We Can Make Ajaokuta Steel Plant a Pride for Africa-Mr Quanli

INTERVIEW (Daily Trust)

By Hamisu Muhammad

A consortium of Henan Taihang Quanli Heavy Industry and Total Steel Nigeria recently renew efforts to restart the Ajaokuta Steel Plant. Last month the group visited the plant site, at Ajaokuta LG, Kogi state and some government officials in Abuja. After the visit, the leader of the group Mr Huang Quanli shared his experience with Daily Trust's Hamisu Muhammad and unveiled some of the plans they have for the abandoned steel plant if given the opportunity.

May we know a little background of your Group?

Our group of companies specialises in metallurgical plant building and management. We are very well connected at a very high level to the Chinese government and also have the financial sources and technical capability in China which we hope to tap from in order to restart Ajaokuta Steel Plant if given the chance. We already have the requisite international projects and investments experience as we are currently handling similar projects in Iran, Malaysia, Indonesia, Vietnam etc.

What is the purpose of your visit to Nigeria and what did you see in Ajaokuta Steel when you visited the plant?

We are in Nigeria to develop a partnership between China and Nigeria to develop Ajaokuta Steel Company in conjunction with our Nigerian partner: Total Steel Limited which has had a long experience in the sector and the local market. We believe the project will support the economy of Nigeria. The visit is basically exploratory, to look at the facilities, resources available and also to assess our partner - Total Steel's and Total Mining's capabilities and see what they have and in what quantity. To examine the process flow of Ajaokuta plant and other information available with the view to conducting techno economic analysis before coming out with a statement on our basic strategies on what we want to do. One thing is very clear: We are excited about the possibility of starting Ajaokuta Steel because we have the technical wherewithal. As you know, with us here is Professor Guo Hanjie, who is a famous Chinese metallurgist, whose specialty is iron and steel making. He is part of this team and he is also confident that there is no big issue on Ajaokuta. It is a plant that can be started. We are working on the possibility of upgrading Nigerian coal to make sure that we do not import a lot of coal to start the plant. Also looking at alternative technology of coal-based direct reduction to start Ajaokuta and make it produce 2 million tonnes of steel per annum is not a big deal.

So, I will also say that the condition of the plant is very good. Ajaokuta is not antiquated. We are very impressed with the condition and preservation of the equipment and we are looking forward to restarting the plant.

Some companies were given the opportunity to start the plant in the past and failed. What assurances will you give that if given the opportunity you will succeed?

We learnt that most of the companies that were given the opportunity to restart the plant lacked the technological and financial resources to do so successfully. We are not in a hurry to make public statements on what we will do unlike other groups who came and shout how much money they have as if they are going to restart Ajaokuta tomorrow. If you check our records, it speaks volumes. Last year alone we and our partners produced about 20 million tonnes of steel globally. And we are operating in many countries such as China, Malaysia, Indonesia, Vietnam, Iran etc.

Some people view the blast furnace technology in the company as an obsolete technology that cannot be developed in a short time. What is your take on this view?

There are thousands of blast furnaces in China. Of the 880 million tonnes of steel that China produced last year, 98 percent is through the blast furnaces technology. There is no special risk in it. No rocket science involved with blast furnace production. India's 56 million tonnes of steel, 33 million of it were produced via blast furnace. So, I think there have been exaggerations on the complexities of running blast furnaces. We are told. By officials that among the main reasons Ajaokuta not started is that Nigeria does not have coking coal. We learnt that enough and conclusive research on the upgrading of coal to make it cokable was not conducted and this is what we are going to cooperate with them in the next few months. We also think that significant technological innovations have already taken place in blast furnace production processes over the last 30 years such as non-coking coal dust injection system to substantially reduce the amount of coking coal required per ton of steel produced via a blast furnace. Whereas 30 years ago you will require about 800kg of coke per ton of liquid steel today's technological innovations necessitated by financial and environmental standards have reduced it to 200kg per ton of liquid steel with very minimal engineering modifications to the blast furnace.

Have you met any government official during your visit?

We have visited the Ministry of Mines and Steel Development. We met Mr. Abdullahi, the Director of Steel. As you do know it is election time and most of the ministers are away campaigning. We met him and he gave his kind permission for the group to visit the plant. We also met the Sole Administrator of Ajaokuta engineer Joseph Isa Onobere, and on both occasions we noticed a very strong desire and commitment to restarting the plant. We also observed a very high morale and dedication to duty by the Engineers and workers.

What exactly do you hope for the plant eventually if the government decides to invite you?

You have just raised the issue of how complex steel making is. You cannot allow an unserious and unorganised team to handle steel production. One of the reasons Nigerians think steel plants do not work is the fact that they were tied to government budgetary system. That did not accommodate the fact that steel plants are not allowed to breakdown. They are not also allowed to run under capacity. If you build a steel plant, you must run it at 100percent. If you run it at 20percent or 10percent, it will die due to overbearing financial overheads which will not only erode working capital but also equity. Therefore, we understand the Federal Government of Nigeria has already taken a decision, not only for Ajaokuta, but for all enterprises in Nigeria, that the way forward is either through outright privatisation or through Public Private Partnerships. The workable business model that we see is that of setting up a special purpose joint venture company under a PPP model with government as owner and Total Steel and our Chinese Metallurgical Group as Core Investors and operators of the plant say for a term of 15 years during which if the PPP partners wish the government can Privatise the plant Via an IPO in an appropriate capital market. Just as with the government's investment in the oil and gas sector of the economy the joint venture partners should begin to earn a reasonable profit from the investment from year 5 of the JV prior to the IPO. It is also our hope that by year 2 of the cooperation the plant would have commenced operation as a fully integrated steel plant not just creating empowerment and employment of the local people but creating value and wealth up and down stream.

With emphasis on National Automobile Policy, do you think the plant can produce the quantity and quality of steel which the automobile industry needs in Nigeria?

It is not just about the National Automobile Policy. It is even more relevant the new Industrial Revolution Plan of the government which focuses on creating value chains. . There are hundreds of millions of tonnes of coals which have not been exploited. We also learnt that there are hundreds of millions of iron ore which have not been exploited. This coal can be used for iron ore reduction and other metallurgical use. They can be used to generate power. The essence of our cooperation is to combine natural resources of coal and iron ore which Total Steel has and our own technology and practical steel production track record and combine it together and become very successful. As I have said, our target in the first two to three years in Ajaokuta is to produce two million tonnes of steel. That's what our cooperation agreement has stipulated. A substantial part of the 2 million tons of liquid steel will be deployed to produce Hot Rolled Coils which will be the basic raw material input to cold rolling mills which provide the cold rolled sheets for use in the automotive industry. The medium section mill with slight modifications will provide rails for all rail expansion projects as well as other structural steel for the power, oil and gas and future industrial projects in Nigeria.

Anything you want to add?

It has been a great honour and pleasure to be interviewed by your famous newspaper. We look forward to a sincere honest and purposeful business and technological partnership for the mutual benefit of our two great countries and its peoples.