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Following the cancellation of a contract to rebuild the nation’s steel facilities, the federal government yesterday announced that it has agreed to pay $496 million to resolve a multi-billion dollar lawsuit from Global Steel Holdings Limited. The number was made public in a report by Mining.com, an online news source specializing on the world’s mining and metals sector. According to the Mining.com article, Mr. Abubakar Malami, Attorney General of the Federation and Minister of Justice, reaffirmed the federal government’s commitment to paying the claims. The federal government has renegotiated a concession deal with Global Steel Holdings Limited for the Nigerian Iron Ore Mining Company (NIOMCO), Itakpe, following a protracted disagreement.
The agreement had taken place after years of mediation and there had been hopes that Nigeria would begin to produce steel. But that never materialised.
The negotiations for amicable resolution of the Ajaokuta crisis had dragged on since 2008, leaving the country’s steel and industrial sectors largely in comatose.
But the news medium quoted Malami, who it said led the negotiations, as having said that the government had managed to get a 91 per cent cut on the original claims of $5.258 billion.
“I pay tribute to President (Muhammadu) Buhari for his dedication to resolving this problem and wrestling back a crown jewel of our national industrialisation plans rather than leaving the endeavour to the future administration to deal with,” he was quoted as saying.
Global Steel Holdings Limited, an Indian company, won the concession of the Ajaokuta steel mill for 10 years, but the agreement was revoked when the federal government accused the firm of asset stripping, a development that led to a court case between the two parties.
To refix the matter, NIOMCO was reportedly ceded to the GSHL for the remaining timeframe of the concession in line with an agreement reached during mediation talks.
Global Steel, which is linked to India’s Mittal family, had between 2004 and 2007 acquired rights to Nigeria’s entire state steel industry via five major concessions and distribute purchase contracts.
Although the federal government allegedly invested over $10 billion to start milling, it is said that Nigeria has been wasting billions of dollars in income and employment prospects for the previous 35 years on the project. The project, which was reportedly 98% complete as of 1994, has the potential to employ 10,000 technical employees directly and 500,000 unskilled workers indirectly upstream and downstream. The steel factory was developed with the ability to increase its output to 2.6 million tons of flat iron and steel products in its second phase, and it was initially intended to generate 1.3 million tons of liquid steel annually.
The plan for phase three was to produce 5.2 million tons of various types of steel products, including heavy plates and has the capacity to become a major catalyst for the production of industrial machinery, auto-electrical spare parts, shipbuilding, railways and carriages.