非洲钢铁行业报告.pdf

6-8 March 2006 - Sheraton Hotel - Abu Dhabi - UAE Arab Iron and Steel Union General Holding Corporation International Symposium and ExhibitionInternational Symposium and ExhibitionInternational Symposium and ExhibitionInternational Symposium and Exhibition The African Iron And Steel Industry: Realities And Prospects By: Sanusi Al-Haji Mohamed Secretary General African Iron and Steel Association Nigeira Arab Steel Industry 2006 The African Iron And Steel Industry: Realities And Prospects INTRODUCTION The Iron and Steel Industry in Africa South of the Sahara is in virtual dormancy, except for South Africa. This is in spite of the fact that it is the basic foundation for industrial development of any country. Africa has 30% of the worlds mineral resources, which include all the raw materials required for the steel industry, which raises the prospects for the steel industry in the region. Africa produced 17.898 million tonnes in 2005 representing 1.6% of world production. Nigeria, which conceived the ambitious integrated Ajaokuta Steel Company, is yet to get it to completion. The Zimbabwean ZISCO, on the other hand has been retarded by the crossfire between the government of the country and western industrial intrigues. The North African industry is growing gradually however. The iron ore and other raw materials for steel making have been either sacrificed in favour of gold and diamond exploration on one hand or hampered by political instability as a result of armed conflicts, on the other, and in some cases by both. Today Africas contribution to the base metals (copper, lead and zinc) is, in fact, less than 7%. The reality of the situation is the gross under utilization of Africas mineral resources. For the purpose of this presentation, I will concentrate on the realities and prospects of the steel industry in Africa South of the Sahara, as the Arab Iron and Steel Union (AISU) is better positioned to get the real situation in the North African sub-region, which include Egypt, Algeria, Libya, and Tunisia. AFRICAS STEEL SECTOR The Steel Industry in the African sub-region is still in a state of slumber. The industry is bedeviled by civil wars and strife as well as lack of political will on the side of the nations leadership. In countries like Nigeria and Zimbabwe, where substantial investment has been put, there is really nothing to write home about in relation to other parts of the world. When the industry in Nigeria and Zimbabwe is related to Africa south of the Sahara, however, these two countries could pride themselves for having acquired the sophisticated technologies for steel making in their integrated steel plants. Presently the Nigerian steel industry can best be described as stagnant if not retrogressing following what can rightfully be considered as premature privatization of the public steel companies that began in the turn of the century. Zimbabwean ZISCO, though operating for sometime after its resuscitation, has been recording losses and therefore needs to be turned around. The government considers ZISCO strategic to its economic wellbeing, as such it is looking for genuine partners to turn it around. An x-ray of the steel industry in the sub-region with a view to identifying the problems militating against successful industrial take off shows that apart from the problems stated THE AFRICAN IRON AND STEEL INDUSTRY: REALITIES AND PROSPECTS Arab Steel Industry 2006 2 above, external sabotage and internal factors have also been the major reasons for its stagnation. SOUTH AFRICA The performance of the South African steel industry, so far the most successful in Africa, can be attributed to the socio-cultural peculiarities of this 1st world country within a 3rd world nation. The massive European investment in the steel and other sectors has significantly improved the welfare of at least the white South African minority. The steel industry in the Country therefore was developed in line with events in the industry in Western Europe. It is to be noted that South Africa even out produces some of the developed countries in Europe and the Far East as far as steelproduction is concerned. Their total output in 2005 was 9.5 million tonnes of crude steel representing 55.50% of Africas production and is ranked 28th in the world steel producing companies. ISCOR is the largest South African steel