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Foundry Development & Services Institute (FDSI)

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FDSI intend to start a foundry technician course for persons who are employed in the industry to qualify them for NVQ level 4 qualifications.

Theory classes will be conducted at Ekala FDSI training center.

Please call 0113109600/0770500404

Mail your application to fdsi@sltnet.lk

With more than two years into the COVID-19 pandemic followed by economic crisis, we’ve learned
to sustain Industry in difficult times. This made the foundry and metal industry stronger, safer and
more adaptable in the domestic market making much wanted products such as firewood cookers
spares, Plantation machinery, and extrusions for local industry. We now need to focus on rebuilding
our systems to restructure the industry in a solid foundation for economic recovery and
uninterrupted growth. FDSI with metal sector advisory committee submitted the Metal industry
development plan to Ministry of Industries to achieve sustainability and growth.
In the council the meetings and communications became virtual in this period more due to fuel
crisis. FDSI had 2 meetings and 2 training programs virtually for nonferrous industries. FDSI also
connected the industry for 6 virtual training programs to develop metallurgical knowledge with the
assistance of IIF India during the year. FDSI webpage became more active than before and were able
to connect industry to the casting requirements of local industries.
The ministry of industries did very little to develop the industry on much wanted policy matters with
long hours of meetings virtually and physically where most of the discussions were originated to
defend the export of Metal scrap used in the foundry and extrusion industry. It was felt that stronger
government participation is required to solve the industry development issues to use local scrap to
bring value addition in the industry. The industry Policy framed with hours of deliberations is now
only another inactive document. The standardizing of locally manufactured Aluminum cook ware,
and bake ware, aluminum extrusions and electric motors for domestic appliances for improvement
and performance are on a snail’s space.
The EDB had 2 meetings with industry to assist on development galvanizing facility and to increase
exports with some of the FDSI members but there was no outcome, but continue to work towards
development of Light Engineering sector. The development of Export market and value addition
formula is yet to be developed. EDB funded some industries for adding new technology into the
industry.
The skills development of foundry industry slowed as the industry participation was insufficient to
run the programs during this period however continuous efforts are underway to popularize the
curriculum developed to train skills of foundry technicians by FDSI together with MESSCO and TVEC.
The reluctance of youth to enter foundry industry is a barrier for future development if
mechanization of industry is not done. Therefore to attract youth for the foundry processes,
hydraulics pneumatics and mechatronics applications will be critical with more productive
remuneration.
Country’s negative GDP growth pegged at -3.6% in FY20221 to22, sky rocketing interest rates of 28
to 30 percent, is not able to control cost of raw material prices, the economy looks not resilient
enough for revere the inflation which is likely to continue in 2022-23.However the devaluation of
rupee is useful for export base industries. But the temporary suspension of raw material imports
turned down exports and import substitution of local metal manufacturing industry. The indirect
exports of some metal products continued with local companies catering to neighboring countries.

A few Industries invested on induction furnaces and on greener foundry concepts to move towards
global industry norms in manufacturing during this difficult period. To sustain in these investments
of industry a very clear government discipline is required in the metal scrap trading policy and base
metal value addition and temporary suspended locally manufactured products should remain for a
few years. Further, China Free Trade Agreement should not allow non-standard products entering
local market if the industry is to sustain.
On the brighter side we see India moving up to a global supply hub of foundry products giving Local
industry opportunity for value addition for metal scrap. If the base metal industry can add 10 IR in Sri
Lanka the foundry industry can get RS 45 per kg of value added products in the cast Iron and steel
products without much strain on the work force. Similarly there are opportunities to add value to
our copper scrap and converting them to copper tubes and pipes for European market which require
a change in our HS classifications to allow export of this commodity now ban for export.
Rising cost of conventional energy sources is a barrier for foundry industry, FDSI advice to reduce
energy cost by improving efficiency and use of Solar Power which is considered as ‘green’ that is
environment friendly and cost competitive especially once the gestation period of capital is over.
The council has agreed to FOCUS on development of the sector industries to increase its productivity
to create markets for its products and today’s session will open the window for this activity.
Council thanks its stakeholder companies and Institutions for their support during the year and look
forward their continued cooperation for development of industry.

