Hussein Nourelddine, General Controller of Standard Metallurgical Company Limited, speaks on the sale of its steel plant assets to KAM Steel, an indigenous iron and steel products manufacturing company. Noureddine also urged the Federal Government to encourage patronage of local products in the industry.
KAM Steel recently acquired the steel plant assets of your company, Standard Metallurgical (SMC), can you speak on the deal?
This plant is one of the most advanced in West Africa, and the reason for the sale is that we had huge investments, which were partly financed by banks at very high-interest rates.
That is why we sold it. The deal comes first for the benefit of the Nigerian steel industry, which has a capacity of 260, 000 tonnes per annum. This means that it will contribute a good share for the Nigerian steel industry.
The iron scrap industry is growing and it is providing employment for thousands of workers and sources of survival of thousands of families too.
The energy is also sourced from Nigeria, which constitutes a good portion of the production cost, except that some raw material of ferrous alloys which are imported from India, China, and Russia.
What is the value of the deal?
It is pertinent to correct the news in the media. The plant was sold far below the value that was reported in the media and the proceeds were directly paid to the bank that financed the project to cover part of the debt in Nigeria, which accumulated and was inherited from the former management.
After having sold the steel plant to KAM Steel, how do you see the future of the steel industry in Nigeria
This deal would change the rules in the market. This plant was expected to roll out production since 2010. It was projected to produce in 2018, but some financial challenges prevented its full utilization.
Our plan was to sell the steel plant to an experienced industrialist to guarantee its future, so, with KAM Steel having the financial means and the technical capabilities that came on board, the deal became easy to strike.
We think that the market will witness progress again. The competition will always exist, but this time, it will be focused on high standards of steel products, which will witness exportation to the ECOWAS region.
You are aware that Nigeria is exploring all avenues to boost its foreign reserves, and exporting is the main source of achieving this.
“The main thing to do is to discourage imported steel. This will give room for the local industry to become stronger”
Hope they’ll be no job losses?
This steel plant itself can accommodate over 200 people across the 36 states of the federation that will be engaged in scrap collection, scrap treatment and handling require the dense workforce to meet up with the company’s need.
Moreover, the production cycle is in need of local workers to join the cycle in different aspects. This is including the operational activities and the labs, and the supply chain and the sale cycle, and the managerial and research and development activities.
It is a place that will grow if all the conditions are met, with solid management and the market strategy.
How do you want the government to support the sector?
The main thing to do is to discourage imported steel. This will give room for the local industry to become stronger. Second, is to organize the scrap industry, there is a big potential for the waste recycling process to grow more and more. The ultimate step is to go for exploitation of the iron ore reserves in Nigeria and the different metals involved in the steel industry.