producer. There are few re-rolling mills melting scraps and they contribute some 300,000 tonnes over and above the production of ISCOR. Many other finishing mills depend on ISCOR for their billets or flat sheets for their down stream process. South Africa exports steel to the USA and some other African countries. NIGERIA Nigeria has potential and prospect to be one of the major steel producers in Africa. Political instability and lack of political will has, however, rendered the steel industry impotent. The only considerable activity, mainly rolling, being carried out is within the private sector steel plants. The Ajaokuta Steel Company (ASCO) and Delta Steel Company (DSC) both fully integrated, are now concessioned and sold to Global Infrastructure Holdings Limited (GIHL) respectively, in the governments privatization policy. The only developed Iron Ore mine located at Itakpe has also been concessioned to the same GIHL. GIHL was in Nigeria as a holding company of Ispat Industries Limited (IIL), an Indian family business. It later came to light that IIL was never involved in the concession agreement neither were they involved in the outright purchase of the Nigerian Delta steel company. It is now becoming more clear that the company has no financial nor managerial capability to meet the conditions set out in the agreements. ASCOs first phase was designed to produce 1.3 million tonnes of liquid steel using the Blast Furnace/Basic Oxygen Technology, which is yet to be completed. Delta Steel Company on the other hand is designed to produce 1 million tonne of liquid steel using Midrex Direct Reduction Technology. Nigeria was able to complete and commission the DSC Project in January 1982 because it was a turn-key project financed by the World Bank loan of about US$750 million through a consortium of Austro-German companies. The Consortium handed over the plant to Nigeria after the successful completion and commissioning. That was the beginning of the crisis in the plant. Insufficient or none availability of working capital right from commissioning date never allowed the plant to produce beyond 25% of design capacity. The state of the plant right now is that the plant needs to be totally refurbished with a budget of about US$100 million. The Government, at one time entered into joint venture agreement with two companies (Voest Alpine of Austria and Osaka Steel of Nigeria), under a partial privatization program to refurbish and operate the plant. The THE AFRICAN IRON AND STEEL INDUSTRY: REALITIES AND PROSPECTS Arab Steel Industry 2006 3 intention here was that Government would eventually sell off the steel plant after the investors have recouped their investment. This arrangement however failed. There are three public inland rolling mills at Jos, Katsina and Oshogbo with annual capacities of 210,000 tonnes each. These are now liquidated. There are numerous private sector efforts in steel re-rolling of billets in the Country. These rolling and mini-mills have varying capacities between 20,000 and 100,000 tonnes. The combined effort of all these mills (about eighteen of them), have never really added more than 300,000 tonnes annually to the overall production capacity of the nation, due mainly to either operational inefficiency, the lack of operational working capital, poor infrastructural amenities, and inconsistent Government policies and inadequate incentives. ZIMBABWE The Zimbabwean Iron and Steel Company (ZISCO) is a 1.0 million tonne blast furnace/basic oxygen technology integrated steel plant. The company reached about 800,000 tonnes capacity after the rehabilitation of the plant by the Chinese and Germans but is now experiencing drop in production from 277,000 tonnes in 2000 to 135,000tonnes in 2005. The drop in steel production has proportionately affected iron ore mining and benefication by Buchwa Iron Ore Mining Company (BIMCO), a subsidiary of ZISCO. Other areas of steel activities in Zimbabwe include re-rolling mini-mills like the 50,000 tonnes wire-rod mill at Kwekwe, and the 7,000 tonnes seamless tube plant (Tor Steel), and factories for steel components manufacturing. REPUBLIC OF CONGO The Congo Iron Ore Company was initiated as a step towards setting up an integrated steel plant in 1983, but construction was suspended in January, 1986 due to financial difficulties and other compelling problems that bedeviled