Steel industry in jeopardy;
thousands of jobs uncertain
Sri Lanka’s steel industry is in the throes
of a major crisis as over 600 industries with more than 40,000 workers
face imminent closure due to a shortage of raw material and uncontrolled
export of raw material to India.
Already seven steel plants have shut down leaving
1,000 workers in the lurch, an issue that has been raised by the
trade in a letter to the Board of Investment (BOI) blaming one particular
Indian manufacturer for unethical trade practices.
A. Gaffar, Chairman of the Steel Industry Association
told The Sunday Times FT that the ferrous steel industry is faced
with constant fluctuation of selling prices and raw material prices
because of a particular Indian steel plant situated at Madampe near
Chilaw. “This plant is adopting unfair trading tactics and
works on a scrap metal price of Rs.31000 per metric ton which is
above market price. They have been maintaining such unrealistic
prices resulting in the rest of the steel industry struggling to
survive. That company is now selling their finished product at an
unbelievingly low price of Rs.48, 000 per metric ton whereas our
cost of production itself is above this level,” he said.
He said such a move will damage the other local
industries and lead to a monopoly in the steel industry. “They
are duping the public by manufacturing and marketing undersized
and short length steel bars leaving room for buildings to collapse
in the future,” he said.
He said Dr. Bandula Perera, Additional Director
General, Board of Investment (BOI) was notified about the issue
and urged the BOI and the Ministry of Industries to take immediate
action against this factory in order to prevent further damage to
industries. Dr. Perera told The Sunday Times FT he had received
a complaint and was perusing it at present. Mr Gaffar said the ferrous
and non-ferrous steel industry is confronted with scarce raw material
at high prices. As a result of this T. W. Steel Lanka (a BOI factory),
Seeduwa Steels, Indo Lanka Steels, Corolla Steels, Hiat Steels,
Colombo Steels and Ispat Corporation (formerly known as Sterling
and Walton Steels) have closed down and left over 1000 people jobless.
“They (India company) has recently set up
another steel plant by the name of Confab Steels at Veyangoda, with
a capacity of 9000 metric tons per month which is the total monthly
demand for steel locally. They are adopting similar selling tactics
in this plant by maintaining very low selling prices and destroying
manufacturers,” he said.
Mr Gaffar said the authorities must take immediate
steps to make available all the steel scrap in the Ceylon Government
Railway (CGR), the Ceylon Petroleum Corporation (CPC), Sri Lanka
Ports Authority (SLPA) and the Colombo Dockyard Ltd (CDL), to 100
percent locally owned steel industries at a concessionary rate to
enable them to compete with BOI factories.
Melvin Samarasinghe, Chairman Foundry Development
Services Institute said owing to uncontrolled raw material exports
such as steel, cast iron, copper, brass and aluminium to India by
traders and BOI companies many industries are facing closure.
This situation has arisen due to the FTA and the
BOI signing agreements for the supply of raw materials to the Indian
industry. “Governments always looked at short term export
earnings without looking at the long term effects. Vendors use fraudulent
ways to export valuable scrap material much less than the world
market price by stealing local bridges and electrical wires and
fittings which are available at no cost to them,” he said.
“The solution should be to ban export of
all raw material of any form and India, Indonesia and Malaysia are
practicing this. Also the BOI agreements should be cleanly monitored
by authorities and customs and their license should be cancelled
on violation,” he said.