Steel’s New Era

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photo: Anteneh Aklilu

Ethiopia imports much of its steel from abroad. So much effort has been made in conjunction with the Ethiopian steel industry, to encourage investors to open factories and explore for iron ore in order to cut down on costs and bring more forex into the nation. The sector is challenged by high raw material and energy costs and price volatility as well as poor regulations.
The country annually imports 70 million tons of steel and the local capacity is not more than three million tons. Currently, there are around 241 small, medium and large factories involved in steel and iron production.
After looking at the high demand and supply gap in the steel market, a South Korean based company, Ekos Steel Plc came here and built a steel factory in Dukem. By the Ethiopian New Year they should begin manufacturing steel. Capital’s Tesfaye Getnet went to Dukem and talked with Shell H. Choo CEO of the company to learn about the plan of the factory. 

Capital: Can you briefly tell us about your company.

Shell H. Choo: We have been making many different kinds of steel including; galvanized steel sheets, hot and cold rolling mills, steel tubes, a steel coil service center operation, steel manufacturing management and engineering work for three decades in South Korea.

Capital: What motivated you to open a steel company here?

Shell H. Choo: On April 2014, this country’s president Mulatu Teshome (PhD) came to Korea to promote investment and asked our company to invest in the steel manufacturing industry. By investing we hope to save foreign currency by replacing imported products, transferring technology and creating job opportunities for local people.

Capital: What have you done so far to begin producing steel?

Shell H. Choo: We got our investment license in June 2014. The groundbreaking was on October 2015 in Dukem, Oromia Regional State on 10ha of land. Currently, construction is almost complete. We will be able to start commercial production of 210,000 tons, from September 2018. We have been working day and night to complete the project as soon as possible. Apart from this plant, for the development of the Ethiopian steel industry, we are progressing with consulting work for the Greenfield Complex cold rolling mill plant project which can produce 300,000MT in Bahir Dar through our sister company CH International Corporation in South Korea.

Capital: What kind of steel you will produce here and where will you get the raw materials?

Shell H. Choo: In the first phase of our project, we have a plan to produce 210,000-tons of high quality rebar and wire rod products to substitute the import products. The raw – material for production will be obtained from world steel maker companies like POSCO in South Korea and Arcelor Mittal in Ukraine and Turkey. Our second phase project plan includes an Electric arc furnace with 500,000MT capacity. The Electric arc furnace plant will be able to produce billet raw materials from scrap. In the future, with this manufacturing plant, we will be able to produce high quality billets that can replace imported billets.

photo: Anteneh Aklilu
photo: Anteneh Aklilu

Capital: How will Ethiopia benefit from your company product? Do you plan to export the product abroad?

Shell H. Choo: Our products are high quality and manufactured for import replacement. This means we will be able to save foreign currency proportional to the amount we produce. Because of our project, this country will be able to save USD 50 million annually. This will facilitate the work of the construction sector. We are also considering exporting to neighboring countries to earn foreign currency. In addition, when we operate at full capacity, we will be able to create employment for around 150 men and women during the first phase of the project.

Capital: The hard currency shortage and power interruptions are major challenges how will you overcome them?

Shell H. Choo: That is a difficult question. This problem is beyond our capacity. We can only rely on the government to provide solutions for us. However, recently, your government’s economic development policies have been executed positively. We think that the shortage of foreign currency may improve soon for the manufacturing sector. We will try our best to develop the steel industrial sector to save the foreign currency and we are also contributing in saving foreign currency by replacing imported products, and we are planning to export to neighboring countries in the future.
The steel industry is one of the biggest consumers of foreign currency. Therefore, we are seeking ways in which crude can be produced from Iron Ore. We have been collecting data on quality and quantity of iron ore for these projects.
We have done our part, installed generators for critical parts, and used the latest technology in Gi Pam smart digital control transformer systems to prevent electrical accidents.  According to information from Ethiopian Electric Utility, the waste power ratio, is 23. We have machines that can save energy.

Capital: Many steel companies lack proper waste management, how will your company handle this?

Shell H. Choo: One of the unique features of our company is zero pollution. We are using LPG gas for the reheating furnace so there is zero air pollution though the cost of LPG is higher than heavy oil and coal. We have a heat exchange machine to save the heat energy generated by the LPG gas. In addition, we will be using a recycling system for our water consumption, so there will be zero water pollution. We have invested in the latest technology to ensure zero pollution and the highest productivity. Our target is to manage a clean factory and become a model for Ethiopia’s steel manufacturing industries as a clean factory.

Capital: Many workers are paid low wages, what will you do about this?

Shell H. Choo: One of our principles in business management is: “the best benefits and welfare to employees”. We will provide benefits and we will be fair and have many other incentives for our employees. We have a library for knowledge building and engage our employees in sport activities for physical wellbeing. We care about our workers’ wellbeing and safety. We provide locker rooms, shower rooms and good food in our cafeteria for the health of our employees. Safety of employees is another important point we take seriously. Safety uniforms, shoes, helmets, gloves and the like are provided. All workers have a close relationship to their managers and can learn from their experiences. Our company’s motto is hard work, creativity and teamwork.

Capital: We have heard that you will not use scrap materials from the local market, what is the reason?

Shell H. Choo: In our first phase, the system can only use billets as raw materials because your country has a shortage of scrap from the local market. We will be using heating and rolling technology to produce the best quality products. In our second phase, we have a plan to use scrap to produce high quality billets in the future because your country has a cheap electrical supply cost, this low cost of electrical supply might be compatible to the production cost.

Capital: Anything you would like to add?

photo: Anteneh Aklilu
photo: Anteneh Aklilu

Shell H. Choo: In our second phase when we expand, we will invest in a 500,000-ton capacity Electric Arc Furnace and we will invest in a ladle furnace/ refining furnace to produce high quality billets. If we succeed with this project, we can replace 500,000 ton imported billets. So, we can save 150 million USD if we succeed. From this product, for our company’s consumption, we will use around 300,000 tons and the other 200,000 tons we will provide to steel manufacturing companies in Ethiopia. During second phase, we will also expand our product range from only rebar and wire rods to manufacturing round bars, flat bars, angle irons, c-channels and, I-beams as well. In order to do that adequate inland transportation and other infrastructure needs such as a stable supply of electric power is necessary.
We intend to become a leading company in the steel industry of Ethiopia both in technology and in environmental protection. We intend to bring new technologies and management systems to the steel industry and set standards. Our slogan is “leading the new era of steel” which is a slogan we brought from Korea. We are sure that EKOS Steel Mill PLC will be “leading the new era of steel in Ethiopia”.