Lovemore Zigara, Midlands Correspondent
REDCLIFF-based steel manufacturer, Steelmakers Zimbabwe has abandoned the export market due to the firming of the greenback against regional currencies making it uncompetitive for the company to keep exporting.
The company manufactures close to 36,000 tonnes of steel per annum which is converted to various shapes to cater for the engineering, agriculture, motoring, mining, construction and manufacturing industries.
Steelmakers group general manager, Alexander Johnson told Business Chronicle that the company has halted exports unless the government intervenes and introduces export incentives.
“We won’t be able to export this year due to the continued firming of the United States dollar against regional currencies where we export almost 50 percent of our products.
“Our competitors in the region have their own currencies which they’re able to adjust against any shocks on the market but that is not the case with us because the currency we’re using is not ours,” he said.
“The only consideration for Steelmakers to resume exports would be if government intervenes and comes on board and offers incentives to exporters.
“At the moment our competitors have a huge competitive edge,” said Johnson.
The steel producer has since abandoned its expansion plans, which if implemented would see the company’s sponge iron plant in Masvingo increasing output tenfold from its present 30,000 tonnes per annum.
The project which needs a capital injection of about $155 million will see sponge iron at the Masvingo plant further converted to Steel billets through a process that would generate 18 megawatts of power from waste gases.
Despite the setback, Steelmakers is set to increase its capacity utilisation levels from 40 percent to 60.
“The operating environment for this year looks gloomy but we’ll go on with our plans to boost capacity utilisation to 60 percent.
“We’ll increase our shifts from two to three at our Redcliff plant in the first quarter of this year as we seek to satisfy the local market,” he said.
Iron and steel demand is likely to be boosted by infrastructural development deals signed between President Mugabe and his Chinese counterpart, Xi Jinping when the latter visited the country late last year.
During the visit by the Chinese president, the two countries signed investment deals worth $4 billion in areas that include infrastructural development, energy and power development, pharmaceutical warehousing, and telecommunications.