Fed Agency Supplies Scrap Metal to Six Industries Amid Shortages

Metal product manufacturers are to receive much-needed raw materials in scrap metal from a federal agency regulating prices in the industry.

Highly dependent on imports, metal industries struggle to get inputs such as billet due to the shortage of foreign currency. Officials hope that over 1,000tns of scrap metal available to six manufacturers will ease the challenges. Steel manufacturers buy scrap metal at prices determined by the Metals Industry Development Institute. A kilogramme of steel costs them 29 Br while cast iron is traded at 21 Br.

The Institute facilitates the supply of scrap metal based on the factories’ production capacity. Scrap is primarily used for the manufacture of reinforcement bars. Vehicles that have sustained severe damage and cars that have served longer than 40 years are disposed off as scrap.

An assessment conducted by the Public Procurement & Property Disposal Service reveals that nearly 10,000 vehicles under the possession of federal government agencies and public universities can be used as scrap metal by the factories. The Service has made 2,600tns of scrap metal available to industries.

However, the amount was a drop in the bucket compared with the annual raw materials demand estimated at 12 million tonnes of billet, slab, bloom, and sponge iron. The 410 factories, employing over 126,000 people, have a combined annual production capacity of 11 million tonnes of steel.

“We’ve informed the factories to collect the scrap metal,” said Senait Menbere, director of mining development at the Ministry of Mines.

Steel manufacturers such as Rose Ethiopia Iron & Steel, Nazachez Steel, Steely, Tadash Steel and Dire Steel Plc are the beneficiaries of this offer.

Incorporated a decade ago with 400 million Br capital, Dire Steel Plc will have access to scrap metal to boost its sluggish operations. It can produce 360,000tns of rebar and wire rods annually, but it only uses three percent of its capacity, Sewnet Abeje, advisor to the chief executive officer (CEO), disclosed.

“We’ve been told to collect the scrap from Dire Dawa University,” Sewnet confirmed.

Dire depends entirely on billet, which the company used to import from China, Ukraine and India in the past. A lack of forex has become a major impediment to production. Its executives say the forex crunch also hampers the government scrap allowance as the factory lacks a metal melting furnace needed to use the scrap metal. The management is considering using a furnace in a nearby factory, according to Sewnet.