Punch-up over scrap metal

Steel city
The proposed Scrap Metal Bill doesn’t introduce a ban on the export of scrap metal; however, part of the objective behind streamlining the sector is to allow for the development of a local steel and iron industry.

The National Industrialisation Policy Framework and the country’s economic blueprint Vision 2030 identify the development of an Integrated Steel Mill as a flagship project.

In a detailed document, the Ministry of Industrialisation and Enterprise Development outlines 15 strategies which will see the creation of a Steel City in Kenya akin to Pittsburgh or Colorado. The document also proposes the development of a power plant – possibly at Dongo Kundu in Mombasa – to exclusively serve the mini or integrated steel mill.

According to Permanent Secretary Wilson Songa, the local steel and iron industry will begin by utilising the available scrap metal in the country for establishing a Mini Steel Mill – suggesting a key reason for curtailing export of scrap metal – and will then use raw materials that include coal, coke, and iron ore.

“Iron and steel is the backbone of the economic activity of any country,” the report reads, and explains how the three core ingredients in iron and steel production are locally available: iron ore reserves in four regions in Kenya; coal in Mwingi and Kitui district and limestone in six parts of the country.
It is a framework that could potentially redefine Kenya’s economic fortunes.

Currently, the country produces 600,000 tonnes of steel from its rolling mills but imports 807,000 tonnes of iron and steel products worth $994m, according to the Statistical Abstract 2012.

The establishment of a steel city will not only boost the infrastructure and construction industry but also spur employment creation. Companies that are already involved in the manufacture of iron and steel products, such as Devki Group, Kaluworks and the Safal Group, will also flourish as Kenya begins to produce enough steel to satisfy local and regional demands.

But such lofty national ambitions put a crimp in the fortunes of local scrap metal dealers, and so Sumra is quick to pour cold water on plans to set up a steel manufacturing plant, let alone a steel city.

“It is always cheaper to bring steel from China than to manufacture it here,” he said dismissively and alluded to a deal gone bad between government and a possible Korean investor.

But PS Songa has his eye fixed on the destination, and his demeanour hints at a steely determination to reach it.