the project. It was started as a limited liability company with 80% Congolese ownership and BASCOTECNIA, a Spanish firm retaining 20%. The project design included rail, road, and marine port infrastructure. It also has a high tension electricity line of 35 KVA required for the realization of the different phases of the project. Already the country is linked by air transport. The Republic of Congo has high grade iron ore deposits located at Zanaga (562 million tones) and Mayoko (27 million tones) containing 65% and 56-65% Fe respectively. Other deposits are located at Nabemba and Avima containing 62-69% Fe though the reserves are yet to be quantified. The Republic of Congo, a co-founder of AISA, is looking for a potential investor to associate with in turning around Congo Iron Ore Company (FERCO). The Government is ready to take minority share holding of the new company to be formed while the investor takes the majority. Interested potential investor can contact the AFRICAN IRON AND STEEL ASSOCIATION at the address provided at the bottom of this presentation. THE AFRICAN IRON AND STEEL INDUSTRY: REALITIES AND PROSPECTS Arab Steel Industry 2006 4 OTHER COUNTRIES WITH IRON AND STEEL ACTIVITY INCLUDE: (i) Ethiopia - Foundry and Machine Shop (64,000 tonnes) (ii) Kenya - Re-rolling mills, and machine shop at locations like Nairobi, Dandora, Runi, Kikuyu, Mombassa. Cumulative total capacity about 300,000 tonnes. (iii) Ghana - Scrap smelting, re-rolling machine shop. Total rolling capacity about 80,000 tonnes. (iv) Mauritania - Iron ore production and export. They export about 12 million tonnes annually. They also have a 5,000 tonnes re-rolling facility. (v) Mozambique- Coking coal production, iron ore production and exportation. (vi) Zaire - Re-rolling project initiated by some private sector entrepreneur. Capacity already in place (100,000 tonnes) Maluku. (vii) Angola - Raw materials and gas yet to be fully exploited Re-rolling capacity 50,000 tonnes. Re-rolling facilities 75,000 tonnes. Other countries with mainly re-rolling activities include: Mozambique - 80,000 tonnes Uganda - 40,000 tonnes U. R of Tanzania - 24,000 tonnes Mauritius - 75,000 “ Liberia - 20,000 “ Madagascar - 36,000 “ Togo - 32,000 “ Cameron - 40,000 “ 2.0 PROSPECTS OF AFRICAN STEEL INDUSTRY The prospects and potential for development of Iron and Steel Industry in African countries can be better appreciated by analyzing their existing natural resources including iron ore reserves, fuel reductions, energy, water, alloying elements and market potentials. THE AFRICAN IRON AND STEEL INDUSTRY: REALITIES AND PROSPECTS Arab Steel Industry 2006 5 2.1. NATIONAL RESOURCES The African continent has a very large reserve of iron ore, manganese ore, chromite, cobalt and nickel ores, as well as substantial reserve of coal, natural gas and oil, together with extensive water resources and hydropower potential for electricity production as well as availability of fluxes, clays and refractory. With a total population of over 1 billion in the continent, the market potential is readily assured. 2.2 IRON ORE Africa (excluding South Africa) has Iron Ore reserve estimated at over 34 billion tones (about 15% of the world total), with 11 countries having reserves greater than one billion tones. The Ore is distributed with 20.4 per cent in Northern Africa, 40 per cent in Western Africa, 24.5 per cent in Central Africa and 15.1% in Eastern and Southern Africa, TABLE I. The largest proven reserves occur in the following countries; - Kilomoto hematite deposit in Democratic Republic of Congo (5 billion) tones. - Manesi range low-grade deposits in Zimbabwe (3.3 billion tones) - Gora Djebilet deposit in Algeria (3.025 billion tones) Other large deposits occur in Angola, Cote dIvoire, Liberia, Libyan Arab Jamahiriya, Mauritania, Sierra Leone and Nigeria. The huge deposits remain unexploited in most of the African countries. Thus only Algeria, Egypt, Mauritania, Morocco, Nigeria, Tunisia and Zimbabwe rank among the world iron ore producers. Nigerias production is however, nose diving, almost grinding to a halt. African iron ore resources remain largely undeveloped owing to such constraints as non- availability of the necessary investment resources from both domestic and International sources. The general uncertainties of the world Iron Ore market, the relative inaccessibility