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Pratim Ranjan Bose

Kolkata , Nov. 16

NIGERIA'S 2.2 million tonne public sector undertaking Ajaokuta Steel Company had never produced a tonne of steel in the 25 years since inception in 1979 when the Mittals of Ispat Industries acquired management and operational rights in the company in mid August 2004. Two months later, in November, Ajaokuta began producing steel.

Mittals acquired operational control over the company through Global Infrastructure Holdings Ltd (GIHL), the holding company of the Ispat group. Controlled by Mr Pramod Mittal, the group currently controls about 10 million tonnes of steel making capacity and raw material processing capacity in the Philippines, Libya, Bosnia, Nigeria and India.

Talking to Business Line, the GIHL spokesperson described Ajaokuta Steel as a classic case of time and cost over-run leading to complications in commissioning. The finances for the project, incorporated in 1979, were exhausted after more than 90 per cent of the plant was set up.

Despite the Nigerian Government trying to find a party capable of rehabilitating the plant and bringing it on stream, all such previous efforts proved futile for some reason or the other.

GIHL had acquired the operational right in the company after the government scrapped the previous agreement with Solgas of US. The US-based company had reportedly failed to start production even after one and half years of taking over control.

As per the new agreement, Mittals have acquired control over Ajaokuta Steel for 10 years, renewable for another 10 years. The group also holds the first right of acquiring the company as and when the Nigerian government decides to disinvest.

According to the GIHL source, the new management has this month put the 1,30,000 tonne wire rod mill of Ajaokuta Steel on stream, based on billet supplies from Ukraine, and has adopted a production plan for the light section mill.

GIHL has also fired the blast furnace and expects to start producing iron in the next few months. The company will be commissioning the rest of the core steel making facility such as coke oven, oxygen steel shop and continuous caster in phases to produce 1.3 million tonne of steel in the first year of operation.

Production will increase significantly when the captive power plant and other associated infrastructure become operational.

More Stories on : Mergers & Acquisitions | Sick Units | Steel

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