Scrap metal shortage hits Pula Steel
Onalenna Kelebeile | Wednesday April 20, 2016 18:00
The company’s corporate services director, Brian Mosenene has said in an interview that they have been experienced a serious shortage for the past two weeks ago.
“We are now operating with only one furnace because we do not have enough scrap metals,” he said. “This is a serious concern for the project going forward. Scrap is our major input, so if we do not receive any we cannot produce.” Pula Steel is the first integrated steel plant in Botswana and has 50.5 percent shareholding by BCL mine. The company is a milestone under BCL’s corporate strategy, Polaris 11 and was constructed at a cost of P130 million. Its phase one project created 250 jobs and it is anticipated to create a further 1,000 jobs in the second phase. It was announced during the company’s official opening last year that government has enacted laws that restricts export of scrap metals without first satisfying local foundries.
Mosenene said that shortage of scrap metals is also likely to have a negative effect on the company’s expansion plans.
“If we cannot get phase one moving optimally, our broader expansion plan would be affected,” he added. “Our orders are already increasing but we might be unable to meet them under this situation.”
He said about 10, 000 tonnes of scrap has been exported since last year despite regulations in place to ensure that the local market was first satisfied. He explained that according to the law that regulates exportation and licensing of scrap metal, no consignment should leave the border without a permit that is issued after local companies sign a consent letter.
He said: “We have not signed any letter consent but we have realised that about 10, 000 tonnes of scrap has been exported. It tells us that scrap dealers may be obtaining permits by other means. We have the capacity to process 6, 600 tonnes of scrap a month but so far we have processed only 500 tonnes that was supplied locally. The BCL stock cannot last us forever as we have almost exhausted it already.”
He said it is not an issue of prices because dealers have standard prices in line with the South African pricing strategy as their basic pricing law. He noted that in some cases Pula Steel pays more that the internationally agreed prices depending on the quality of the raw material. He expressed concern that the fact that scrap metals continue to find their way outside the country without permits and proper licensing indicated that the law is not fully enforced.
“We hope that the issue will be addressed timeously by relevant authorities so that Pula Steel can operate optimally,” he said. “We have not yet retrenched our employees as a result of low production but if it can be ensured that no scrap is exported without satisfying the local market then jobs can be sustained.”