Steel Companies in Crisis

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construction material in storehouse
  • Illegal Scrap Export Collapsing the Industry
  • High Electricity Tariff Stiffle Production

Story By: Paul Harrison Mensah, Tema

The seven major steel producing companies in the country, Sentuo Steel Ltd, (formerly WA home Steel), Ferro Fabrik Ltd, Tema steel Works, Atlantic steel Ltd, (Formerly Special Steels), Fabric Metal Steels, Sege Steel, and Yum Hu Steels, have expressed concern about the current state of affairs in scraps exports and stress that if nothing is done to stop the practice, there would soon be a downturn of raw material needed by the steel Milling companies in the country.

They have also raised an alarm over growing spate of electricity bills imposed on them, and warned that I these two major problems are not solved immediately it may bring the entire steel industry to its knees, and also compel them to lay as many as over 3,000 workers off.

Scrap metal forms the core of raw material input in the steel industry. Recently, it has become a common practice of the scrap dealers to send the commodity to the neighboring West African countries and beyond instead of feeding the local steel companies.

This illegal practice, according to the steel companies is killing their businesses. They alleged that the scarcity has resulted in them producing far below their production capacity.

When business Journal contacted production Managers of these steel companies, it was revealed that they only produce 50 to 60 percent of their industrial capacity as at now.

Mr. Daniel Mad Joe, Human Resource Manager of Sentuo Steel Ltd, however believes that apart from the smuggling aspect of the commodity, the influx of steel milling companies in the country of late contributes significantly to scarcity of scraps in the system.

He said formerly it was only WA home Steel, Tema Steel Works and Ferro Fabrik Ltd that were into scraps milling business to feed other steel retail companies in the country but presently he can count as many as seven different companies that are into steel milling business and they all rely heavily on the local scraps as their raw material base.

Business Journal gathered that a number of illegal exit routes have been established to cart a chunk of the raw materials for the steel companies out of the country through the Paga border in the North-Eastern part of Ghana and also through Dotse and enter into Burkina Faso and Togo respectively to export the commodity.

It was also revealed that even some prominent citizens of the country use the main harbour to export the commodity overseas.

All the General Managers of above mentioned steel companies confirmed the existence of these routes and the illegal practice of the scrap dealers.

Another disturbing factor that came up during the interviews about their operations is the high electricity bills.

While some say they pay more than one Hundred and fifty Thousand Ghana Cedis (GH₵150,000) per month on electricity alone, others also pay approximately GH₵ 300,000 for both water and electricity per month. A situation they find it extremely worried looking at cost of operating a capital intensive company in the country.

“All these and more are making steel companies operating at a lost because production cost alone takes away your profit margin. Atone of metal scrap ranging from GH₵ 500 and above, depending on the quality of the scrap, Water bills, Electricity bills, Workers’ salaries and other taxes consume all your    profits,’’ they concluded.

Though it is believed that scraps exporter’s gets better deal for their goods in the international market, the illegal export of the commodity is gradually killing our local steel companies.

In Ghana, steel is a major material used in the construction and building industries but in recent times the commodity is becoming scarce in the system due mainly to illegal export by the dealers.

Even though government say the practice has been banned long ago in 1987, the exporters always succeed in sending the commodity outside the country to the detriment of our local steel companies.

It is high time government steamlined its operations to combat against illegal export of scraps in order to protect our local steel companies so that they can do well in business and gives more employment to our teeming youth who are idling in town.