ALSCON: Hope rising

Nigeria’s Vice President Kashim Shettima, in the Russia-Africa Economic and Humanitarian Forum in St. Petersburg, Russia, said Nigeria will revive the $3.2 billion Aluminium Smelter Company of Nigeria, ALSCON, in Ikot Abasi, southern Nigeria.

He was speaking on 27 July, 2023 after taking off time to meet with the Russian core investor to ALSCON, UC RUSAL in Moscow.

The Aluminium Smelting Company of Nigeria, ALSCON, was incorporated in 1989. The Federal Government of Nigeria owned 70% of the shares, Ferrostaal of Germany 20% and Reynolds Incorporated of America 10%.

The maximum capacity of the plant is 197,000 metric tonnes of aluminium ingots a year. By 1997, aluminium was selling at about $3,000 a tonne.

Nigerian government interest was under the Ministry of Industry but in 1991 was transferred to the Ministry of Mines, Power and Steel.

Production started on 15 October, 1997 but stopped on 6 June, 1999.

In September, 2002 the Bureau of Public Enterprises, BPE, under the Privatization and Commercialization Act of 1999, advertised for Expression of Interest to sell government shares in ALSCON. Ferrostaal and Reynolds gave up part of their shares and retained just a combined total of 7.5%.

ALCOA Incorporated of America, Glencore AG of Switzerland, UC Rusal of Russia, ALCAN of Canada and Ferrostaal AG of Germany expressed interest. However, only UC Rusal submitted full Technical and Financial bids and the process was suspended and re-stated in 2004.

An international company owned by a Nigerian, Dr Reuben Jaja, Bancorp Financial Investment Group and a Russian company, UC RUSAL, met the requirements.

ALSCON assets declined to $1.1 billion in 2006 and to less than $89 million in 2011.

BFI Group made a bid of $410 million dollars and UC Rusal $250 million.

BFI Group was the winner and should pay 10% of the bid price by July 8, 2004 but was said to fail to do so.

Under the willing buyer, willing seller policy, UC Rusal was chosen by the National Council on Privatization headed by Vice President Atiku Abubakar.

In September, 2004 BFIG went to Federal High Court, Abuja, lost and appealed and again lost. It however, went to the Supreme Court and won on July 6, 2012.

Meanwhile, UC RUSAL started production in February, 2008. It now owns 77.5% of the shares, Ferrostaal AG of Germany; 7.5%, and Nigerian government; 15%.

BFIG was given a deadline of March 18, 2013 by BPE to pay 10% of the bid price but failed and BPE declared UC RUSAL core investor in ALSCON again. Part of the document from BPE to BFIG read “Aluminium Shelter Company of Nigeria” instead of ‘Aluminium Smelter Company of Nigeria.”

BFI Group went to a Federal High Court asking for 2.8 billion naira in damages and that BPE obey the judgement of the Supreme Court. It won and the court asked BPE to comply with the Supreme Court judgement on 17 December, 2019. The BPE appealed the ruling which is still pending.

Meanwhile, UC RUSAL sued Nigerian government at the London Court of International Arbitration, LCIA, for breach of contract.

In August, 2017 the National Council on Privatization approved an amicable resolution for all parties and the BPE gave BCIG another deadline till 3 October, 2017 but it again failed to meet the conditions.

President Muhammadu Buhari approved, on the advice of the National Council on Privatisation and BPE, that UC Rusal be named the core investor of ALSCON.

However, the Company retrenched 98% of its staff in the crisis and is to pay terminal benefits of N2.3 billion to the affected staff. By 9 August, 2021 a leader of the retrenched staff, Hope Wilfred, said 35 of 850 of them have died from neglect as they are yet to be paid.

A total of $120 million from the $250 million from its bid price is for the dredging of Imo River to evacuate its aluminium products from Ikot Abasi for export.The Imo River is yet to be dredged.

The bed of the river has oil pipelines which have to be removed and replaced after dredging. This involves another ministry, the Ministry of Petroleum Resources, as it is outside the purview of the Ministry of Power and Steel.

ALSCON has two gas-fired plants for electricity generation for 180 mw. Only one plant is needed, the other is a redundancy. Electricity is vital to power the smelting or else the molten aluminium will congeal prematurely and block the system. The plant has space for four more power plants.

Gas supply to power the plants is by the Nigerian Gas Company through a pipeline it built in 1997. The supply became and the plant was shut in 2014.

The Federal government promised to connect the plant to the national grid but electricity supply in Nigeria is epileptic, to say the least.

ALSCON will now hope for uninterrupted gas supply to the plant and dredging of Imo River after the court cases and with the renewed pledge of the Federal Government of Nigeria.