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7/28/2019 Overview of the Iron and Steel Industry in Nigeria
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Overview of the Iron and Steel Industry
in Nigeria
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Schematic of Iron- and Steel- making Operations
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Iron and Steel Processing Operations
There are basically five (5)stages in the iron and steel
processing operations bywhich raw materials are to beconverted to finished steelproducts. These are:
(i) Raw Materials preparationand Coke Making.
(ii) Iron Making.(iii) Steel Making.
(iv) Continuous Casting orContinuous Rolling.
(e) Finishing Operations.
The first four stages areusually called the PRIMARYEND while the last stage istermed the FINISHING END.Fig. 1 is a schematic of theoperational sequence of theNigerian Iron and Steel
Industry
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RAW MATERIALS PREPARATION AND COKE MAKING
The major raw materials required for the Primary end of Iron making are Iron Ore andLimestone.
NATIONAL IRON ORE MINING PROJECT (NIOMP) The National Iron Ore Mining Project (NIOMP) at Itakpe is earmarked to supply the total 2.155
million tons per year iron ore requirement of the Ajaokuta Steel Project. In addition, it is
contemplated that the project would also supply about 40% of the requirement of the Delta SteelCompany for super-concentrate iron ore fines (grading 68% Fe) which were largely imported fromBrazil.
Also, contract for the provision of railway line from Ajaokuta to Warri was only executed over aportion of the over 200km distance. Thus, there is no existing provision for cost-effective bulktransportation of iron ore super-concentrate from Itakpe to Delta Steel Company.
Some of the major constraints to full plant operation at NIOMP include:
- Inadequacy and low availability of mining equipment, support facilities, spare parts andconsumables, such as explosives.
- Non-completion of the 4th beneficiation line that will produce super-concentrate for DSC.
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RAW MATERIALS PREPARATION AND COKE MAKING (contd)
Ajaokuta Steel Company Ltd. (ASCL)
ASCL is an integrated blast furnace/basic oxygen furnace steel plant with a designedcapacity of 1.3 million tonnes of cast blooms per year, currently under construction.The project is being executed under a contract agreement signed in 1979 withTiajpromexport of the former USSR (now Lengipromez of Russia)
Under the first phase of development, on-going for the past 20 years, the plant isexpected to produce bars, and light medium sections. Many of the facilities of the
plant have been completed with the exception of the coke ovens, blast furnace andBOF, which are still to be completed. Thus, at the moment, the plant has no liquidsteel making capability.
When completed, the product mix of the plant is expected to cover thefollowing:
Product Tonnes (per annum)I) Wire Rods (5.5mm - 12mm) 130,000
ii) Bars (16mm - 32mm) 200,000
iii) Light Section 200,000
iv) Medium Section 560,000
v) Billets (for sale to third parties) 95,000
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RAW MATERIALS PREPARATION AND COKE MAKING (contd)
Ajaokuta Steel Company Ltd. (contd.)
SINTER FEED The Itakpe Iron Ore Project can supply the Iron Ore Sinter feed requirement of the
Ajaokuta Steel Plant especially with the commissioning of the 52km railway linebetween Itakpe and Ajaokuta.
LIMESTONE The supply of Limestone from Jakura to Ajaokuta should also not be a problem if the
40km access road from Lokoja to the Jakura Hill is properly rehabilitated.
COKING COAL The major problem is the supply of Coking Coal to Ajaokuta. Coking Coal
has not been found in Nigeria in both quality and quantity. Thereforeabout 1.3 million tons of coking coal required per year for the Phase 1 of
Ajaokuta must be imported to produce Metallurgical grade Coke for theoperation of its Blast Furnace.
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RAW MATERIALS PREPARATION AND COKE MAKING (contd)
Ajaokuta Steel Company Ltd. (contd.)
COKING COAL REQUIREMENT
It is important to emphasize the three basic functions of MetallurgicalCoke in an Iron Blast Furnace:
Fuel to provide the heat for melting;
. Source of reducing agent and
The provision of a permeable support bed for the charge and
molten metal.
