Delta Steel: Story of arrested dreams to industrialise Nigeria
The eerie silence and emptiness at the large reception hall of the imposing four-storey administrative building of the Delta Steel Company (DSC), now operated by Premium Steel and Mines Limited (PSML), is an instant reminder of wasted dreams of those who conceived the plant.
In its heydays, the reception hall endured a flurry of activity as cadres of workers milled in every direction attending to one issue or the other.
But the near empty administrative building, scanty car parks and desolate surroundings masked the distant roaring sound of the revamped rolling mill, producing various forms of iron steel.
Before it’s acquisition by Global Infrastructure Nigeria Limited (GINL) and later by Premium Steel, DSC was hailed as one of the largest steel plants in the African continent when it was commissioned in 1980 by President Shehu Shagari.
Today, the steel plant is actually running, although on very low-scale, producing “reinforcement steel” for construction of train rails, bridges, dams, skyscrapers, etc.
Spread out on a large expanse of land between the Owvian and Aladja communities and the Warri River in Udu local council area of Delta state, DSC was a dream project conceived in the 1970s to quench Nigeria’s growing thirst for iron and steel.
When the plant was commissioned in 1980, it was designed to produce approximately one million tons of liquid steel per year, which sadly, it never attained until the plant was run aground. Its highest production was said to be an average 500,000 tons, which it achieved in the mid 80s.
Under its pioneer Chief Executive Officer, Senator Fred Brume, Delta Steel Company (DSC) moved towards becoming the hope of the long-awaited break-through in industrial development for Nigeria and Africa. But given the typical Nigerian destructive attitude to government establishments, the gigantic steel plant was allowed to fold up.
According to Chief Zik Gbemre, a community leader conversant with activities at the steel plant, a number of forces combined to “kill” DSC after a little over a decade of operation: “From tribal wrangling to diabolical atrophy through inter-and intra-personality clashes to atrabilious politicking the great Delta Steel Company Limited, Ovwian- Aladja was murdered. Like all viable projects in Nigeria, there was no administrative continuity plan even at the national level”
Iron and steel were strategic materials needed to drive Nigeria’s quest for industrialisation and economic force in the continent, more so as a handful of the automobile industries in the country in the 70s and the 80s sought metal foundries where brake drums, engine block, steel sheets and others would be forged locally. PAN was known to have produced several automobile parts at DSC until 2003.
Between 1995 and 2004, the steel plant was the main employer of labour and literally the economic livewire of Warri and environs, as it provided jobs for a cross spectrum of workers, many of whom lived in the purpose built town known as Steel Town, before it went comatose state. The steel town, situated a few kilometers from the plant, in its hey days had state-of-the art schools for the children of workers, a world class medical centre and first of its kind recreational facilities and other amenities for the comfort of its workforce. The steel town is today in a state of rot and decay.
However, in 2004, desirous to revive the dead plant, especially the rundown steel rolling mill, the federal government, privatised it with the BPE auctioning the plant to Global Infrastructure Nigeria Limited (GINL), after outcries by host communities, former DSC staff, the state government and industry unions, protesting the plant’s neglect and abandonment.
GINL an Indian firm acquired control of the 960,000 tonnes-a-year Delta Steel Company (DSC) in 2004 for $30 million, even though a local firm, BUA International offered $31 million for an 81 percent stake in the firm and was reportedly the preferred bidder by the Bureau for Public Enterprises (BPE) at an auction in Abuja.
GINL which also acquired the Nigerian Iron Ore Mining Company in 2005, succeeded in revamping the steel plant from a comatose industrial liability to a fully operational and viable producer of high quality iron and steel products.
However, in 2015 GINL lost control of the Delta Steel plant to Premium Steel and Mines Limited (PSML) in rather unclear circumstances, even though GINL was accused of being an “unserious investor”
In 2019, the House of Representatives set up a committee to probe the alleged shady sale of Delta Steel Company to Premium Steel and Mines Limited, after the member representing Ethiope federal constituency, Chief Ben Igbakpa, moved a motion urging the house to “unravel the dubious transactions that landed the company in the hands of Premium Steel and Mines Limited, a company hurriedly registered without any proven track records in steel development, simply designed to rip off Nigerians their pride in the most audacious evidence of the stride of the Federal Government towards industrial revolution in Nigeria through DSC, an Integrated Steel Plant located in Ovwian-Aladja, Delta State.”
Igbakpa urged men of good will, particularly Delta people, to support the effort for the probe “so that we can get our company back to production way’’.
He was supported by the member representing Ughelli and Udu federal constituency, Hon. Francis Waive.
