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Severe power shortages force Libya steelmaker to slash output

LONDON: Power shortages have forced Libyan Iron and Steel Company, one of North Africa’s largest steelmakers, to slash output and shut down one of its two steel melting shops. Libya’s energy sector is experiencing its worst disruptions since a civil war in 2011, with cuts at eastern gas fields affecting supply to power plants.

Libyan Iron and Steel Company is currently producing at an annualized rate of about 625,000 tons, or less than 40 percent of capacity and well below its target for this year, two company officials told Reuters this week.

“The planned capacity of liquid steel this year is 900,000 tons and we will not reach it because of electricity restriction and irregularity of natural gas supply,” one company official said.

“Since the beginning of the month we have been requested by the government to switch off steel melt shop No. 2 because of the lack of energy in Libya. But hopefully we will resume the production in a week or 10 days,” the official added.

Lisco resumed steel production in the spring of 2012 after more than a year of suspension due to a conflict that saw former dictator Moammar Gadhafi overthrown.

After its restart, however, the plant suffered technical problems that limited production. Repairs were also hampered because some foreign technicians needed to do the work were reluctant to visit the politically unstable country, a second company official said.

Lisco had hoped to boost annual output capacity by at least 300,000 tons but failed to achieve this due to the lack of available foreign contractors.

“People are still too worried to come to Libya,” the official said.

In 2012 the plant, which has a maximum capacity of 1.6 million tons, aimed to produce just over 1 million tons yet managed only 350,000.

In the first half of 2013, with most technical issues finally resolved, Lisco produced 430,000 tons of steel.

It also produced 410,000 tons of direct reduction iron and 180,000 tons of hot briquetted iron, two steelmaking ingredients, part of which was sold to European and Middle Eastern buyers.

Since its restart, Lisco has relied more on Brazil’s Vale and Samarco for iron ore pellet since Sweden’s LKAB, historically a main supplier, stopped selling to the company due to worries about payment terms, the officials said.

“Nowadays we do not have any valid contract with them [LKAB] and we are willing to restart dealing with them again in the very near future,” the first official said.

 
A version of this article appeared in the print edition of The Daily Star on September 28, 2013, on page 4.

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