adminLovemore Zigara Midlands Correspondent
The survival of Midlands Metals, a Gweru-based manufacturer of ferrous and non-ferrous products, is under threat following the lifting of the ban on scrap metal exports.Government imposed the ban on scrap metal exports in 2008 to promote the local steel sector following the closure of Ziscosteel (now New Zimsteel) which provided the commodity to local steel companies.
However, government removed the prohibition to Zimbabwe Defence Industries recently so that it could offset some of its obligations.
The lifting of the ban on ZDI has seen other players who are not licensed to export the commodity leaving local companies without scrap metal which is the major component in the production of steel products.
This has resultantly affected the viability of local steel companies.
Midlands Metals operations director, Tatenda Karimazondo said since the lifting of the ban, capacity utilisation at the company had dropped by 15 percent from 280 tonnes of steel products a month.
Karimazondo said prior to the lifting of the ban, the company was operating at 65 percent capacity and was in the process of raising production to 83 percent by year end.
“We are at the risk of going out of business as there has been an influx of scrap metal buyers who are exporting the commodity to South Africa illegally. These foreign buyers are paying cash and at a higher price for the commodity to the major scrap metal suppliers such as Zimalloys, New Zimsteel, among other players. As a result, local steel companies are now being starved of the raw material.
“We were producing 280 tonnes per month of steel products and we are now down to about 230 tonnes per month of the commodity. We may further go down if the situation persists,” Karimazondo lamented.
Karimazondo said foreign scrap metal buyers were paying $120 per tonne as compared to the $115 local steel companies are paying.
He said local companies are taxed by Zimra for the scrap metal while foreign players are exporting the commodity without remitting anything to the state revenue collector.
Midlands Metals, which employs 100 workers is now being forced to purchase the commodity at $140 a price which Karimazondo said makes them uncompetitive.
He called on the Ministry of Industry and Commerce to protect local companies by plugging loopholes in the export of the product so that local steel companies remain afloat.
Karimazondo said the steel players have already approached the Confederation of Zimbabwe Industries (CZI) to lobby government on the issue.
CZI advisory board member and past president, Dr Joseph Kanyekanye said they are already engaging government.
Industry and Commerce Minister, Mike Bimha could not be reached for comment as his phone was not reachable.
Online Reporter