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Tuesday April 23, 2024

Exporters move SIFC to remove irritants in export of copper ingots

By Mehtab Haider
January 23, 2024

ISLAMABAD: The exporters have approached the Special Investment Facilitation Council (SIFC) against the Federal Board of Revenue (FBR) with a request to remove irritants in exports of copper ingots having the potential to jack up exports up to $5 billion.

The building of FBR can be seen in this image. — AFP/File
The building of FBR can be seen in this image. — AFP/File

In a letter written to SIFC Director General, the steel sector stated that during the last few years, the exports of non-ferrous products by the steel industry emerged as the fastest growing exporting sector securing 5th place in top exporting sectors.

In FY 2023, the value of exports of copper touched $1350 million mark, exhibiting Year-on-Year increase of around 20%.

With Chinese annual copper imports of around $200 billion and FTA with China providing competitive advantage, copper exports could easily cross $5 billion mark within two/three years.

To take advantage of this opportunity, the Iron & Steel Industry is fast diversifying into exports of copper to China. With some hand-holding and support from the government, this sector has tremendous potential to increase exports. However, unfortunately the exporters of copper are facing red-tapism and inordinate delay by FBR in incorporation of required enabling provision in EFS Rules hindering copper export potential. This inordinate delay has already resulted in huge loss of foreign exchange in terms of lost exports.

“We earnestly appeal the government to immediately intervene in this matter and bail out copper export sector out of this impasse. In a challenging scenario, the current government supported by SIFC is taking appreciable steps to boost exports and at the same time to support the domestic industry” they added. However, in our case they have been struggling for the last one year for incorporation of required enabling provision in EFS Rules, however still the matter has not been resolved by FBR.

The best part of this whole activity is that this is a labour-intensive process and with hardly any capital expenditure (nil imported machinery) it would generate an employment of approx. over 100,000 skilled and unskilled workers.

Within 2/3 years it can become the second largest exports of Pakistan after Textile. The following are the facts/hindrances being faced by copper exporters as steel sector of Pakistan imports steel scrap worth $2.6 billion annually. The electrical motors being imported for purpose contain 65% steel scrap (by value) and 35% is copper. (By value) which acts as import substitution. Copper extracted out of these imported motors is further processed and exported to China. From copper to copper, the value addition in this is more than 30% (FBR requirement is 10%).

In case of processed copper export (from imported motors and compressors) the value addition should be more than 10% when compared with copper; (excluding steel scrap which was imported with the motors and is being used as import substitution).

FBR is required to issue a notification that “in case of processed copper export from imported motors, compressors, electrical cables 10% value addition would only apply to copper excluding steel imported with it”.