· Generates zero revenue, guzzles N6.04bn in annual personnel costs
· Moribund plant can’t produce steel, requires over $2bn for revival
By Joshua Joseph
Arguably, the Ajaokuta Steel Company in Kogi State is Nigeria’s biggest industrial failure.
Forty-seven years after construction began, the quest to acquire steel-producing capacity to drive Nigeria’s economy remains elusive.
The project, which kicked off in 1979 with enthusiasm, was commissioned by the late President Shehu Shagari in 1983 in partnership with Tyazhpromexport (TPE), the original contractor from the defunct Soviet Union.
Unexpectedly, the plant ran into an insurmountable crisis while construction was ongoing and crashed on the verge of completion.
Several sources attribute the challenges to policy somersaults, corruption, and international conspiracy, among other factors, including the interests of successive governments.
“At the peak of the crisis, about 98 percent of the steel complex had been built, but key units like the blast furnace and coke ovens were never made functional before everything finally came to a standstill.
“It was only the Light Section Mill and the Thermal Power Plant that ran intermittently in the past to roll iron rods, following a concession to foreign technical partners.
“That arrangement was short-lived because of a ‘fragile, ambiguous agreement’,” said a retired engineer of the company who asked to be identified simply as Khalid.
Technical Audit: Steel Plant, Environment
According to the 2018 technical audit report, the steel plant is “robust except for minor mechanical issues. The blast furnace, coke ovens, and steel-making units are nonfunctional. Only auxiliary units like the power plant and water treatment plant receive basic upkeep.”
Consequently, the plant — designed as an integrated steel plant with 43 production units — has remained in “preservation mode,” as all efforts by successive administrations to revive it have hit a brick wall.
“The plant is still non-operational and has produced no steel for over four decades. That’s over 40 years of decay. Except a miracle happens tomorrow, the foregoing suggests the company has a glaringly bleak future, with no feasible solution in sight,” said a source at the mill who requested anonymity.
According to the source, the present condition of the steel plant is a sad reminder that the quest for steel capacity, as mooted by stakeholders in the early 1960s, may turn out to be a mirage.
A visit to the multi-billion-naira steel complex at Ajaokuta reveals a sorry state. The assembled plants lie in ruins, resembling a graveyard. The main administrative complex is no exception.
At the main steel plant complex, where a few workers observe skeletal services, and in other auxiliary departments, the scene is equally bleak.
The chirping of birds and insects has replaced the noise of machines and the bustle of workers. In some cases, machines, abandoned vehicles, houses, and workshops compete for space with encroaching vegetation. Many have been “submerged” by trees, grasses, and shrubs, as the site reverts to its natural state.
Revival, Challenges
According to reports, successive administrations since the 1980s have struggled to revive the steel company but failed due to technical, financial, and political problems.
With the 2018 plant audit noting that the plant is “robust aside from normal part deterioration,” the current Federal Government, led by President Bola Ahmed Tinubu, has reaffirmed its commitment to revive the plant through a fresh technical audit in partnership with Russian and Chinese experts and investors.
Against this backdrop, the Federal Government brought in a team of 23 Russian engineers — staff of the original builders — in August 2024. They conducted a technical audit and preliminary inspection to assess what is needed to revive the plant.
According to reports, the Russian technical partners found the plant 95–98 percent complete but in need of major upgrades, digitalization of analogue equipment, and huge capital investment.
In September 2024, the Federal Government and a Russian consortium reportedly signed an MoU in Moscow for the rehabilitation, completion, and operation of the Steel Plant and the National Iron Ore Mining Company Limited (NIOMCO), Itakpe.
Investigations revealed that while the FG is still finalizing funding and fine-tuning contract terms, the Russian team is said to be “waiting to receive a go-ahead to start work.”
A source noted that the MoU, contract, and funding have not been secured yet, stressing that the signed MoU is just a “statement of intent,” not a binding contract to commence construction.
“FG and the Russians still need to sign a bankable commercial contract and agree on the exact scope, timelines, and financing model,” the source said.
The source added that several grey areas still need to be resolved with the technical partners before any move to revive the mill can commence.
These knotty areas include infrastructure deficits, contract disputes and litigation — particularly with Global Steel Holdings Ltd, the Indian company granted a concession in 2004.
Political and bureaucratic bottlenecks, corruption, lack of accountability, funding sources, and mismanagement — which stalled completion in the first place — along with the alleged ghost-worker syndrome and the payment of N38.9bn to idle staff, also need to be addressed to restore investor confidence.
Besides, experts point out that for a functional mill, the steel plant needs reliable power, rail, water, and iron ore supply.
“Nigeria’s national grid is unreliable, so the plant’s own Thermal Power Plant must be revived first. The rail line linking Ajaokuta to the Itakpe iron ore mines and Warri port was only recently revived.
