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Cheap steel threatens to shut down Qualitec Industries

Steel
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Qualitec Industries, a major producer of roofing sheets, is on the verge of shut-down as smuggled cheap steel hurts the company.

BusinessDay visited the aluminium maker to ascertain the impact of poor import policy on it and it was gathered that it has already cut down the number of workers significantly in the last five years.

It was gathered that the number of workers at the expansive factory is fewer than 50 from almost 300 in 2014.

Steel makers complain that importing full or plain aluminium is cheaper than bringing in inputs.

“When you import plain aluminium, for example, you pay five percent duty. But when you wish to import your input like galvanised sheets, for instance, you pay 35 to 45 percent duty,” a key player in the steel sector told BusinessDay.

Qualitec’s caster and rolling mills are still on. But its power plants run almost 24 hours. Coating lines and other sections are still on, but lack of patronage is slowing down activities in the factory.

BusinessDay had visited the factory at Ota, Ogun State, in 2014.

Oluyinka Kufile, chairman and chief executive of the company, was then optimistic. He had told BusinessDay that he had invested   $100 million in new plants, machinery, captive power plants and resuscitation of existing plants. A second production line was being installed, he had said, while machines that would be required, alongside technicians that would operate them, were expected to arrive in Nigeria from Turkey.

“We have made these investments because we believe that what is worth doing at all is worth doing well, “said Kufile had said, during a tour.

“We are in the forefront of production of aluminium in Nigeria and we are very proud of this,” he said.

“It is a huge investment that has been on for a very long time. And we are still doing more. When we started, it got to a point that we had to approach American Nexim Bank. They obliged us and gave us the facility. Today, it is a different story,” Kufile had disclosed.

But Kufile is no longer that optimistic today as he openly said his factory is shutting down.

“You can see that things are no longer that way they were when you first came,” he told this writer.

“We cannot compromise standards of roofing sheets we produce, but people bring in cheap products and are allowed to pay lower duties,” he said.

“No country develops its manufacturing sector that way,” he added.

He complained that state governments move to China and give contracts to companies there whenever they have projects.

“If we do not have confidence in our local players, how do we grow?” he asked.

To avoid manipulating import duties and flooding the Nigerian market with cheap Chinese and Indian steel, Kufile suggested a way out.

“Except government re-classifies all the HS Codes in metals and steel and put them in proper classification, some may continue to manipulate the duties and people will keep bringing in substandard products that kill the industry,” he said.

Nigeria steel sector is hurting from low patronage and cheap steel from China  clearly dominating the global market. Many are shutting down and exiting the country owing to poor policy frameworks and implementations.

Recently, Grif, maker of aluminium drums, exited Nigeria because the company could not get annealed cold-rolled steel which was its key raw material. The cold-rolled steel is one of the items on the Central Bank of Nigeria’s list of 41 items banned from accessing foreign exchange since 2016. Yet, as of today, nobody manufactures annealed cold-rolled steel, meaning that the company lost its rhythm as it could neither import nor source the essential input locally.

Also, Federated Steel from China, maker of iron rods, has exited Nigeria and sold its assets to MNIL Limited.

Another iron rod maker, Universal Steel, has shut down. Sources close to the company attributed its closure to smuggling and unbridled import of iron rods, which are 20 to 30 percent cheaper.

BusinessDay  gathered from reliable sources in the steel sector that Industrial And Farm Equipment Company, a maker of wheel barrow, has exited.

 

ODINAKA ANUDU

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