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remanufacturing could be the solution

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Nigeria has pumped greater than US$8 billion into Ajaokuta Metal Firm, a challenge which started greater than 40 years in the past however has but to provide one tonne of metal.

A number of makes an attempt have been made to convey the plant into manufacturing, however with out success. It was constructed to 98% capability by the Soviet Union’s Tyazpromoexport. However the lack of a rail line across the plant, and modifications in political and operational administration over time, stymied completion.

Bilateral discussions in 2019 raised the opportunity of Russian funding to resuscitate the metal plant, however the COVID-19 pandemic and the Russia-Ukraine disaster might have stalled any unofficial agreements.

One other drawback for the plant is that a few of its put in gear might have been corroded and degraded by now.

Metal corrodes shortly in acidic environments. Shopper-grade metal and different iron-rich metals can develop iron oxide (or rust) after simply 4 or 5 days of publicity. Corrosion of elements has been reported by a crew of Nigerian and Ukrainian specialists auditing the plant.

Nonetheless, the Nigerian federal authorities is now having one more go. It is searching for a core investor that may get it working profitably on a concession foundation.

The price of revamping the metal firm was put at $1.4 billion in 2020.

As an alternative of concessioning, we suggest remanufacturing as a manner of rescuing the plant. Remanufacturing
is an industrial course of whereby used or damaged down merchandise or elements are restored to helpful life.

Based mostly on our analysis, we argue that remanufacturing’s financial, social and environmental benefits would clear up the Ajaokuta Metal Firm Restricted drawback, make it aggressive, meet modern calls for of sustainable manufacturing and get it operational.

Nigerian demand for metal

Ajaokuta Metal was conceived in 1958 to satisfy Nigeria’s metal demand and launch Nigeria’s and West Africa’s manufacturing sector. The concept of a large-scale nationwide metal manufacturing plant was based mostly on the argument that no nation may discuss energy standing or the defence of nationwide pursuits with out its personal metal trade.

Nigeria had a quick rising inhabitants, with rising demand for manufactured items. A lot of manufacturing industries sprang up within the Nineteen Sixties and the Seventies. Native demand for metal merchandise was about 3.5 million tonnes a yr between 1985 and 1995, the majority of which may solely be met by means of imports.

The manufacturing trade grew from 9% in 1985 to 19% in 1995, encouraging authorities’s industrialisation drive.

Challenges of concessioning

As to how you can meet that demand, a concessioning settlement for a metal plant presents some key challenges.

Though the concession might put the metal plant into the palms of a reliable investor, it is just for 10 years. Then authorized challenges might come up. The newest operator, an Indian firm referred to as International Metal Holdings Restricted, had its 10-year concession settlement revoked by the Nigerian authorities and the matter led to an out-of-court settlement in 2016.

A concession settlement with overseas operators can’t assure the involvement of native human assets, which Nigeria’s manufacturing desperately wants.

Remanufacturing inputs

A significant problem of reviving the Ajaokuta Metal plant is that a lot of its gear is in a broken-down state.

We argue that remanufacturing may restore the gear and get it working. It may additionally develop the native capability for remanufacturing amongst Nigerians.

Remanufacturing is an industrial technique of steps that make make a used product nearly as good as new. It’s a key round economic system technique.

Damaged-down elements are known as “cores”. They’re handed by means of various standardised remanufacturing operations – inspection, sorting, disassembly, half reprocessing or refurbishment, reassembly and testing – to make sure they meet product requirements.

The ensuing output is a product which meets or exceeds the standard and efficiency requirements of a newly manufactured product.

Research counsel that remanufacturing can save as much as 50% of the price of a newly manufactured product, 60% of the power, 70% of the fabric and 80% of the air pollutant emissions.

Remanufacturing is labour intensive, so it will possibly assist new jobs and different jobs within the provide chain, reminiscent of transporting cores from the unique producers or disposal web site to the remanufacturer’s web site.

The UN Environmental Programme has studied how remanufacturing can retain worth, discovering that it will possibly cut back new materials necessities by between 80% and 98% and improve expert labour hours by as much as 120%.

Nigeria does interact in some remanufacturing, for instance remanufacturing of medical units, however it’s largely unorganised and pushed by small, impartial operators.

What makes remanufacturing superb for Ajaokuta

For remanufacturing to occur, cores have to be out there. It have to be doable to disassemble the cores. And there have to be labour and entry to prospects.

We’ve assessed the problem with the Ajaokuta Metal Firm Restricted and concluded that the boundaries to remanufacturing might be overcome.

First, the broken-down elements within the metal facility type the remanufacturing cores.

Most of those mechanical elements (gearboxes, conveyor belts, cranes, blast furnace) might be disassembled and remanufactured.

The metal plant would function the unique gear producer (and buyer) and a provide route may very well be created utilizing the highway networks round Ajaokuta, the place the plant is positioned. A long run transport system ought to embody a rail line to allow entry to coal websites, as an example.

Nigeria has a younger inhabitants which may present the unskilled and expert labour for remanufacturing.

Tips on how to revive the metal plant

For efficient engineering administration, we suggest that Tyazpromoexport, the Russian firm that first put in the Ajaokuta Metal plant, ought to work with Nigerian engineers to remanufacture the plant. The identical firm has efficiently put in metal vegetation in Egypt, Algeria, Pakistan and India.

We suggest the next broad steps:

  • audit and assess worn-out and broken-down elements
  • decide what might be remanufactured and at what value
  • assess supporting stakeholders: impartial remanufacturers, native routes, uncooked supplies, services and labour
  • remanufacture recognized elements
  • procure elements that may’t be remanufactured
  • set up remanufactured and newly procured elements.

We perceive that Ajaokuta Metal Firm Restricted faces different challenges. They embody the politicisation of the metal challenge, the Russia and Ukraine disaster and the ensuing geopolitical fall-out.

Nonetheless, with over $8 billion already invested, zero manufacturing and the corroding of the ability, there’s a have to urgently revive the metal complicated.

Remanufacturing presents a wonderful alternative to resuscitate it in a inexperienced, environment friendly and sustainable method.

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