“Without these, steel can’t be made competitively,” said Bala Ademu, an engineer who claims to have closely followed the company’s saga for years.
Budgeting, Funding
At the 2024/2025 budget defence session with the National Assembly Joint Committee on Solid Minerals and Steel Development, the Minister of Steel Development, Prince Shuaibu Audu, said technical analysis and expert evaluations indicated that the government would require “between $2bn and $5bn” to revive Ajaokuta within three years.
According to the 2026 Appropriation Bill presented by President Tinubu to the National Assembly on December 19, 2025, a total allocation of N6.69 billion was voted for the steel plant. This covers personnel costs of N6.04bn.
The amount covers salaries, allowances, social contributions, overhead costs, and capital expenditure.
It was noted that the capital allocation for actual rehabilitation and steel production is just N410.8m. Budget documents indicate the steel plant will generate zero independent revenue in 2026.
This sparked heated debate at the joint session of the National Assembly, as Senator Natasha Akpoti-Uduaghan, representing Kogi Central, questioned paying over N6bn to idle workers without generating a kobo from the company.
Union Laments
Leaders of Ajaokuta Steel unions, particularly the Iron and Steel Senior Staff Association of Nigeria (ISSSAN), are unhappy with the Federal Government over how the plant’s revival is being handled without considering workers’ interests in the concession process.
They demand inclusive negotiations on workers’ welfare before any deal with Russian, Chinese, or private investors.
ISSSAN’s National Chairman, Comrade Ibrahim Audu Abdurrahman, recently raised concerns over the “sudden delay” and the “shift from nationalization to privatization” after the 2023 technical audit.
He cautioned against privatizing the complex and demanded stakeholder inclusion so workers’ welfare is not sacrificed, stressing that the government should focus on concrete progress, not just signing MoUs.
The union urged the FG to resolve all transnational legal issues over the company before signing new MoUs, citing the 2005 concession to Global Steel Holdings and the $496m arbitration settlement as “irregularities” that caused economic losses and worker uncertainty.
In a memo submitted recently, the labour leaders reminded the Federal Government and NASS that the steel company can employ 10,000 people directly and generate 110MW of electricity, besides thousands of indirect jobs.
“The bottom line of our core concerns remains: ‘Don’t sideline workers, settle legal issues first, stop policy flip-flops, and prove the money budgeted is actually used for revival, not salaries of alleged ghost workers’,” said a senior labour leader who asked for identity protection.
Management Raises Hope
The current Managing Director of the company, Prof. Nasir Naeem Abdulsalam, who was appointed on April 3, 2025, expressed hope upon resumption that the plant would soon begin full operations as a key industrial asset for Nigeria’s economy.
He is focusing on the audit, securing the $1.4bn completion funding, and moving the plant from government ownership to a Public-Private Partnership (PPP) as required by the new Ajaokuta Steel Company Act.
At a function in Lokoja recently, he said efforts were being intensified to keep the comatose company on skeletal service pending completion of the ongoing revival plan.
“We are close to sealing an agreement with the Nigeria Railway Corporation (NRC) to produce spare parts for railway tracks to aid smooth operations. Other areas are being explored to keep the plant on skeletal service pending when the ongoing revitalization plan is completed,” he said.
Prof. Abdulsalam is reportedly making frantic efforts to restore industrial harmony despite ongoing worker grievances over his move to reduce the number of labour unions from four to two.
According to union leaders, the attempt is a ploy to whittle down and suppress workers’ power, which they have vowed to resist vehemently.
NEXTER reports that the condition of the steel company has been generating public discourse within and outside the state.
While some stakeholders have given up hope and classified the steel plant as a white elephant project, others feel the company can breathe again if genuine steps are taken.
Residents of communities around the steel company are praying fervently and hoping the plant will bounce back to life to boost socio-economic activities.
“It has been a harrowing experience since activities at the steel company gradually ground to a halt. Economic activities have been paralyzed, social services have disappeared, and the standard of living has dropped to a ridiculous level in all the immediate communities.
“We were excited to hear about the government’s move to revive the money-guzzling company. We hope this move will see the light of day,” said Mariam Salihu, a resident of Ajaokuta and a shop owner in the ASCO area.
However, renowned industrialist Alhaji Aliko Dangote, Chairman of the Dangote Group, raised doubts about the company returning to operation after years of abandonment. Speaking on Nigeria’s industrialization during the FG’s 2026 budget defence, the business mogul described the plant as obsolete due to “outdated infrastructure and lack of modernization,” comparing it to “vintage cars vs modern cars.”
Several experts have described the steel plant as a white elephant project that needs complete modernization, warning that the country risks wasting money on an obsolete Soviet design that cannot meet modern steel production standards.
