurities have been removed and when you are saying: this is lead ingots, it’s not lead. What you find from the ground could be 84 percent lead and some other impurities, at times it comes with silver. We are going to extract the lead and make it into ingots, so that when you are selling, you cannot be cheated; so that when you say you are selling lead, you are selling 100 percent lead. We are building a plant in Ebonyi for that. And for South-south, we are doing barite around Ogoja. Barite is something that is used in oil industry. It’s part of the drilling mould that is used for oil exploration. Nigeria imports to the tune of about a $300 million annually for barite mostly from North Africa. I think it comes mostly from Morocco. We do have the barite in Nigeria. The problem has been taking the barite from its raw form when it’s exploited from the ground to what is acceptable in the market. We have done a lot of work on this now. We got all the stakeholders involved; the end users are involved. We got people who are mining the barites; we got companies who got their own plants to process it. Basically, barites come like chunk of rock when they mine it. So, these plants will crush and mill them and we have been given a specification. They have to mill to about 0.003um, the plants will do that. Then they will be bagged and sold to the companies. So what we have done as a government is to say: okay, you are the miners, you got the barites. We have identified about three companies now that have a milling machine that can do this. Then, we got some interested entrepreneurs who are making the bags, because there has been an attempt in the past to bring Nigerian barite to the market but these are the failures: they will say, it was not milled properly, the bagging was poor and when they want to use on site, it split up and then, the barite is wasted. We are taking care of all these snags that have been identified. We have got the private sector people involved in this and we are just taking the barites from the mines to the market with government being a facilitator. That is essentially what we are doing in Cross-River. Those are the six programmes that we are doing and by the grace of God we should bring them to fruition this year.

Data is critical in investors’ business decision. So, what is the ministry doing to avail prospective investors in the nation’s gold sub-sector all the relevant information they need as they decide on whether to invest in the country or not?

So, this year and into the following years, our exploration project -National Integrated Mineral Exploration Project (NIMEP) has been on course. NIMEP came on board because mining is all about data, gathering data and this is data that you offer to some interested people. It’s not good enough to say I have gold. People want to know the quantum of your gold and whether it’s worth their time and investment. If it will cost you about $200 million to get to where the gold is and you find out that the gold there is worth just about $150 million, it’s a loss. So, if I have an idea that the gold deposit there is worth about $10 billion, then I can spend my $250 million going after it. This is data that we need to acquire in other to attract the right investors and that is the programme we are doing all over the country. It’s a N15 billion project, about $50 million as at that time and the results are coming true; it’s looking very promising. In fact, when we went to Canada last year, before the onset of the pandemic and when we were in South Africa in February, these are the data we were marketing to investors and there were a lot of interests. People were already asking to come to Nigeria and all that but for the pandemic. Though, we hope to continue to market this data so that people can come. This data will not be free; it will be put in a bid auction because we have spent so much money. So, we need to recoup the money and use the money in doing further exploration.

What effort are you making to develop the country’s gold refining capacity and improve the value of the gold resource to the economy?

Most of the gold that is used or that you found around that is used to make jewelry and all that; they are from the door bars. Door bars is about 93 per cent purity, but when you want to take gold as a measure of wealth as is recognized intentionally, you have to take to what is called bullion standard. That is the gold standards they called 99.99 that is bullion. You would recall that sometimes in August last year, we presented bullion to President Buhari at that time. That was a proof of concept to show that yes, we have gold in Nigeria and we could take it to the bullion level; the bullion is what the CBN or even an individual can keep. If you have bullion now, you can know the value from the price quoted on the New York Exchange, price of gold is quoted daily. If you have one bullion, you know that the one we presented to the president was worth about N168 million for 12.5kg. We gave it to the president and the CBN purchased it and did a presentation of the cheque that the CBN governor gave to the president and there was a big dummy cheque that was made for that. So that is gold from Nigeria which was sold to CBN and the CBN said, wow! Nigeria can add to its foreign exchange level not just through oil and gas but through gold; not in door bars but through bullion. Putting that bullion in the vault of CBN increased our foreign exchange reserve. So that is another thing we are trying to do. That particular bullion, the final leg of it to take it to bullion was done outside the country, it was done in Turkey. Now, we have licensed two institutions. The third one is just recently licensed so that one is just starting. But two of the people that we licensed to build refineries in Nigeria have gone far: one is in Abuja, and one is in Mowe, Ogun State. This people will be able to refine gold to bullion standard and of course, individuals can buy gold. If you want to keep your money in gold, may be because you think inflation rate is going so fast and you want to keep your money instead of the cash, you can keep it in gold; that is legitimate. You can put it in a save in your home or if you are afraid thief may come, you can keep the bullion in a vault in the bank. And of course, the value, like the one I was saying was N168 million that the CBN paid for, it was very good for CBN because within a few months, prices of gold went up and it became about $250 million because price of gold kept moving per ounce. Because the price of gold is measured in ounce and it went up to about 2200 per ounce at the stock exchange. What CBN bought essentially with about N168 million went up within a few months to about N250 million at the time. That is gain for the country because if we had kept that cash, you would still have the same value (the N168 million). But by putting it in gold, you have enhanced the value of that cash to about N250 million. So’ it’s also part of the things we are trying to do. When the refineries come up, they will be able to refine gold locally. Like I said, the one that was given to Mr. President, the final leg of it was melted to get to door bars but we were able to take it to bullion standards in Turkey. We sent the door bars to Turkey; they did for us and then they sent it back and then we presented to the president. We have licensed three refineries in Nigeria which will be able to do these bullions for us in Nigeria. So, these are some of the things we are pursuing for this year and, hopefully, like I said, before we leave office, we will be able to give you a good account of our time in office.

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