The implication of these functions is that the amount of metallurgical cokerequired for the operations of the Blast Furnace is not dependent on thecapacity utilization for iron ore sinter feed for the production of molten pigiron. Therefore, it may reasonably be seen that whether the furnace
operates at 10%, 30%, 60% or 100% capacity utilization, the amount ofmetallurgical coke required may be about the same for all practicalpurposes. As a matter of fact the coke rate, which is the amount ofMetallurgical Coke that is consumed per ton of liquid iron produced is adesign parameter for the blast furnace. To do otherwise is to expectinstability in the process metallurgy that takes place in the Blast Furnace.
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RAW MATERIALS PREPARATION AND COKE MAKING (contd)
Ajaokuta Steel Company Ltd. (contd.)
COKING COAL REQUIREMENT (contd.) Also, it is important to note that coking coal blends of between 3 and 4 sources are
usually combined after satisfactory pilot plant carbonization and other tests for feedin the coke oven battery to produce metallurgical coke. The storage life of cokingcoal is also very short with deterioration in properties common within four months ofstorage. On the other hand, availability of coke-oven product of metallurgical coke is
very scarce in the world market. Thus, Nigeria needs a supplier that will guaranteethe regular availability of quality Coking Coal in a long-term contract (1015 years).
Furthermore, both the Coke Oven Plant and the Iron Blast Furnace require continuousoperations (24 hours per day) for at least five (5) years (i.e. one campaign Life of theFurnace). Any shut down within this period (as a result of unsustainable production)will result in the destruction of the two facilities. The overall consequence will be an
enormous financial loss to the Nigerian government with the attendant set back in theIron and Steel development in Ajaokuta.
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RAW MATERIALS PREPARATION AND COKE MAKING (contd)Ajaokuta Steel Company Ltd. (contd.)COKING COAL REQUIREMENT (contd.)
More importantly is the capacity of the Nigerian Government to sustain the provision of thenecessary foreign exchange (every year for at least five years) to import the coking coal. Assumingthat the Federal Government of Nigeria is able to identify two or more sources for the long term (10 15 years) supply of coking coal, Table 2-2 shows the sensitivity of the financial outlay for importingcoking coal (alone) to the exchange rate of the Naira to the U.S. dollar.
Exchange Rate of
Naira to U.S. Dollar
($)
0.60 1.0 5.0 50.0 100.0 120.0 130.0
Annual Cost of importingCoking Coal for Ajaokuta
(N billion)
0.117 0.195 0.975 9.750 19.500 23.400 25.350
Thus, for Nigeria to import coking coal alone for a landing cost at Ajaokuta of about U.S.$150/ton the
country requires 23.400 billion Naira (at U.S.$1 = N 120.00) per year and for five (5) years, this amount
is N 117.00 billion. This amount must be guaranteed by the Nigerian Government as part of the
working capital of the plant( in foreign exchange) in order to have sustainable production of steel at
Ajaokuta (in one campaign life of the blast furnace).
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Economic Viability of Ajaokuta in the 21st Century
In 1976 when the Naira was exchanged for about U.S.$1.7, the operatingcost of the furnace that required an annual capital outlay of about N0.117billion for Coking coal alone was considered economically justifiable.This was also true as of 1988 when the exchange rate was about N10 (tenNaira) to the dollar. One is not sure that the same assumption of economicviability is valid in the year 2008 with the exchange rate of about N 120.00to the U.S. dollar.
This is why it is imperative for the completion of the Ajaokuta Phase I
project to clarify through an independent study by reputable professionals(both local and international) the following issues:
- the Cost-Benefit Analysis of the Technology Choice of replacing theBlast Furnace process with the Direct Reduction Process or similarprocess that will utilize the locally available raw materials (e.g. limestoneand iron ore) and fuel (e.g. coal, gas and electric power). It should benoted that gas is already available at Ajaokuta and the iron ore at Itakpe is
nearer Ajaokuta than Warri. - identification and evaluation of the sources for the long-term (15 to 20
years) supply of high grade Coking coal and the commitment by theFederal Government of Nigeria to enter into a long term contract for thesupply of same to Ajaokuta.
- the current state of the Market structure for the demand and the supplyof iron and steel products (both long and flat) in both domestic and
international markets.