of most of the reserves (necessitating large investment in transportation and other infrastructures) and civil and political strives that hamper their development. Liberia (before devastation by years of war), Mauritania and Algeria are the only African exporters of Iron Ore. Egypt, Morocco, Nigeria, Tunisia and Zimbabwe produce for their domestic steel plants only. 2.3 STEEL ALLOYING ELEMENTS There are abundant alloying elements in the African sub-region which include:- - Chromite reserves, about 95 per cent of world total. Most of its production comes from Zimbabwe with proven reserve of over 500 million tones. Other significant reserves occur in Madagascar and Sudan. - Africas share of the world cobalt reserve is about 33% with Democratic Republic of Congo (DRC) and Zambia accounting for 75% and 20% respectively of the region reserves. Other reserves occur in Zimbabwe, Botswana, Uganda (near Kelembe). - African countries have about 78% of the world known reserve of manganese most of which is exploited in Gabon (26% of world reserves) and Ghana. Significant reserves in Burkina Faso, DRC, Angola, Cote dIvoire and Togo are still undeveloped. THE AFRICAN IRON AND STEEL INDUSTRY: REALITIES AND PROSPECTS Arab Steel Industry 2006 6 - Nickel reserve in Africa amount to 10% of worlds total mainly in Burundi, Botswana, Ethiopia and Zimbabwe (which is the largest producer). Other alloying elements in Africa are tungsten (DRC and Zimbabwe), Niobium and tantalum DRC, Mozambique, Zimbabwe and Nigeria). Only limited quantity of alloying elements is at present being used in a few African countries (Algeria, Egypt, Nigeria and Zimbabwe) for producing special grade and alloy steels. Ferro alloy production so far exists only in Zimbabwe and Egypt. 2.4 COAL The bulk of African coal reserves occur in Eastern and Southern Africa. Zimbabwe, Botswana, and Mozambique are endowed with the most extensive deposits (85% of the continent total). Only 18 countries have coal deposits and of these only Zimbabwe, Swaziland,Egypt and Algeria have coking coal that can be used in blast furnaces. Coal is produced in the following countries:- - Eastern and Southern Africa Zimbabwe, Zambia, Swaziland, Tanzania, Malawi and South Africa. - North Africa Algeria, Egypt and Morocco - West Africa Nigeria and Niger - Central Africa Democratic Republic of Congo. However, only Algeria, Egypt and Zimbabwe are using local coal for coke production and Iron making on a large scale. 2.5 NATURAL GAS The largest natural gas reserves are in Algeria, Egypt, Libya and Nigeria (88% of the whole of Africas total). Algeria is a major world producer and exporter of natural gas. This natural gas endowment has formed the basis for the establishment of Midrex direct reduction plants in the following countries:- - Egypt Alexandra Iron and Steel Company, El-Dikhela Installed Capacity 840,000 tonnes/year. They now produce about 1 million tones. - Libyan Arab Jamahiriya Executive Board of Iron and Steel Co. (EBISCO) Misurata, capacity 1.1 million tones/year. Libya is now expanding her steel production capacity to about 4 million tones per annum. - Nigeria Delta Steel Company, Ovwian-Aladja capacity 1.03 million tones/year. 2.6 HYDRO-RESOURCES All African countries except Algeria, Libya, Botswana, Chad and Togo have significant exploitable hydro-resources for electricity production as well as water resources for industrial usage. Africas technically exploitable hydro-potential is estimated to be over 360 GW. (more than 16 per cent of the world total), with the Democratic Republic of Congo river potential alone been greater than 100 GW (of this, less than 5 per cent has been exploited). The main electricity producers are Algeria, Egypt, Libya, Morocco, Nigeria, Zambia and Zimbabwe. THE AFRICAN IRON AND STEEL INDUSTRY: REALITIES AND PROSPECTS Arab Steel Industry 2006 7 With the above presentation, Africas position can be summed up to have viable environment for investment in the iron and steel sector. Africa is waiting with open hands to welcome any potential investor to participate in the development of the continent and also to develop the investors businesses.The African Iron and Steel Association whose contact address is given below is ready and willing to welcome and guide you to these opportunities. Alhamdu lilLah. Dr Sanusi Alhaji Mohammed (FNMS) EXECUTIVE SECRETARY