Ethiopia’s Ministry of Finance (MoF) said on Wednesday that it has cut prices of scrap metals it is supplying to steel manufacturing factories as inputs for recycling.The Ministry in Septen last year decided to sell scrap metals including junk vehicles stored in government institutions to steel industries without a bidding process after the sector was hit with raw material shortages due to price increases at the global market and foreign currency challenges.

The scraps have since been sold exclusively to steel industries as per the price set by MoF and a supply quota determined by the Ministry of Mines based on the production capacity of factories.

Factories were buying used spare parts for $0.96 per kilogram (kg), and out-of-service vehicles and machineries for $0.96 per Kg. Other scrap metals such as cast Iron, steel, and aluminum were also traded for $0.95, and $2.32 per kg, respectively.

The manufacturers, however, were asking for a cut in selling prices of the scraps saying that they give little consideration to several cost-inducing factors such as transport.

On Tuesday, the Ministry of Finance responded to their request positively, lowering the price of every type of scrap metal.

“Government’s main objective is for the industries to get inputs at a reasonable price, increase their productivity and reduce forex spending to import raw materials,” the MoF said in a statement.

Therefore, the Ministry announced that it has decided to reduce selling prices and made additional cost-reducing measures based on the request made by the manufacturers.

The government has made a price reduction to the selling price of each scrap metal type, and offered incentives for steel factories buying scrap metals located outside of a 100-kilometer radius of Addis Ababa. 

Accordingly, the price of used vehicle spare parts will be $0.74 per kg, while out-of-service vehicles and machineries will be sold for $0.73 per Kg.

The ministry further set the price of Scrap metals of cast Iron, steel, and aluminum scrap metals at $0.65, $0.90, and $1.67 Birr per kg, respectively.

More price cuts will also be made for steel factories that will buy scrap metals located beyond the 100km radius of Addis Ababa based on three factors.

Authorities started selling scrap and junk metals accumulated in federal government institutions and enterprises to alleviate the country’s metal manufacturing factories’ difficulty in accessing raw materials, primarily due to the lack of foreign exchange.