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Steel Industry Related Infrastructure andGovernment Policy Issues
Infrastructure/Utilities Supply
Adequate and efficient infrastructure facilities and the supply of reliable
utilities are mandatory requirements before the steel industry in Nigeriacan attain its full potential in the production of competitive iron and steelproducts for both domestic and international markets.
On the basis of the nominal production at each steel plant, the followingquantities of materials (shown below) are expected to be transported toand from each plant:
Tonnes/year Tonnes/year
PLANT TO FROM
AJAOKUTA 4,960,000 2,000,000
DELTA STEEL 2,220,000 975,000
JOS 230,000 210,000
KATSINA 230,000 210,000
OSOGBO 230,000 210,000
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Road Networks
Current Status and Concerns In general, Nigeria has a reasonably good network of roads linking the
major towns and cities. However, transportation of bulk steel-relatedmaterials by road may do damage to the roads and may not be the most
efficient manner of moving the goods. For example, transporting 690,000tonnes of billets per year by road from DSC to the Inland Rolling Millsrequires a trailer to leave DSC every eleven (11) minutes around the clock.
Of particular concern is the access road to the sites for some of the majormineral deposits that are required in the steel industry. The following
access roads and concerns need to be given attention:- Access Road to Jakura Limestone Deposit in Kogi state (45 km)
- Link Road from Osara Dolomite Deposit in Kogi state to Itakpe rail line(10km)
- Access Road to Onibode refractory clay deposit in Ogun state (20km)
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Rail Transportation
Itakpe Ajaokuta Warri Rail Link The status of the Itakpe-Ajaokuta-Warri standard gauge rail link may be
summarized as follow:
- The 51km Itakpe Ajaokuta iron ore transfer rail line has beencompleted by Julius Berger, the contractor.
- The contract for the 270km Ajaokuta Warri rail line is underimplementation. The line is expected to be extended to Warri port.
Concerns
- The specifications and the completion time for the Terminus facilitieswithin the DSC plant.
- The specifications and the completion time for the supply of therolling stock.
- The connection and extension of the Itakpe
Ajaokuta
Warri railline to the narrow gauge railway track of the Nigerian RailwayCorporation (NRC). For example:
the Ajaokuta to Oturkpo (Benue State) extension (~202km)
the Itakpe to Baro (Niger State) extension (~115km)
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Power and Utilities
Current Status
The provision of adequate and dependable supply of quality electric powerand other sources of energy (e.g., gas and coke) is an important parameterin the operation and competitiveness of any steel plant. Furthermore, theavailability of low cost reliable power is necessary for the development ofthe downstream industries and the economy in general.
The current combined electric power demand of the public sector steel plants(excluding Ajaokuta) is about 380MVA. Commissioning of the Ajaokuta plant isexpected to add another 250MVA to the demand.
The following captive power plants exist in some of the steel plants:
- 2x55MW (110MW) at Ajaokuta Steel Plant
- 5.1MVA emergency power generator at Jos Steel Rolling Mill - 27MW plant at the Katsina Steel Rolling Company
- 16MVA (4x4MVA) and 8x1.2MVA emergency power generators atDSC
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Power and Utilities(contd.)
Current Status
The PHCN currently supplies electric power to the Steel Plants through thefollowing transmission grid system:
- Two (2) 330KV lines feeding the Delta Steel Company, each from theDelta Power Station (at Ughelli) and the Sapele Power Station.
- One (1) 132KV line feeding Ajaokuta from Benin 330 KV line
- Itakpe is connected to the 132 KV Itakpe/Ajaokuta transmission line
The Delta Steel Company has two (2) electric arc furnaces (each 110 tonne
capacity and each consuming about 40MW).
There is supply of natural gas to both the DSC and the Ajaokuta Steel
Plants.
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Power and Utilities(contd.)
Concerns
Although PHCN may be able to meet the electric power demand ofthe steel plants, we think that the reliability of supply still needs tobe improved upon. For example, frequency fluctuation on theNational grid can damage sensitive electrical control systems inthe plant .At the time of visiting with a PHCN official the frequencymeter on his table was reading 51.08Hz. This is outside thepermissible fluctuation range for a number of electrical controlsystems in a steel plant ( i.e. frequency, 1.5%; voltage, 10% )
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Thank you all
for your attention!!!