Following the commissioning of the largest steel and iron manufacturing factory in West Africa, by B5 Plus Ghana, the local steel industry is set to receive a major boost in capacity which will enable it to serve both the local market and the West African sub-regional market as a whole.
With an unprecedented investment in the industry, worth US$ 80 million by B5 Plus, the country’s export capacity with regards to steel and iron products has reached its highest level ever.
B5 Plus now clearly leads an industry that also comprises of 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.
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.
As at June 2019, the industry was estimated to have total installed annual capacity of above 1,000,000 metric tonnes (MT).
The sector employs about 4,500 direct workers and 17,000 indirect workers. The impact of B5 Plus’s latest investment is illustrated by the fact that the company on its own is now set to provide 3,000 direct jobs and 10, 000 indirect jobs.
Although the installed capacity of the local steel industry is about 1,000,000 MT per annum, local annual average demand is only about 350,000 MT per annum resulting in an idle capacity of 650,000 MT per annum. The challenge now is how to effectively use this as yet unutilized capacity.
Given that the country has received several expressions of interest from major automobile companies to establish their regional production factories in Ghana, the steel industry is well positioned to play a vital role, serving as a major source of key production inputs and raw material. Even before this happens, B5 Plus is now well positioned to make Ghana a major exporter of steel products across the sub region.
But despite the potential of the industry, current data on iron rods and steel coils imports curiously shows 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 the industry operators indicate is killing the local Steel Industry.
Earlier this year, the Steel Manufacturers Association of Ghana (SMAG) expressed with grave concern that the ever-increasing importation of steel into the country is having adverse effect on the growth and development of the industry with the situation being accentuated by law-evading importers who are able to access Customs bonded warehousing facilities without paying the requisite taxes to the detriment of the local steel industry.
To improve the industry’s fortunes, the government is set to pass the Ghana Iron and Steel Development Authority (GISDA) Bill into law before Parliament rises this year.
The Bill seeks to establish a state Authority that will develop and promote an integrated iron and steel industry. This will expectedly justify new investment such as that made by B5 Plus.
The Authority will be required to collaborate with investors for the development of the integrated iron industry, ensure the development and implementation of a local content policy across a value chain in the industry and also ensure that the minimum total equity held by the State and the Ghanaian private sector in any joint venture in the industry is not less than 30 per cent of the total equity. Here again, B5 Plus’s investment in the steel industry gives Ghana the capacity to make this possible, even for truly huge joint ventures.