Ajaokuta Steel complex: Will it begin production this time?

President Muhammadu Buhari has put a high priority on getting the plant into production, hopefully by selling it to private investors. But the legal, technical and political problems illustrate in microcosm—albeit a three-square-mile microcosm—many of the challenges that bedevil Nigeria’s diversification drive.

Sumaila, a mechanical engineer who’s taken a three-year leave of absence from Royal Dutch Shell Plc to try to revive Ajaokuta, is undeterred. “What excites me is the enormous potential of this place,” he said in his office at the plant. “Whatever we need to do, we have to do it.”

The economic imperatives are clear. Nigeria depends on crude for 90 percent of its export earnings. With global oil prices significantly below their past highs of more than $100 a barrel, shortages of foreign exchange are a daily reality. And Nigeria, Africa’s largest oil producer, has little domestic capacity to refine gasoline and thus must pay to re-import its own oil. The consequent lack of foreign currency has driven up prices for everything from food to construction materials, further hobbling an economy that shrank by 1.6 percent in 2016.

The need for diversification, and the employment it could provide, is made more urgent by a surging population. With about 200 million people and growing rapidly, Nigeria is by far the most populous country in Africa. Without durable sources of employment, a nation that’s spent much of the past decade fighting insurgencies in its arid north could descend further into disorder.

Yet the record of privatization in Nigeria is decidedly mixed. In the cement industry, it was largely a success: Investors succeeded in reviving production, making the country a net exporter of the material. One of the early buyers, Aliko Dangote, is now Africa’s richest man. By contrast, efforts to sell off power plants have failed to end blackouts, still a daily occurrence in much of Nigeria.

Steel has long been an obvious target. Nigeria has vast deposits of iron ore, much of it in Kogi State, the same region where Ajaokuta is located.  Transformed into steel, the ore could make other domestic industries, such as construction, far more viable.

Those intentions underpinned the construction of Ajaokuta, which when it began in 1979 was envisioned at Pharaonic scale. At full capacity, it was intended to produce as much as 3 million metric tons of steel annually, enough to largely close the gap between Nigeria’s current steel consumption and domestic output. Yet the most critical piece of infrastructure, a rail line that would connect the plant to iron-ore mines and deliver the finished product, was never completed.

Today much of the facility beyond the central administration block resembles the set for a post-apocalyptic action film. The blast furnace, conveyor belts and giant cranes to move materials—many inscribed with the words “Made in USSR”—stand idle in scrubby fields. Pipes as wide as manhole covers are coated in creeping grass, and cattle graze in clearings meant to store coal for the furnace.