Melvin Samarasinghe
Chairman
22 nd Sept 2022

It is right to say 2020 was a year of   Change for Foundry industry and a favorable year for higher value added exports, and a display of innovative Foundry skills for Sri Lankan manufacturing industry with the eminent support of Ministry of Industries, Export development Board and Industrial Development Board

FDSI in 2020, the word would be ‘change’ it was a big year of promised transformation to value added exports with the stopping of exports of metal scrap used in foundry industry with different arrangements. In preparation for this transformation FDSI worked to develop a Series 4 online workshops to enhance knowledge on materials used in Aluminum and Brass industry, resulting a growth of local foundry and extrusion industry with the identification of more materials for valued addition

FDSI proposed the development of new value addition formula to measure the value addition of local industries to support the industries doing higher value addition with the ministry of industries. The standards development for water pumps and cook and bake ware are still been developed in a snails speed at the Sri Lanka standards institution due to want of resources and other priorities.

Six months minimum warrantee was proposed FDSI to the Presidential Industry forum through ministry of industry metal sector which was accepted at the 1^st meeting is yet to overcome trade barriers for implementation. The ban on copper 3mm wire has curtailed the regulated value added exports but there is no evidence to prove that this copper is now used in the country. However the copper price in the market has doubled indicating that the material is leaking to overseas market in tons per month without any revenue to the country.

FDSI continue to participate in skills development and completed a curriculum for foundry technicians with the industry members with the sponsorship of MESSCO and TVEC. The program of training 100 technicians on line will soon to be realized with its member industries participation and now industries can apply for training of their staff for a valid NVQ Certificate. FDSI continued to transfer knowledge for modernization of the foundry industry and metal industry with Export Development Board. Some of the members made use of this Grant given by the EDB to add value to their products. EDB continued to support in development of Aluminum die cast industry for further value addition.

 

The impact of Covid-19 and scarcity of FOREX in the country has hit the small and medium foundry operation due to scarcity of foundry coke and other chemicals. The government efforts to sustain the industry are not taken as a priority by the banks.

Throughout, at FDSI the council continued commitment to improve levels of service to Stake holder in small and medium foundries. The noticeable indicators are the results of our achievement of export targets in the Engineering sector and the growth of local raw material usage in foundry and extrusion industry.

Member support will be a key priority in 2021, with the Board focused on assessing future industry wants to ensure a technical workforce to run its machinery for higher value added products. This is built on continued support of Directors, Private members, industries, FDSI customers and funders. Our future sustainability, as always, depends on these strong partnerships. The Successive development of leadership to co-chair for the institute is the need of the day.

 

I thank from the bottom of my heart for the 10 board Directors and 3 ex-officio Directors consultants for spending their valuable time with FDSI and hope to see a change to a 3G foundry industry soon.

 

For Council

 

Melvin Samarasinghe

12^th Oct  2021

Time : 4.00 p.m to 5.00 p.m Zoom Details : https://us02web.zoom.us/j/82031861994?pwd=MlJ2ck82ZXpMK3NCdmY4cFZ1OXVuQT09

Supply of necessary scrap metal for the Local Small Scale Industrialists - Issues relating to the metal industry had been discussed by the “Inter-Ministerial Task Force on Industry and Enterprise” and the “Presidential Task Force on Economic Revival and Poverty Alleviation” at their meetings. As determined at those discussions, steps have been taken to stop the export of Copper, Aluminium, Stainless Steel, High Carbon Steel, Brass, Cast Iron, Aluminium Ingots and Zinc Ingots with immediate effect, with a view to providing sufficient raw materials for the local metal industrialists. According to a research conducted by the Sri Lanka Industrial Development Board and the University of Moratuwa, it has been proved that there is a high demand for scrap Iron, Cast Iron, Aluminium, Copper and Brass by the local industrialists and the demand for Zinc, Manganese, High Carbon Steel and Stainless Steel is also being increased. The demand for Scrap Metal is expected to be increased further in line with policies of the Government pertaining to the promotion of local industries. Therefore, it has been found that it is appropriate to reconsider the current permission that has been given for the export of Copper Wire and to suspend the export of Copper Wire in order to encourage production of more value added products. Accordingly, the proposal made by the Minister of Industries to use the scrap metal of Iron, Copper, Aluminium, Stainless Steel, High Carbon Steel, Brass , Cast Iron and Aluminium Ingots and Zinc Ingots and Copper Wire only for the local industries and to permit to export the unusable Scrap Metal only on the recommendation of the Sri Lanka Industrial Development Board and the other relevant institutions, was approved by the Cabinet.

