Now that the Trade minister has managed to – at least provisionally – calm down the petrol dealers, will he manage to do the same with the steel companies? Since Desbro stopped its iron production on 1st November, the parties have not been able to reach a consensus. The conflict became even worse last week when the government realised that the supposedly more affordable prices expected from foreign companies could finally prove more expensive. But a meeting between both sides yesterday helped calm things down a little bit. The government appears keener on finding a solution and will give its decision after cabinet next Friday.

The conflict started between Desbro and the ministry of Trade after the former explained to the government that it could no longer go on producing iron bars at the existing price. Despite the support of its competitors – who agreed that price of iron bars had to be raised in view of the rise in the price of raw materials as well as petrol on the international market – the government did not accept their point of view. But in view of the deadlock, a ministerial committee, including ministers Duval, Jeetah and Valayden, was set up to work out a solution.

After Desbro threatened to stop its activities if the price of bars was not increased, the government said it would not give in to “blackmail”. Minister Jeetah even mentioned the names of two foreign companies that would be prepared to export their products to Mauritius at cheaper prices than Desbro’s.

<B>Putting the cart before the horse</B>

Australian firm Texima and America Steel Industries of Philadelphia were the two companies expected to save the sector. But it seems the government had put the cart before the horse. The estimate of Texima is actually Rs 1,000 higher than Desbro’s while the US company revealed it could not at the moment supply the country with billets (the blocks of steel which are the raw materials of the bar-making industry).

The government was convinced that it would be able to find billets at between 460 and 480 dollars the ton on the world market. It is true that the first estimate of Texima was quite close to this, as it was “only” 518 dollars. But the problem is that iron bars at that price do not contain vanadium, an essential component and a guarantee of quality of the iron bars manufactured by Desbro.

But the government is not happy with Desbro’s attitude. The minister of Labour and Industrial Relations, Vasant Bunwaree, does not mince his words when condemning the way the steel company has acted so far, “Desbro asked for a price rise but stopped its industrial production while negotiations were still on. There was another meeting on Thursday and we received another letter from Desbro. This is not a good atmosphere in which to start honest and sincere negotiations. We will not give in to that kind of blackmail.”

The situation could not be clearer. Both sides appear convinced that they are right and are not prepared to make any concessions. Desbro is adamant that it will not change its mind – or resume its activities – as long as the government does not review the price of bars. It made it clear that it could not go on producing at a loss and, without such an increase, it would have to close down its factory – leading to several job losses.

Risk that factory closes</B>