Steel manufacturers are crying from the roof top for salvation, following announcement that the Ministry of Trade and Industries would be rushing back to parliament for a review of the law banning the exportation of ferrous scrap metal.
The action, according to persons close to the industry, will undermine future laws that parliament is going to pass, since legislations are passed based on the behaviour of people.
The Steel Manufacturers Association of Ghana (SMAG) is, therefore, asking for the legal ban on export of ferrous scrap metal to stand.
Addressing the press at Tema on Monday, Mr. M.J. Patel, chairman of SMAG, said that the industry is currently receiving a total monthly scrap supplies, averaging 25,000 tons, as against an average monthly ferrous scrap requirement of 85,000 tons, for full capacity operations of steel factories in Ghana.
As such the lifting of the ban will spell doom for the industry, rather than help it.
According to Patel “the steel mills wish to assure scrap dealers that the industry is positioned to purchase all good ferrous scraps, including high carbon and cast.
While the perennial complaint from the foundries of lack of cast iron supplies to them still rages on, equipment are being ordered by some of the steel mills to enable the processing of cast iron locally.
Mr. Patel told the newsmen that on-going expansions and diversification of product lines will depend on continued and sustained availability of ferrous scrap.
Therefore, opening the window for export, no matter how narrow, will only serve to exacerbate the already scarce ferrous scrap supply situation.
With reference to pricing issues, Mr. Patel said the steel mills had always respected value for price and accordingly paid good price for high quality scrap as the practice the world over.
He noted that for steel manufacturers to continue paying competitive prices and provide the best market for the ferrous scrap to its suppliers, it was imperative that the quality of scrap purchased produces a clean and dense charge of their electric furnaces.
According to him, a dirty and contaminated scrap cannot be used to produce quality finished steel products at competitive prices. In Ghana, he continued, the steel factories shoulder the responsibility for cleaning and separation, among others.
Quality control is unknown to local scrap dealers. He further stated that despite the global economic downturn that has made international scrap prices take a little nose-dive.
The SMAG boss said: “for a country that is critically managing its scarce foreign exchange, we get seriously shortchanged when we allow scrap to be exported, hoping to rake in foreign exchange at around $350 per ton, if these amounts are repatriated.
In the process, the already low production capacity of steel manufacturers is further exacerbated.”
The advantages of the ban, he said, are invaluable to the economy, not only in conserving scarce foreign exchange, but especially to save the construction industry in view of recent incidents of collapsing buildings.
The SMAG boss added: “we humbly recommend that the ministry takes this matter up seriously.”
The scrap metal suppliers are accusing the steel manufacturing companies of not buying their goods, contrary to an agreement they reached before on 25th March, this year.
The suppliers are also blaming SMAG of issuing them with cheques, which could not be honoured on time, thereby, forcing them to feel the absence of the exporter. One of the three surviving local steel companies, Sentuo Steel Limited has acquired about 300,000 tons of steel scrap metals in the form of pipes from Equatorial Guinea.
Two new steel manufacturing plants have just been installed in the free zone enclave at Tema. They are Rider Steel, a Jordanian company owned with a capacity of 5,000 metric tons and United Steel Limited, a Lebanese owned company which has a capacity of 25,000 metric tons, and expected to employ about 500 workers.
This brings to seven, the number of local steel manufacturing companies with a total capacity of 70,000 metric tons.
The already existing local steel manufacturing companies are Sentuo, a Chinese-Ghana government entity, (74% and 26% respectively) 25,000 metric tons capacity, the premier steel company, Tema Steel Limited, 100% Indian ownership with a capacity of 4,500 metric tons, Ferro Fabrik, 100% Chinese owned company with 4,000 metric tons capacity, Special Steels Limited, 3,500 metric tons and Western Cast, 2,000 metric tons, the last two being hundred per cent Ghanaian owned.
The Ministry of Trade and Industry (MOTI) in June, this year, commenced investigations into alleged fraud at the nation’s seaports, involving some importers of the mild steel coils.
The coils, said to be of inferior quality and allegedly responsible for the collapsing of buildings, are mostly not well labeled at the ports as raw materials for the manufacturing of nails and wire mesh, but they end up on the market as iron rods selling cheaper than the locally made ones.
This came to light when officials from MOTI toured some steel manufacturing companies at Tema, sometime this year.
Our information is that this is the second stage of the ministry’s attempt to stabilize the local steel manufacturing sector, but the outcome of that meeting has not been made available to the media.
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