Hong Kong's WEMPCO to Invest $750 Million in Nigerian Steel Mill

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Researched by Industrial Info Resources (Sugar Land, Texas)--Western Metal Products Company Limited (WEMPCO) (Hong Kong) has announced plans to invest $750 million in a new steel mill being set up in Ibafon, Nigeria. Construction of the 750,000-ton-per-year flat sheet steel mill started three years ago and is scheduled to begin operation by the third quarter of 2009. The project site is spread over 359 hectares and the steel mill is set to become the largest in sub-Saharan Africa outside of South Africa. While products obtained from the first phase of the project will be marketed locally, the second and third phases will target the West Coast and the rest of Africa. China may also be selected as a possible market.

Director Robert Tung said the company is investing in the project to boost the steel industry as well as Nigeria's economy. The country cannot afford to continue importing products that can be sourced locally. The company is sourcing some of the raw materials required to construct the facility from local sources. The effort to use local materials has also been integrated into WEMPCO's 1.5 million-square-meter-per-year ceramic tile project being set up at the same site. About 95% of the raw materials to be used in the ceramic tile project will be sourced locally while the steel mill will initially import some materials but gradually source them locally. The ceramic tile project is scheduled to start production in the first quarter of 2009.

WEMPCO Chairman Alhaji Tokunbo Alli has said that the company had already begun efforts to reduce the quantity of imported hot- and cold-rolled steel coils by a quarter. The move was chiefly to dispel the fears of other manufacturers who felt threatened by the incentives granted to WEMPCO by Nigeria's government. WEMPCO's investment plan has been approved by the government, and it has granted the incentives in an effort to encourage the group and attract potential investors. The investment incentive has, however, not been approved by WEMPCO's business rivals who fear that the move will adversely affect their business. WEMPCO has assured the businesses that it will use as many local materials as possible and will import materials only for the project. The imported materials will not be sold in the market.

The Manufacturers Association of Nigeria (Lagos, Nigeria) has approved of the project as well as the import-duty waiver granted by the government to WEMPCO on the grounds that the significance of the facility for the nation's economy far outweighed the benefits the company has been granted by the government.

The oil-rich country is gearing itself up to become a steel-producing nation. The Nigerian government intends to employ the nation's young engineers in its steel industry to overcome the problem of insufficient manpower. The government is willing to take all necessary steps required to win back the trust of global investors into the steel industry. Other problem areas holding back the growth of the industry have been identified as the lack of sufficient geosciences data despite Nigeria having a long history of mining and operating small smelters, the lack of infrastructure, the lack of data on the iron and steel industry, the lack of entrepreneurial skills and the lack of funds.

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