South Africa signs plan to revive the steel industry

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South Africa’s Department of Trade, Industry, and Competition said that the country had signed a plan to revive the local steel industry.

The plan dubbed The Master Plan for the steel and metal fabrication sector is an initiative by regulators, industry, and labour and delineates the steps to re-energize the sector and expand production, Pretoria Rekord reports.

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South Africa is regarded as one of the biggest producers of steel on the continent. According to reports, steel-consuming industries contribute up to 600 billion Rand (44 billion USD) to the country’s GDP.

ArcelorMittal South Africa ACLJ.J is the country’s largest steel producer. ArcelorMittal SA MT.LU, based in Luxembourg, is the majority owner of the company.

In recent years, the industry has been under increasing pressure because there are few infrastructure projects, soaring input costs, and international price competition.

The State Department of Trade and Industry and Competition was optimistic that the signing of the Master Plan would set the foundation and commitment for the sector’s development and growth.

The crafters of the plan based it on these key pillars:

● Addressing demand and supply measures and agreements related to the African Continental Free Trade Area Agreement (AFCFTA).

● An oversight council comprising 35 members of the industry, public sector officials, and labor officials has been put in place to oversee the plan’s implementation.

● Setting up a steel fund to support the sector’s projects.

The industry players all agreed that the decline in domestic production and demand had become a challenge for the industry.

The Master Plan was developed after various stakeholders held consultative forums with the government.

According to the plan, the country’s steel industry was in survival mode, which means they were focusing on cost-cutting rather than investments in emerging innovative technologies, new plants, and improved processes.

What Measures Will Be Implemented?

The growth-stimulating measures the plan aims to implement include:

● Promoting export into the African continent which offers a massive opportunity for steelmakers in South Africa. Reports suggest that African countries purchase iron and steel worth 400 billion Rand each year.  In this regard, the plan focuses on opening new markets for local industries and promoting partnerships.

● The plan also aims to look at local procurement, which stakeholders consider to be a critical growth driver. In the plan, state-owned entities like Transnet commit to review their procurement requirements and help to boost the local supply chains for large-scale projects and consumables.

Through its operations director Lucio Trentini, the country’s Steel and Engineering Industries Federation of Southern Africa (SEIFSA) stated that letting local companies in the value chain and communities that rely on steel go under was ridiculous. According to Trentini, historical trends in the metal and steel industry reveal that if they let some parts of the local industry close down, then it would be near-impossible to revive them.

Pretoria Rekord