Chinese importers sinking Aluworks

Unbridled aluminium imports from China – which have heightened in the last three years - are threatening the operations of Aluworks, the only intermediate supplier of metals for downstream companies- putting at risk about 5,000 jobs in the industry.

Though the World Trade Organisation (WTO) has ruled that the practice is unfair and countervailing measures should be instituted by Ghana against it, no action has been taken, said Kwasi Okoh, Managing Director of Aluworks.

Though the company has petitioned the Tariff Advisory Board (TAB) set up by government to address such issues, the situation remains the same, he added.

“The economies of Ghana and West Africa are growing because of the young population. So the demand [for corrugated roofing sheets, pots and pans] in West Africa is good. Therefore we should be in business, but we are not. Why? Because China supplies that demand instead of us [local manufacturers], so we have a problem,” he told the B&FT.

Aluworks directly employs 260 people and supplies it products to more than 30 downstream companies, as well as 130 other small-scale business.

The company buys the raw metal from Volta Aluminium Company (VALCO), paying the same international price – the London Metal Exchange price-as other aluminium producers anywhere in the world.

But according to Mr. Okoh, aluminium imports from China- which have incurred freight, duty and clearance cost of raw metal from VALCO.

“We take the metal from VALCO, [and] we incur huge costs to produce items. They [Chinese manufacturers] bring theirs [finished products] from China to undercut us here because their government gives them rebates,” he said.

“Our quality is good so we should be able to match the Chinese. But instead of competing with us quality-versus-quality, they know we will beat them so they compete on price. And they price lower because their government gives them a subsidy.”

China, which became a member of WTO in December 2001, has been criticized since then for its unfair trade practices-including promoting dumping and lavishing subsidies on its exporters.

Countries such as the United States, Australia, India and Canada have all put in place countervailing measures to protect their aluminium and other industries from unfair Chinese competition.

A countervailing measure will typically require Chinese aluminium importers to pay a certain percentage of tax – equivalent to the amount subsidized by their government.

“The Chinese are taking demand away from local manufacturers. We want government to do something- not because we just want to save Aluworks, but because we want to save manufacturing and the economy of Ghana,” Mr. Okoh said.

The share of manufacturing in Ghana’s GDP has been shrinking, he lamented- falling from 10.2 percent between 2006 and 12 – as the Chinese onslaught has rocked other industries including textiles, wherein exporters from the world’s second-biggest economy have been accused of not only dumping but also pirating local designs.

Government is currently grappling with Chinese nationals’ involvement in the mining and retail sectors, but has taken a cautious approach as it remains one of the main beneficiaries of Chinese government loans to African countries.

Last week, seven Chinese illegal miners were arrested for gold-prospecting on a concession at Manso Abodom in the Amansie West District Assembly, belonging to ORE Royal Mining Company Limited.

Government officials in China have said in the past that it is up to Ghana’s government to enforce its laws against Chinese nationals who violate them in pursuit of commercial interests.