The development of a domestic steel industry has been a central component of Nigeria’s industrial strategy since the late twentieth century, informed by the belief that a strong steel sector could catalyse broad economic transformation. As part of this strategy, the Federal Government established the Ajaokuta Steel Company Limited (ASCL) in Kogi State in 1979, intending it to be a fully integrated steel complex capable of supplying primary and finished steel products for national infrastructure and manufacturing needs. Roughly concurrently, the government built inland steel rolling mills, including one at Osogbo, Osun State, designed to convert intermediate steel billets into finished rods and bars. These projects, albeit ambitious, remain largely moribund, representing significant unrealised potential in Nigeria’s industrial history.
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Origins and Construction
Ajaokuta Steel Company Limited
The creation of ASCL followed feasibility studies initiated in the 1960s and early 1970s, when Soviet experts advised Nigeria on iron ore prospecting and steel production capability. A high‑quality iron ore deposit was identified at Itakpe in 1973, which helped shape plans for a full steel complex that could convert raw materials into diverse steel products. The Federal Government incorporated Ajaokuta Steel Company Limited in 1979 and commenced construction on a 24,000‑hectare site that would place Nigeria among Africa’s premier steel producers.
By 1994, erection of equipment at the plant reportedly reached about 98 per cent completion, with 40 of the planned 43 major plant units constructed. The plant’s design envisaged an annual output capacity of 1.3 million tonnes in its first phase, with potential expansion to 2.6 million and 5.2 million tonnes in later phases. The complex also included coke ovens, by‑products plants, rolling mills, and support infrastructure such as housing and power generation facilities.
To ensure supplies of raw materials and access to markets, a rail line was planned to connect Itakpe to Ajaokuta and onward to Warri, linking iron ore sources to the steel complex and the Atlantic port. Construction of this standard gauge line began in 1987, but due to delays and extended timelines, it was not completed until 2020, and commercial operations commenced only after many years, largely supporting passenger and mixed traffic rather than dedicated industrial supply.
Despite the extensive infrastructure and early progress, the integrated plant never achieved substantial commercial steel production, and by the early twenty‑first century it was widely described as incomplete and non‑functional.
Osogbo Steel Rolling Mill
The Osogbo Steel Rolling Mill was one of three inland rolling mills established under a Federal Government industrial policy initiative to transform Nigeria’s steel industry. Constructed contemporaneously with Ajaokuta, the mill was intended to produce finished steel products such as rods and bars from billets supplied by integrated plants or imported feedstock. The facility was commissioned by the government in 1983 following its construction and a technical assistance programme aimed at training Nigerian workers in mill operation and management.
Osogbo’s initial capacity was reported at 210,000 tonnes per year, with phased expansions expected to raise output. Housing and worker accommodation were integral parts of the design, reflecting the facility’s role within national industrial policy.
Challenges and Policy Shifts
Failing to Launch: Ajaokuta
Despite the significant capital investment and extensive construction effort, Ajaokuta never entered large‑scale integrated steel production. Chronic issues such as inconsistent funding, policy changes, managerial challenges, and technical complexities impeded progress. Over several decades, the Federal Government attempted to revive the project through concession agreements with foreign partners, including Japanese and Indian firms, but none succeeded in making the plant operational at full capacity.
In 2002, the government concessioned the plant to Kobe Steel, and later in 2004 to an entity financed by Global Infrastructure Holdings Limited (GIHL), whose chair was Indian steel magnate Pramod Mittal. The GIHL concession ended amid allegations of asset‑stripping, and the government terminated the agreement in 2008. GIHL pursued arbitration, resulting in a negotiated settlement. In 2022, Nigeria paid approximately US$496 million to settle claims and regain full control of the facility.
Even after these efforts, the plant remains incapable of full steel production. Only the light mills operate intermittently for small‑scale iron rod fabrication, and large parts of the facility are abandoned.
Decline of Osogbo Mill
The Osogbo Steel Rolling Mill similarly faced difficulties. Although operational in its early years, political and economic changes in the 1990s and 2000s coincided with reductions in raw material availability and maintenance support, contributing to declines in output. The enterprise was privatised under the Federal Government’s privatisation programme, but the facility has not returned to significant production levels and has suffered prolonged periods of inactivity. In 2023, the Nigerian House of Representatives initiated probes into the abandonment of Osogbo and other inland mills, reflecting concern over their failure to contribute to industrial development and employment.
Economic and Social Impacts
The underperformance of Ajaokuta and Osogbo reflects broader issues in Nigeria’s industrialisation strategy. A functional domestic steel sector could reduce reliance on imported steel products, conserve foreign exchange reserves, and stimulate growth in construction, manufacturing, and infrastructure sectors. Instead, Nigeria continues to import substantial quantities of steel, weakening its trade balance and limiting local industrial growth.
The failure of these facilities to sustain operations also diminished long‑term employment and skills development opportunities for engineers, metallurgists, and technical workers who might have provided generational economic benefits. Moreover, regions that hosted these projects have experienced economic stagnation rather than industrial growth.
Legacy and Contemporary Efforts
Ajaokuta and Osogbo occupy complex positions in Nigeria’s economic history, as symbols of both ambition and chronic underachievement. Ajaokuta, once branded the cornerstone of national industrialisation, is often cited as an example of strategic mismanagement and policy inconsistency. Similarly, inland rolling mills like Osogbo represent lost opportunities in value addition and manufacturing capacity.
In recent years, the Federal Government has reiterated commitments to revitalise the steel sector, including ongoing discussions with international partners and renewed focus on completing rail links and related infrastructure. However, challenges remain formidable and require sustained political will, technical expertise, and effective governance.
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Author’s Note
The history of the Ajaokuta Steel Company and the Osogbo Steel Rolling Mill illustrates the complexities of industrialisation in Nigeria. Conceived as linchpins of national development, these projects have struggled for decades due to managerial, financial and policy challenges, leaving Nigeria dependent on steel imports and missing opportunities for local value creation. Their legacies underscore the importance of coherent industrial policy, sustained investment, and governance that prioritises long‑term capacity over short‑term political gains.
References
PunchNG report on Osogbo Steel Rolling Mill abandonment and probe.