FDSI continued to fulfil the objectives of the Institution with the new challenges for the foundry industry due to export of scrap metal used as raw material in the industry, and free flow of low quality castings and finished products to the market. The council met 4 times during the year. To find solutions to scrap problem with industries FDSI had meetings with Ministry of industries, (MI) Export Development Board, Ministry Of Development Strategies and International Trade, and Industrial Development Board and with Secretary to the President. However, these meetings had no result as the scrap exports ( Brass, Copper and cast Iron) were approved by MI for export in different forms to different institutions due to lack of clear policy. FDSI joined the Lanka Industry Forum for Empowerment - LIFE to strengthen its power to bargain with other sectors in 2018 to resolve this problem.

Senior business leader and renowned engineer cum industrialist, Dr. Nihal Jinasena passed away on 2 February. Dr. Jinasena was the Chairman of the L. M. Jinasena Group of Companies and of Loadstar Ltd., the largest export company in Sri Lanka. He was also serving on the Board of Janashakthi Insurance Plc. He was a Chartered Engineer and a Fellow of the Institution of Engineers, Sri Lanka, and a Fellow of the Institution of Engineers of the UK. He also holds an Honorary Doctorate from Loughborough University, UK. Dr. Jinasena was also a keen sportsman and was the Sri Lanka Champion in Yachting and Motor Racing and captained the Sri Lanka team in these two sports. He was honoured with the prestigious title of ‘Deshamanya’, awarded by the President of Sri Lanka, for his many achievements. Among the many positions he held were the Chairmanship of DFCC Bank and DFCC Vardhana Bank while being a member of the Securities and Exchange Commission and the Insurance Board of Sri Lanka. He was also a member of the National Research Council.

Description of Copper Based Products Part of laying out the foundation to improve statistics and increase market transparency is to agree to a common set of definitions when describing or referring to products. Through the efforts of a select Working Group of government and industry experts, the ICSG has developed a set of definitions and descriptions for certain copper based products. Definitions and Descriptions of Copper Based Products used by the International Copper Study Group I. Copper, Copper Alloys and Intermediate Products of Copper Metallurgy General Copper is extracted from various ores or recovered from waste and scrap. Copper is recovered from its sulphide ores by a dry extraction process in which the powdered and concentrated ore is roasted where necessary to drive off excess sulphur and smelted in a furnace to produce copper matte. Cement copper (precipitated copper) is a product obtained by precipitation (cementation), i.e. by adding iron to the aqueous solution resulting from the leaching of certain roasted ores or residues. It is a finely devised black powder containing oxides and insoluble impurities. Cement copper is often added to the charge which goes to a melting furnace to produce copper matte. In some cases the concentrated ore is smelted in an air or oxygen flash smelting furnace („flash smelting") without prior roasting. The matte is treated in a converter to eliminate most of the iron and sulphur and produce blister copper. The blister copper is refined in a reverberatory furnace to produce fire-refined copper (anodes) and, where required, may be further refined by electrolysis. Marketable products received from this process are cathodes. In additional plants cathodes are cast into, billets and cast rod. wire bars For oxide ores and also for certain other ores and residues a wet process is used: Solvent extraction/electrowinningHigh grade electrowon (Commercial Cathode) is SX-EW production that can be treated as refined cathode and sold as such. Low grade electrowon is SX-EW production that must be re-refined. (SX-EW). Relating to the source of material used in producing anode, smelter production is divided into two groupings: primary - from concentrates and precipitates, e.g. matte or cement copper. secondary - from scrap materials e.g. old scrap (tubes, sheets, plates, cables, automobile radiators and other scrap from castings, electronic scrap, Cu-Fe-materials, catalysts etc.), new scrap (turnings and other scrap from first and second processing stage) and residues e.g. flue dust, slag, ashes, droses. There are, however, intermediate products of copper metallurgy, e.g. black copper, blister and anodes that can hardly be grouped to primary or secondary I.1 Copper Mattes; Cement Copper

