Govt Cuts Scrap Metal Prices after Steel Factories Plea

Govt Cuts Scrap Metal Prices after Steel Factories Plea

ADDIS ABABA – The Ministry of Finance (MoF) has cut prices of scrap metals it is supplying to steel manufacturing factories in Ethiopia for recycling.

The Ministry in Sept last year decided to sell scrap metals including junk vehicles stored in government institutions to steel industries without a bidding process after the sector was hit with raw material shortages due to price increases at the global market and foreign currency challenges.

The scraps have since been sold exclusively to steel industries as per the price set by MoF and a supply quota determined by the Ministry of Mines based on the production capacity of factories.

Factories were buying used spare parts for 51.25 Birr per kilogram(kg), and out-of-service vehicles and machineries for 51.25 Birr per Kg. Other scrap metals such as cast Iron, steel, and aluminum were also traded for 51 Birr, 64 Birr, and 124 Birr per kg, respectively.

The manufacturers, however, were asking for a cut in selling prices of the scraps saying that they give little consideration to several cost-inducing factors such as transport.

On Tuesday, the Ministry of Finance responded to their request positively, lowering the price of every type of scrap metal.

“Government’s main objective is for the industries to get inputs at a reasonable price, increase their productivity and reduce forex spending to import raw materials,” the MoF said in a statement.

Therefore, the Ministry announced that it has decided to reduce selling prices and made additional cost-reducing measures based on the request made by the manufacturers.

The government has made a price reduction to the selling price of each scrap metal type, and offered incentives for steel factories buying scrap metals located outside of a 100-kilometer radius of Addis Ababa.  

Accordingly, the price of used vehicle spare parts will be 39 Birr per kg, while out-of-service vehicles and machineries will be sold for 39 Birr per Kg.

The ministry further set the price of Scrap metals of cast Iron, steel, and aluminum scrap metals at 35 Birr, 48 Birr, and 90 Birr per kg, respectively.

More price cuts will also be made for steel factories that will buy scrap metals located beyond the 100km radius of Addis Ababa based on three factors.

The government will waive 5.8 Birr per kg from the selling prices to ease buyers’ costs related to cutting, sorting, and collecting the scrap metals, and reduce 2.5 Birr per kg in consideration of loading cost.

An additional 0.00953 Birr per kg will be cut from the prices for transporting the scrap metals, according to the two ministries’ joint statement.  

Authorities started selling scrap and junk metals accumulated in federal government institutions and enterprises to alleviate the country’s metal manufacturing factories’ difficulty in accessing raw materials, primarily due to the lack of foreign exchange.

Scrap Metal TypesPrevious prices
New prices
1.Steel scrap metals64 Birr per kg48 Birr per kg
2.Cast iron scraps51 Birr per kg35 Birr per kg
3.Scrap vehicles and machineries51.25 Birr per Kg.39 Birr per kg
4.Aluminum scraps124 Birr per kg90 Birr per kg
5.Used vehicle spare parts 51.25 Birr per Kg.39 Birr per kg