According to Mr. Hussein Nourelddine the General Controller of Standard Metallurgical Company limited, he revealed the circumstances behind the sale of SMC Steel Plant Assets to KAM Steel Integrated Company Limited.
We are aware that Kam Steel Integrated limited acquired the Steel plant assets owned by Standard Metallurgical Company, (SMC), what is your opinion 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 was partly financed by banks at very high interest rates. That is why we sold the it. The deal comes first for the benefit of Nigerian steel industry. This steel has a capacity of 260,000T per Annum. This means that it will contribute a good share for Nigeria steel industry. This is done to a high extent via Nigerian workforces and from the resources available in Nigeria. The iron scrap industry is growing and it is giving place of work for thousands of workers as well as thousands of families. The Energy is also from Nigeria and constitute a good portion of the production cost. Remain some raw material of Ferro Alloys which is imported from India and China and Russia.
What about the value of the deal?
In fact, it is pertinent to correct the news that spread in the media. The plant was sold far below the value that was reported in the media. The proceeds were directly been paid to the bank that financed the project to cover part of the debt in Nigeria, which accumulated and were inherited from the former Management due to high interest rates.
After having sold the steel plant to Kam Steel, how do you see the future of the market of steel in Nigeria?
This deal shall change the rules in the market. This plant is being expected since 2010. It was projected to produce in 2018, but some financial challenges prevented a full utilization. Our plan was to sell the steel plant to an experienced industrial to guarantee the future operation, now with KAM Steel having the financial means and the technical capabilities that came on board and was able to close. We think that a change in the rules of the market are set again. Competition will be always exist, but this time, it will be focused on high standard long product steel and on the exportation to the ECOWAS region. You are aware that Nigeria has to add to its foreign reserves, and exporting is the main source of foreign currencies. This plant will give hand to this process of acquiring foreign currencies.
What about job opportunities?
This steel plant itself can accommodate over 200 people across the 36 states of the federation will be engaged in scrap collection, scrap treatment and handling require dense workforce to mert up with the company’s need.
Moreover, the production cycle is in need for 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, meaning the solid management and the market strategy.
What is the role of the government in supporting this sector?
The main thing to do is the limitation of the imported steel. This gives room for local production to get stronger. Second is to organize the scrap industry, there is big potential for this 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 steel industry.