17 January 2013

Ghana: Unbridled Imports Killing Steel Industry

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If immediate attention does not come from the government to salvage the situation, the remaining local steel companies, namely Sentuo (formerly WAHOME) and Special Steel, cannot survive the first quarter of this year, a frustrated local steel operator has bemoaned.

Already, he said, Ferro Fabrik, Tema Steel and Western Steel have all been shut down for competitive reasons, and went on to say that only God knows when the last two steel companies would follow suit.

The local steel companies are singing from the same hymn book - competition from the imported inferior mild steel coils which have flooded the local market.

Over the past two months, when these companies shut their gates to customers, at least close to 3,000 workers in the industry have gone home, and are asking if President John Dramani Mahama, who they voted for, would not listen to their cries.

Painstaking investigations conducted at the Tema Port revealed that a lot of the companies whose imports of inferior mild steel are flooding the markets, are seen on a regular basis with concessionary exemptions from the ministries, and allegedly do not pay duties at the port.

Ironically, the Ministry of Trade, which has a responsibility to improve the lot of the industry, is offering little, more so, when it is unable to secure a Legislative Instrument (LI) to ban the exportation of metal scraps in all forms.

The local steel industry is currently enjoying an administrative ban on the exportation of ferrous scrap metal, which is the raw material for the local steel manufacturer.

Mild steel coils in various sizes and weight come through the Tema Port daily, but it seems the supervising bodies such as the Ministry of Trade, Ghana Standards Authority (GSA) and the likes do not care about the quality and dangers associated with it.

Our intelligence in the industry has come out with the facts surrounding the inability of the industry to stand on its feet, and rather hanging on wobbling pillars. Raw material for local industrial use attracts five percent import duty, and finished products are billed 20 percent duty.

It is alleged that most of the companies which import the mild steel coils are not manufacturers, and therefore, only resort to the use of stretching machines at their warehouses or premises. Because the rods come in smooth form, they take them through the stretching machine in order to obtain stirrups or ribbs.

Having gone through this process, known as cold rolling, the rod now loses its high tensile, and easily breaks under pressure. The cold rolling steel, according to our findings from the Ghana Standards Authority, is not recommended for structural use, but can only be applied for light slabs.

Organised contractors in the country embarking on projects only use the hot rolling steel, which standard is accepted by the GSA.

Non-organised contractors such as the local masons and steel benders, who work on our buildings, normally go for the cold rolling steel, since it is always cheap, as compared to the hot rolling steel rod.

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