The Afghan government's tight control of the selling of certain kinds of scrap iron is causing domestic steel mills to run short of raw materials and has increased the trafficking of scrap metal out of the country, mainly to Pakistan, said investors.
At least $300 million has been invested in the industry in recent years, but along with a lack of metal, operations face frequent power shortages and a lack of land.
Investors claimed that up to 1,000 tons of scrap iron is smuggled to Pakistan every day. They say that the remains of four decades of war have resulted in scrap iron that is being distributed by the government, to the detriment of domestic industry.
“Based on our information, 500 to 1,000 tons of scrap iron is smuggled through Spin Boldak and Angor Ada crossings on a daily basis to Pakistan. The government has stopped its exports and trafficking, but it continues despite that,” said Abdul Naseer Reshtiya, CEO of the association of steel plants.
Steel mill owners said that another problem they face is a lack of electricity. They said that 98% of these factories must use scrap iron and imported iron materials for their factories and, so far, they have not used iron ore.
“All factories demand that the government not remove all the necessary resources--including scrap iron and extracted mineral ores--but instead provide them raw materials and not monopolize the government’s scrap iron for a few limited companies,” said Abid al-Haq Sarwari, head of the HR office at Sadat Hofyani steel plant.
There are 40 steel mills with high and medium capacity in the country.
Back in April, steel plants owners said their businesses were on the brink of collapse because of a lack of raw materials and power shortages.