Zambia’s steel output drops

’ steel

production has dropped by 150,000 per year following unreliable supply of electricity.

Universal Mining and Chemical Industries

Limited (UMCIL) had reduced production of the commodity at its Kafue Steel Plant by 150,000 tonnes annually.

Kafue Steel Technical Director, Julius Kaoma, said low production of the commodity would affect its increased demand due to infrastructure development in Zambia.

Dr Kaoma was speaking during a public hearing on ZESCO’s application to adjust electricity tariffs by an average of 113 percent.

“Since 2015, we have been running at a shortfall because we cannot produce the 250,000 tonnes of steel per year but we are only producing 100,000 tonnes of steel and yet the country needs steel following infrastructure development.

“The situation is that we have put up an integrated iron and steel plant so we can reduce the cost of steel but the mining and beneficiation plant are not operating because power supply is not reliable,” he said.

Dr Kaoma explained that the steel plant was only operating for 12 hours considering the prevailing economic conditions such as shortage of electricity in the country.

Zambia, he warned, risked having shortage of steel soon should the current situation continue.

Dr Kaoma stressed that the steel plant operated on a 35 megawatts of power and that it needed full power supply.

“We have major infrastructure development and they are buying the steel from us, by increasing tariffs, its means the bottom line is to close the plant.

“This will mean we do not have a supply of steel providing low price and when we import, it will be very expensive. The tariff is not sustainable for us,” Dr Kaoma said.

ZESCO Acting Managing Director, Webster Musonda, said the worsening fiscal position of Zambia had led to international financiers of new power generation projects demanding higher returns on Investment.

He said the cost of power from new generation infrastructure was much higher than the cost of generation from old depreciated power plants.

Mr Musonda indicated that as the proportion of generation from new power plants increased to meet the rising demand, the overall cost of electricity generation rose.

“This means that the selling prices has to rise to keep the sector sustainable and enable it to continue growing along with the economy,” he said.