Sri Lanka’s UBC ingot exporters feel the pinch of export ban
Sri Lanka’s manufacturing and export firms of used beverage cans (UBC ingots) are now on the verge of closing down their operations following the recent ban on exports of all scrap metals, several such exporters complained.
At least 15 units engaged in the production of UBC ingots have become destitute without any means to sell their massive stocks locally or internationally as there were no buyers in the country and no way to export it due to the prevailing ban, they said.
Around 10,000 people will lose their jobs and livelihood along with UBC suppliers under the present situation, M. Shakeel Director of Maxtrex International told the Business Times.
These 15 small and medium scale enterprises produce the ingots with 96 per cent of Aluminum and then export it to countries like India, Korea and Malaysia as it cannot be sold in Sri Lanka, he explained.
However at a meeting with the representatives of the Aluminum industry and the Chairman and Director General of the Industrial Development Board, it has been agreed to grant a concession for UBC ingot manufacturers to export 100 metric tons within the next six months, a letter sent to the secretary to the ministry of industries by the DG IDB P.L.U, Rathnamalala revealed.
According to Sri Lanka standards, all products manufactured out of Aluminum needs 99.97 per cent of Aluminum content and therefore UBC ingots cannot be sold in the local market, Mr. Shakeel pointed out.
Local exporters use to export 600 metric tons of these ingots at a price of US$1155 per metric ton to India per month under the Indo-Lanka free trade agreement generating much needed foreign exchange for the country amounting to $8,316,000 per year.
The ban on scrap metal exports without considering any data analysis or proper marketing survey has caused a considerable loss of foreign exchange revenue for the country, economic analysts said.
The UBC ingots with the HS code of 7601.20 does not need any license to export where under the Imports and Exports (control) Act No1 of 1969, UBC ingots have not been categorised as a product requiring a license to export, they pointed out.
The reason for this was that these ingots cannot be reused in Sri Lanka as the country lacks such technology, industrial experts disclosed.
Mr .Shakeel noted that his company has entered into an agreement with an Indian company to supply 150 metric tons per month and they have deposited money in the local company account.
He complained that due to the export ban they cannot oblige the agreement and his company will have to face legal action for the failure to supply the agreed quantity.
The government has taken the decision to ban all scrap metal including UBC ingots on a request made by All Ceylon Metal Foundry Industrialist Association without considering the fact that those ingots cannot be used in any industry in the country, he alleged.
At a meeting with the Industrial Development Board, Iresha Aluminum has offered their stocks to local buyers including big players like Alumax and Lanka Aluminum for a price of Rs. 160 per kg and they have rejected to buy it as they cannot produce anything out of UBC ingots owing to less Aluminum content, he revealed.
This matter has been brought to the notice of the President, the Prime Minister and the chairman of the Presidential task force Basil Rajapaksa in writing but it was to no avail, he complained.