Some of the SMES and traditional industries were in the verge of collapse in October last year but after the ban on export of metal scrap a reasonable volume of scrap is available to continue their industries. The ban on export of metal scrap is justified as the country needs metal for all infrastructure development programs and the demand has increased more than 20 times from which prevailed 10 years ago, Foundry Development Services Institute (FDSI) Immediate Past President and Council Member Melvin Samarasinghe told Daily News Business. The demand for steel scrap in the country per day is 15,000 tons out of which 8,000 tons are locally found and the balance is imported, therefore the demand for steel production is more than the scrap supply. He said that the local market price of steel scrap currently stands at Rs 50 per kg which is equal to the London Metal Exchange (LME) price. Therefore industries import steel billets in addition to local steel scrap for production of steel. “Making a reasonable impact on the economy, the usage of steel scrap for local production of construction steel has helped to minimize the price fluctuations because 60 percent of steel is produced using the local steel scrap”, he said. The Government now should reconsider stopping the licences issued for BOI industries to export their scrap as they could sell their scrap at LME prices in the local market as the main business of BOI companies is not export of scrap. There is a potential for value addition to Copper too as Copper is considered a precious metal. Currently, the LME price is Rs 950 per kg while the local market price is Rs 650 per kg. Copper is not a metal that will perish as fast as iron and the generation of copper scrap came mostly from electrical installation and grounding of telecom and the electrical wire in the last decade. “Copper could make a reasonable amount of money and create more jobs by facilitating and banning the export of non-value added products of Copper, while encouraging the local smallholders to start small industry units and encouraging the industry to grow as the steel industry. The production of copper wire and tapes and manufacture of telecom cables should now be encouraged for higher value addition,” Samarasinghe said.

Nov 09 (LBO) - Sri Lanka on Thursday extended a six month ban on exports of scrap metal for a further two years, to protect the local foundry industry. The six month ban was due to expire on Friday, with Sri Lankas Cabinet of ministers approving the two year extension, Cabinet spokesperson Anura Yapa told journalists. The ban was introduced to protect the local foundry industry that was running short of raw material scrap for value addition, due to a rush of exports to neighbouring India. Ferrous and non-ferrous scrap is used to make brass fittings, hinges, hardware and ornaments among other things, and is still largely a small, cottage led industry in Sri Lanka. There are about 50 large scale industries using metal scrap and about 2000 to 4000 smaller units, with as many as 40,000 families dependant on the industry, Melvin Samarasinghe, Chairman of the Foundry Development Services Institute, said. The local industry needs about 2000 tonnes of brass scrap, 1000 tonnes of copper scrap and about 600 tonnes of aluminium scrap a month, generated from places like the National transport Board, the water board and other institutions. The industry says that it is still facing shortages however, despite the ban, with factories running at 40 percent capacities over the last few months. The problem, Samarasinghe says, is that exporters have found new avenues to get around the ban, in some cases converting the scrap into the form of ingots, which can then be exported. “Other avenues to export scrap have opened up and therefore the ban does not have much effect,” Samarasinghe said. Prices of 260 rupees a kilo of brass scrap before the ban have also now shot up to 300 rupees a kilo with brass scrap selling at 550 rupees due to tight supplies. Meanwhile, the government will allow exports of lead and lead alloys, subject to environmental clearances, Yapa said.

