Cheap imports push Aluworks to the margins

Cheap Chinese aluminium products, buoyed by a kind export rebate, have taken over the Ghanaian market and are pushing the nation’s main manufacturer of aluminium products — Aluworks — to the fringes.

Aluworks’ MD Kwesi Okoh is troubled by the situation and is calling on the Ghanaian government to put in place countervailing measures — or his company will die.

“Chinese imports end up here very cheap not because they are more efficient than we are; in fact, in many cases we are better in our processes but because they get what is called an export rebate — sometimes as high as 35 percent — which means their products land here way cheaper than our price,” he lamented to parliamentarians.

“But let me be very clear: I am not actually fighting the Chinese. Ghana’s government should help Ghanaians. So if the Chinese government is helping the Chinese, why should I fight? We must help ourselves in this country; we must make sure we have jobs, we have revenues, we have incomes, generate taxes — or this country is going to die,” he said.

The company has since 2007 been running at a loss due mainly to low volumes as well as foreign exchange losses.

“In 2006, we were making 15,000 to 16,000 metric tonnes. By the end of this year, we will do about 9,000 metric tonnes. That is why we are asking government to put in place countervailing measures; meaning that if the Chinese reduce their price by, say, 30 percent you add 30 percent or so to the duty, then the playing field will be levelled.”

A number of advanced countries have imposed varying degrees of countervailing measures to combat the dumping of aluminium products by China into their countries.

The US has imposed additional tariffs of 59.31 percent; Canada has imposed additional tariffs of 179 percent of shipment value; India has imposed an extra 12-14 percent; and Australia 16 percent.

Aside from the huge export rebate Chinese aluminium products entering the country enjoy, a 2013 study by the Ghana Revenue Authority found that some of the products are sold more cheaply than the cost of aluminium itself, which points to a case of under-declaration.

Aluworks’ request for countervailing measures has been on government’s table since 2007, while the country is deprived of duties, jobs and taxes, Mr. Okoh said.

The company was incorporated as a private company limited by shares on 24th February, 1978, but was converted to a public limited liability company in May 1996.

The factory was built between 1982 and 1985, and was officially opened for production on 21st September 1985 with an installed capacity of 10,000 metric tonnes of various aluminium products at 70 percent capacity utilisation.

The plant capacity was expanded to 20,000 metric tonnes per annum in 1992 and to 30,000 metric tonnes in 2002 — operating with a workforce of about 440. Currently, the labour strength is about 265. Ghana is home to almost all major production steps in aluminium processing, but not in an integrated form.

While bauxite is exported to smelters in Scotland and Canada, alumina is imported from Jamaica and the US for the local smelter, Volta Aluminium Company Limited (VALCO), from which Aluworks buys its raw materials.

Aluworks is the only company that processes or casts aluminium ingots in Ghana and provides one of the vital links in the chain of aluminium processing in the country.

source : B & FT

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