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Published On: Wed, Dec 4th, 2019

Alscon: An economic hub and multi-money spinner now lying fallow

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By Musa Ilallah

Narration of the marathon journey of the setting up of the Aluminium Smelter Company, ALSCON in Nigeria cannot be complete without tracing its roots to the elected government of President Shehu Aliyu Shagari of the National Party of Nigeria, NPN when it initiated talks with various interested bodies. The government commissioned Messrs. W. S. Atkins, a British firm to carry out a feasibility study on the project. With the change in government in 1983, discussions on the project were kept in abeyance until 1986 when the project was resuscitated by the Administration of General Ibrahim Babangida. Thereafter, Ferrostaal AG of Germany, in conjunction with Reynolds International of the United States of America, submitted a joint proposal to the Federal Government for the establishment of an integrated 180,000-tonne per annum smelter plant. In response, the Government set up an Inter-Ministerial Committee under the supervision of the Federal Ministry of Industries to process the proposal.
A consortium of consultants comprising M+F Engineering Consultants, a Zurich-based aluminium consulting firm, FINCO Engineers and Phoenix Investment Services both Nigerian companies, were engaged to assist the Inter-Ministerial Committee. The Government also appointed a four-man Presidential Task-Force to finalize the articulation of the project and submit recommendations to the Government. The Task-Force comprised Alhaji Abubakar Alhaji , Chairman; Malam Ibrahim Aliu, then Permanent Secretary, Federal Ministry of Industries; Aret Adams, then Group Managing Director, Nigerian National Petroleum Corporation and C. C. Okoye, then Director in the Ministry of Budget and Planning who later became ALSCON’s Deputy General Manager (Planning and Administration as members.
For the purpose of clarity, the Smelter is a joint venture project between the Federal Government of Nigeria and two foreign technical partners, Ferrostaal AG of Germany and Reynolds International Inc. of the United States of America with 70%, 20% and 10% holdings respectively. ALSCON was incorporated in 1989. Ferrostaal is the turnkey contractor while Reynolds, as the supplier of the technology will manage the plant from the start up until Nigerian management takes over. The Smelter is sited at Ibekwe community in Ikot Abasi town in Akwa Ibom state in the South- South region of Nigeria.
The special properties of aluminium, the smelting technology available and the readily availability of abundant natural gas reserves, reinforced the decision of the Federal Government to proceed with the establishment of the Ikot Abasi Smelter Plant. The Government, will by, operating the Smelter, utilize the nation’s abundant gas resources to generate energy for aluminium production and in turn, receive much needed foreign exchange by exporting a large portion of the ingots and billets. Indeed, the whole philosophy of the project is the exportation of gas in embodied form.
It is estimated that ALSCON plant when fully operational will utilise close to 1 billion cubic metres of gas annually.
Similarly, another important objective of the smelter is the supply of the basic raw materials, ingots and billets- to local aluminium rolling mills and extrusion plants. These raw materials are currently imported. It will also help Government conserve foreign exchange in addition to supporting expansion of aluminium rolling mills, extrusion plants and down-stream industries making finished products like aluminium kitchen utensils, roofing sheets, deep freezers, van bodies, wires and cables, and wrapping materials among others. Most importantly, the plant is intended to reduce waste in the petroleum industry by utilising the natural gas now being flared.
The Company was established in order to utilize and enhance the country’s gas reserves and further discourage gas flaring in the Niger Delta. Part of the objectives for setting up ALSCON include; to establish a self-reliant aluminum factory, provide employment to Nigerians, impact technical/develop trained technical manpower, conserve and earn foreign exchange by meeting local aluminum demands and to aid the development of aluminum downstream industries.
With the huge investment lying fallow, the Nigerian government listed ALSCON under the second phase of its privatization agenda and the ball was set rolling in 2002 with a request for investors to express interest.
Available records show that five companies expressed interest were ALCOA Inc of America, Glencore G of Switzerland, UC Rusal of Russia, ALCAN of Canada and Ferrosstaal of Germany submitted their technical and financial bids
Eventually, BFI Group emerged as the preferred bidder with a bid offer of $140 million following the disqualification of UC Russal. However, the winner was unable to pay the 10% before take over within the stipulated period prescribed by BPE. With this failure, UC Rusal won the equity and the plant was handed over to it.
BFIG went to court to challenge its disqualification and won its case which made BPE to provide a share purchase agreement, SPA to BFIG for execution. Again, it refused to execute the SPA and BPE terminated the agreement in March 2013 and UC Rusal was again reinstated. BFIG went to court again for the third time to challenge the BPE decision. This case is still pending in court.
As a result of the uncertainty of the situation, both Rusal and ALSCON have suffered grave damages having to maintain the plant and staff without being in operation. That resulted in staff retrenchment to minimize the losses.
Convinced that BFIG does not seem to have the technical and financial capacity to run ALSCON, the relevant ministry briefed the President on the development and steps taken so far to resolve the contending issues.
President Buhari, who had always been worried with how the impasse had negatively impacted the fortunes of the company and subsequently gave BPE approval to go ahead with the decision of the National Council on Privatization and Commercialization, NCPC which makes Rusal, the owner of the plant to resume production and reap the benefits for the country and the company.
During his recent visit to the Russian federation, President Buhari while discussing issues with his host, President Putin talked on the protracted issue of the Ikot-Abasi based Aluminum Smelter Company of Nigeria, President Buhari said that he had asked the Ministry of Justice, to submit a comprehensive report on the UC Rusal, the Russian owners of the plant matter. The President assured that the aim of our reforms is to ensure such investments are concluded and actualized in a professional and painless manner.
It is therefore my fervent prayer that the issues will be amicably resolved so that Nigeria and Nigerians will stand to benefit maximally from the potentials of setting up the smelter and the subsequent investment provided by Federal government of Nigeria. I have no doubt in my mind that President Muhammadu Buhari is committed to making the smelter work again for the political, financial, economic and social well being of Nigeria and its people.
So far, so good. President Buhari is doing very well on all fronts for the good of Nigeria and Nigerians. He and his government need our support and cooperation.

Ilallah wrote in from

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