Local steel industry touted as backbone of Ghanaian economy

Local steel industry touted as backbone of Ghanaian economy
Source: Samuel Ohene | okaite@yahoo.com
Date: 21-02-2019 Time: 02:02:56:am
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Ghana’s steel industry is dominated by the production of iron rods and steel coils with the manufacturing process mainly done by a hot rolling process of converting scrap metals and billets into iron rods, coils and steel balls for the construction, mining and allied industries.

The local production of steel started in the 1960s with the establishment of GIHOC Steel Company, the forerunner of the Tema Steel Company Limited. 

There are currently eight local steel manufacturing companies including Sentuo Steel Company Limited, Tema Steel Co. Ltd, United Steel Company, Western Castings Limited, Rider Steel Ltd, Ferro Fabrik Limited, Fabrimetal Ghana Limited and Special Steel Limited.

The total installed annual capacity of these companies is above 1,000,000 MT with Sentuo Steel Company Limited being the largest. 

The sector employs about 4,500 direct workers and 17,000 indirect workers. The companies also contribute significantly towards government revenue in the form of taxes.

The installed capacity of the local steel industry of about 1,000,000 metric tonnes per annum against an annual average demand of about 350,000 Metric tonnes per annum results in a surplus of 650,000 metric tonnes per annum.

Current data on iron rods and steel coils imports indicate that there is a significant and steady increase in the importation of iron rods and steel coils above 6mm into the country, a situation which is killing the local Steel Industry.

The Steel Manufacturers Association of Ghana (SMAG) has therefore expressed with grave concern the ever-increasing importation of steel into the country as having adverse effect on the growth and development of the industry with the situation being accentuated by dodgy importers who are able to access Customs bonded warehousing facilities without paying the requisite taxes to the detriment of the local steel industry.

A statement signed by Rev. Dr. George Dawson-Ahmoah, a Consultant for the Association observed some imported steel products do not conform to the engineering and basic standards of the country: GS 788-1: 2008 (Reinforcement of Concrete-plain bars), GS 788-2: 2008 (Reinforcement of concrete-ribbed bars), GS 788-3: 2008 (Reinforcement of concrete-welded fabric), purposely to avoid the payment of the required tariff.

“This non-conformance leads to the influx of low quality steel products with a rippling on the construction and mining industries.

“The downstream industry of nails, wire weaving binding wire, etc. do not use wire coils of diameter exceeding 6mm. Indeed steel coil wire exceeding 6mm in diameter are straightened and sold on the market as iron rods. If they are imported as iron rods they should attract 20% duty to promote the competitiveness of the local industry. The industry has no quarrel with the concessionary 5% tariff on intermediate raw materials like billets and steel coils below 6mm diameter as they are raw material," the statement noted.

Rev. Dr Dawson-Ahmoah, who is also the Chairman of the Tema branch of the Association of Ghana Industries and the Executive Secretary of the Cement Manufacturers Association, said it will be absurd in this era to experience an upsurge in the importation of steel coil and iron rods into the country.

He explains that Government, through the Made in Ghana and Local Content Policies, is encouraging local manufacturers to embrace the addition of value to local raw materials as part of its transformative and industrialisation agenda of the manufacturing sector.

He bemoaned steel importation as unacceptable as it is injurious to the local steel industry and if not checked and will impair the growth and opportunities in the sector. 

The adverse effects the statement cited includes: increase in the high cost of production, massive loss of jobs which could lead to labour unrest, less use of local raw materials, reduction in corporate social responsibility activities and reduction in financial contribution to the economy in terms of direct and indirect taxes as a result of a decline in sales.

“It is therefore worthy to acknowledge the significant role being played by the local steel industry and as such the need to protect it with every inch of the country’s resources,” the statement said.

Rev. Dr George Dawson-Ahmoah on behalf of the Association called on Government to intervene by taking a cue from Nigeria, which has imposed a levy of 20% in addition to the normal ECOWAS approved tariff of 29% to protect its steel industry.

The Association also wants the Government to provide a legislative instrument (LI) to ensure that trading activities in the local steel industry are transparent, predictable and consistent with international best practices.


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