Also, Coordinator of the Udu Positive Force, Chief Galaxy Udukparobo, said PSML was not a known steel manufacturing company, that it was “hastily registered for the sole purpose of the clandestine purchase of DSC.”
He queried, “how many times have steel products or rods been sold by PSML since they took over years ago.
“Why is it that up till now, a property of the Federal Government was sold to a private company in total secrecy to the extent that nobody knows what was sold?”
According to the Acting Chief Executive Officer of Premium Steel Ujjwal Sinha, when PSML took over the plant in 2015, it discovered that the whole plant was in a “terrible and cannibalized state”. For example, over 3000 meters of various armored cables were stolen and PSML had to spend over a 150 million naira to replace the cables. Several motors had been removed. The power supply and water supply facilities were vandalised. The machinery, due to lack of use and maintenance were in very bad shape and beyond use. There was no housekeeping, so bushes had to be cleared to enter certain areas of the plant. The jetty was unusable for any shipping activity.
He said the mill was modified to produce reinforcement steel conforming to BS 4449 grade to be used for major infrastructure projects in the country; the jetty was fixed and made usable. The power facility in the plant was equipped with the latest technology.
“After the acquisition of the plant, we have completed the Phase I, which was basically rehabilitation of the existing facilities and equipping the mill to produce reinforcement bars of highest quality. Very soon, we shall be commencing the Phase II of our plan, which would enable the plant to produce liquid steel of highest quality in conformity with international standards. This would make us the largest steel plant in entire West Africa.
“When we took over the plant, it was our promise to offer the best quality of steel to the Nigerians. We are importing billets from world-class plants in Russia, China, etc. These billets are then rolled to Reinforcement steel. Therefore, we are not insulated from the turbulence of the steel market and forex markets. We also pay duties on import of billets, which is making it expensive while some others are getting exemption. This is further adding to our problems, making it difficult to compete.
“PSML has invested several billions of naira towards the rehabilitation of plant and its Jetties. We had to modernise the rolling mill and equip it with latest automation technologies. To produce the rebars, which meet international standards of quality, the rolling mill had to be upgraded. We are still investing in the full rehabilitation of other units of the plant in the integrated steel complex and there shall be huge investment when the Phase II of our plan comes up. We are not yet talking about profit as all our earnings and other inflow of foreign exchange are ploughed back into procuring our raw materials (billet) and consumables, and procuring spares /equipment for the full rehabilitation of the integrated steel plant.
“Our plans for the future is to deliver to Nigeria and Nigerians a fully rehabilitated integrated steel plant and expand on the initial production capacity of the plant from one million tonnes/annum of liquid steel to over three million tonnes/annum of liquid steel. The implication of our rehabilitation/expansion project will be felt by Government (through revenue due to them from our full operations), job creation (directly and indirectly), host communities (boom in their economy and opening of opportunities to them) and finally, reinforcing Nigeria and Nigerians with quality steel, our core mandate,” Sinha said.
In 2019, groups within the host communities also raised the alarm that PSML was also stripping and selling assets of the plant with the intention to abandon the plant and leave like the previous operator. The youths claimed the host communities were kept in the dark about what was happening in the plant.
Sinha said the allegation of asset stripping was totally false and unfounded. He explained that what played out then was that the company had to discard unusable, unserviceable, obsolete spares/equipment that littered the company premises and acted as a breeding ground for dangerous reptiles/animals and were hindrance to the rehabilitation process.
He added that the host communities had been supportive of the company and with their constructive support, “they understand that the growth of company will bring prosperity to the community all around. We have been running schools and hospitals and the people around are benefitting from them.”
The firm runs primary and senior secondary schools in the townships with over 3,000 children studying in the schools, which have been equipped with modern library, laboratory, play grounds and classrooms.
They also manage a 50-bed hospital with modern facilities like surgery unit, well-equipped clinical laboratory, a dental wing, x-ray unit and pharmacy. The company said it plans to add a number of beds in future to meet the health requirements of the community. The hospital has deployed ambulances to bring patients from far off places.
The company, which has 800 Nigerian workers, according to the management, is yet to break even, largely due to a lot of challenges. They include high duty on imported billets for production, encroachment on the company’s landed property with the attendant high cost of litigation in defending/protecting the company’s interest, very high electricity/gas tariffs, battling with all kinds of taxes, levies and rents, and insecurity. The company is also victim of large-scale theft and vandalism.
Despite allegedly operating at a loss, PSML has to contend with host communities’ demands, hence, its decision to renovate and upgrade some existing educational and health facilities in the steel towns.