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The federal government has commenced the payment of $496 million arbitration fee to Global Steel Holdings Limited following the termination of their contract to upgrade the nation’s steel plants.
The firm, which won the concession for the Ajaokuta Steel plant, Delta Steel plant in Aladja and Nigerian Iron Ore Mining Company (NIOMCO), Itakpe under the President Olusegun Obasanjo administration, had dragged the government before the court asking for $7 billion in compensation.
Taking his turn at the President Muhammadu Buhari Scorecard media series in Abuja on Thursday, the Minister of Mines and Steel Development, Olamilekan Adegbite who disclosed this, said rather than pay the amount demanded, the government lawyers were able to puncture the litigants’ arguments, thereby drastically reducing the penalties.
He affirmed that the payment has now commenced but will be spread across a period of time.
The Minister stated: “The major albatross on Ajaokuta steel was the concession that occurred during the President Olusegun Obasanjo administration. Things went sour and he took us to court. I won’t want to go into all those details.
“That case has been on for 12 years but, thankfully, we had a very patriotic Nigerian, practising law in England, who did very well and made sure Nigeria didn’t pay the $7 billion asked by Global, the concessionaire. But he was able to puncture most of their claims, gathered evidence for us and at the end of the end, Global settled for $496 million.
“At Arbitration, Global said they had a receipt given to them by the Obasanjo administration for $250 million. In 2022, if you look at the date, 15 years after, we paid only $496 million, less than double the receipt.
“The lawyer was consistent, fought bravely for Nigeria and we are paying them only $496 million. Even the $496 million, we have the chance to spread it out. We’ve started paying and we can spread monthly. As of today, the process is on.”
Olamilekan apologized for the inability of the present administration to fulfil its promise of revitalising the Ajaokuta Steel plant before the end of its tenure, noting that there intervening factors that made it impossible.
He explained: “I had promised that Ajaokuta steel would start (operations) before we leave office.
“That is not possible anymore; not because of lack of efforts but, especially because of COVID-19. We started the process in October 2019, when we went to Sochi, Russia, to attend a summit with Mr President. On the sidelines of a bilateral meeting, we met with the Russian government and we requested, among other things, that they should help us to resuscitate Ajaokuta steel because the Soviets built Ajaokuta steel and they acceded to that request.
“I came back to Nigeria and explained our plans to resuscitate Ajaokuta steel and we will make sure it worked,
“The first thing we were to do was the technical audit…what needed to be done, what needed to be serviced and all that. That was what the technical audit was meant for. And, the Russians were going to come in in March 2020; to start the technical audit for three months.
“We agreed on the price, everything was concluded and made available by the Nigerian government and everyone would recall that COVID-19 started and we couldn’t do the technical audit. It was put in abeyance.
“That went on, all through 2020 and 2021. Then we said, ‘let’s go another route, let’s expand our net.’ Now, we are no longer talking to only Russians, we are talking to 11 foreign interests. Of the 11 interests I mentioned, of course, three are Russians.
“People are interested in bringing their money to invest in Ajaokuta steel and make sure it works. If we put in the right amount of money, people would start producing steel in the next two years.
“The process is ongoing and, before we leave office, we will concession Ajaokuta to people who would bring money and make sure it works.
“We started the process to resuscitate Ajaokuta steel and we had a two-year timeline. Unfortunately, the COVID-19 pandemic stopped that process.”
While noting that a transaction adviser has been recruited to guide government through the process, he stated: “Like I said, we (this government) may not get Ajaokuta to work again and maybe this is the right forum, I apologize to Nigerians because I promised that it would work in the third quarter.”
“Yes, we couldn’t do it. I give an unreserved apology for that but it’s not for lack of effort. But we will not stop. The process is ongoing. Before we leave office, we will concession Ajaokuta in an equitable way. Not the cheap concession we had in the past. It’s people who will bring money in to invest,” he added.
The Minister revealed that the mining sector in the country has attracted over $1 billion in Foreign Direct Investment with Segilola Gold Company in Osun State getting $900 million investment portfolio.
Also, he said African Natural Resources and Mines Limited has $600 million investment portfolio with major players like Kian Smith Gold Refinery, Dukia Gold and precious Metals coming on board.
According to him, over 500 prospective mining investors have been engaged in investment meetings through International conferences among which, some have started setting up businesses in Nigeria.
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Other achievements of the sector he outlined are promoting the Nigerian mining sector in three international mining journals and publications; RockPost, iMine and Global Mining review publications and facilitating smooth agreement and partnership between Dukia Gold and Philoro Global Trading Company in Switzerland to produce world-class Gold bars and coins.
“This was to ensure that gold coming out of Nigeria, sourced, refined and traded by Dukia Gold will always meet and surpass the standards, conditions and guidance set by Organisation for Economic Corporation and Development (OECD) and London Bullion Market Association (LBMA),” he said.
He also noted that Gold Durbar in Kano launched in partnership with Messrs. Kian Smith Trade Company, served as a Regional Gold market-place to attract jewellers and gold buyers from across Nigeria, West Africa and the rest of the world.
According to him, the event has aided in boosting investment into the Gold (downstream) value chain, increasing access to data, providing visibility for policy decisions, stimulating the development of the gold value chain & trade of gold, and developing the jewellery value chain.
Olamilekan informed that the draft Solid Mineral Export guidelines are at the final stage of development to facilitate ease of doing business as part of efforts to unlock the potential in the downstream sector.
He said the Ministry also launched the Nigerian Barites to API standard, to substitute import of about $300,000,000 annually.
Olamilekan recalled that Presidential Artisanal Gold Mining Initiative (PAGMI) launched by President Muhammadu Buhari on Thursday, 16th July 2020, commenced in Kebbi and Osun States and supported the effort at creation of jobs for Nigerians, diversifying the revenue base of the country and improve foreign reserve.
He also recalled that PAGMI presented the maiden 12.5kg gold bar to the President, which was later bought by the Central Bank of Nigeria at N268,608,236.00.
Olamilekan assured that Bitumen used for asphalting in roads will soon be produced in Nigeria to put an end to import and reduce the cost of road construction.
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