Last weeks Exporters Forum held under the auspices of the Industries Ministry revealed that certain Government policies like allowing duty free imports of some items were killing local industries manufacturing the same. One of the issues raised in this connection was the permission given to import duty free sprayers used for the spraying of fungicides, weedicides, insecticides and such like in the agriculture sector. Melvin Samarasinghe, Factory Manager, Agro Technica Ltd., a Hayleys subsidiary, told Industries Minister Rishad Bathiudeen that Budget 2010 for some unknown reason allowed the duty free importation of sprayers. Previously such imports were subjected to a 30% duty. According to him there had also been two other manufacturers, one Batticaloa based and the other Baurs. Both of the latter companies had to close down their operations, unable to withstand competition against duty free imports, as they had to pay duties for raw materials imported for the manufacture of such sprayers, whereas the same could be imported duty free, making the latter cheaper. A representative from Singer Sri Lanka plc who was also present at this occasion said that they too had to close down their sprayer manufacturing operation because of this competition from free imports. Samarasinghe said that they had also made representations to Economic Development Minister Basil Rajapaksa (President Mahinda Rajapaksas brother), but to no avail. “All that we are asking for is a level playing field,” he said. A Finance Ministry representative who was present at this occasion asked him whether his and the two companies which closed down were in a position to cater to the islandwide demand for such sprayers to which Samarasinghe answered in the affirmative saying that at one time they were supplying 75% of the local market. Here Bathiudeen requested the Finance Ministry representative to look into the matter and to come up with a solution at the next forum which will be held in another three months time to which however no firm date was given. Meanwhile the Singer representative further airing his grievances said that they are also into the manufacture of pumps. But this operation is being affected because cast iron was being exported under the guise of scrap iron thereby hurting its manufacture. Here Bathiudeen directed a Customs officer who was also present at this forum to come up with a solution at the next meeting. Another problem that cropped up was with regard to Chevron Lubricants Lanka plc, where the company was unable to compete with duty free imports in the case of supplies to BoI companies, though there is a scheme called temporary imports for export processing which allows indirect exporters like Chevron Lanka, indirect because they cater to BoI companies which are mainly export oriented, to be allowed to import raw materials on a duty free basis for the manufacture of such lubricants. BoI companies which are essentially export oriented are allowed to import their inputs (such as lubricants in this case) on a duty free basis. An Industries Ministry official however said that they cannot give Chevron this concession as they didnt know how much of that raw material input was required for the manufacture of lubricants to service BoI companies. The company was therefore asked to address this issue at the next meeting. KIK Group of companies which makes electricity materials were also faced with a similar problem. In their servicing of BoI companies they had been allegedly directed by the Central Bank of Sri Lanka (CBSL) to obtain their payments in foreign currency. They said that they can obtain such payments from foreign owned BoI companies but the problem was when it came to dealing with BoI companies operated by locals where it was not easy to obtain payments for supplies made and work done in foreign currency. Because of this condition, such BoI companies preferred to import those goods direct where they enjoy duty free concessions, whereas similar type of goods manufactured by KIK are subjected to taxes and hence became uncompetitive vis-à-vis tax free imports because of the condition that they need to obtain their payments in foreign currency in the supply of such to BoI companies. The authorities said that they will look into this matter. A representative from CBSL was also present at this meeting. Among some of the other matters raised was the non remittance of monies under the Governments Export Development Rewards Scheme (EDRS), a scheme that was in operation in 2009 at the height of the Great Recession, where exporters were promised by the Government cash rewards if they kept up with their export performances, coupled with no reduction in staff. It was pointed out at this meeting, that in the case of just two companies alone, the total outstanding EDRS was Rs. 75 million. Here Industries Ministry Secretary Tilak Collure directed the Finance Ministry official to come up with an answer at the next meeting as to whether the EDRS would be honoured or not. Delays in obtaining VAT refunds were another issue that cropped up at this forum. However that may be, some exporters also did point out that due to the intervention of this Forum that they were able to get at least some of their VAT refunds.

The private sector emphasizes the need to revisit metal sector policy while studying its strengths to mitigate weaknesses for economic development. The Government banned scrap metal imports in October 2010 for six months. The ban imposed in October for six months is still continuing. Agriculture Machinery Manufacturers Association Chairman Melvin Samarasinghe said iron, copper and aluminium are mainly benefiting from the ban. The largest contribution is being made by the steel industry which produces over 15,000 tonnes per month to the value of Rs 1.5 billion per month and the value addition is over 50 percent of the London Metal Exchange (LME) scrap value. He said copper industry value addition for export of copper rods was lower than the LME scrap price in October 2010. This value addition has been 50 percent lower than the local industry value addition, which is, plus 40 percent to LME copper price even when compared with a simple product like a brass hinge. The ban on copper has therefore helped the local industry but today there is no brass scrap for the local industry as this has leaked out of the country through other channels. Samarasinghe said the aluminium industry value addition was worse due to non segregation of scrap but after the ban the segregation of scrap commenced and the value of locally produced aluminium using scrap extrusions increased by 20 to 30 percent which is plus 50 percent of the LME price benefiting locals. “This needs to be streamlined after closing the gaps,” he said. “There should be a transparent system for import and export of raw material benefiting local value addition for economic development. The policy should be free from regular revisions therefore the best and the simple way out is to use the globally existing HS Codes for export of finished metal goods and to facilitate import of raw material for the local industry. The export of any value added metal products should be at least 20 percent more than the LME based metal prices as any of our imports of finished goods are not less than the global raw material price,” Samarasinghe said. Exporting value added finished goods will definitely benefit economic development, productivity and employment generation as these items could also be further value added to electric cable, electrical contacts, springs and screws which could help many more industries. “In applying to the metal sector we are paying the value of material of different products which is sometimes cheaper but not buying the complete product with its deliveries. Our machinery users are getting blunt day by day and we are becoming more dependent on other countries. We are now contributing to adding value to industries in other countries than our own country. If we continue this process we will have to close local metal industries,” Samarasinghe said.