Posted on 15 Jun 2021
The South African government and steel industry representatives have signed the “Steel and Metal Fabrication Master Plan 1.0”, designed to support the industry’s short-term survival and long-term growth and sustainability. The measures include a ZAR 1.5 billion ($108.8 million) Downstream Steel Development Fund.
“The key medium-term goal is to match supply to demand: there is over-capacity in basic long steel commodity products, but no supply of many of the steels which are required by the auto industry, the mines and the mining and yellow metal equipment sectors,” South Africa’s trade, industry and competition department (dtic) says in the Master Plan seen by Kallanish.
The main themes include an infrastructure drive, localisation of input material, developing joint ventures for export promotion, decarbonisation, and development of industry value chains. The implementation of the Automotive Master Plan will increase demand for locally produced metal components as OEMs pursue their localisation commitments under the plan. Discussions are now underway between the auto industry and steel sector players, dtic observes.
“Industry consolidation may be necessary along certain parts of the value chain,” it comments. "A targeted designation by the Minister under the Competition Act is proposed, which would enable discussions between industry stakeholders to help manage consolidation .... Some consolidation is likely to take place simply as a result of market forces, but that may lead to further de-industrialisation and a discussion of options is preferable.”
In addition to South Africa’s scrap export tax, discussions between government, and dealers and consumers of scrap have been held to consider measures which can drive local beneficiation of scrap, while sustaining the local recycling industry. “There should be an incentive for recyclers to beneficiate scrap further up the value chain than by simply melting it into ingots or billets for immediate export,” dtic says.
Doron Barnes, Scaw Metals’ chief executive and director of the Barnes Group, says the Hall Longmore pipe mill, where the Master Plan signing took place, was planned to be sold off in 2014 and its parts exported. However, the dtic intervened to keep the plant operating in South Africa.
“There is absolutely no way that anyone would have ever have replaced this facility in SA again,” Barnes says. Since 2014, the firm has sold over 230,000 tonnes of electric resistance welded pipe in South Africa, which today would equate to nearly ZAR 5 billion worth of sales, and approximately 90,000t were exported, mainly to the US, which equates to revenue of $100 million, he added.
Source:Kallanish
