Fri, 06 Aug 2021

  • Steel industry body SEIFSA says allowing companies that depend on the sector to face closure is unthinkable.
  • The steel master plan is aimed at driving growth and investment in the sector.
  • The steel industry employs around 200 000 people and companies have over the years been shedding jobs.

Hit by years of decline, the local steel industry in "largely in survival mode", according to an assessment contained in a new framework aimed at resuscitating the ailing sector.

The South African Steel and Metal Fabrication Master Plan 1.0 seeks to address the dire reality faced by the sector which was once counted as the key employer and growth contributor, but the rise of imports from China and slow domestic growth has hampered demand, forcing some local producers to reduce output.

The new plan, which has been welcomed by the companies in the sector aims to improve the long-term sustainability of the industry which employs around 200 000 workers.

"The decline in both domestic production and demand has presented a challenge to the industry," according to the document signed by industry players.

The master plan has been developed in consultation with government and all stakeholders in the industry.

"The industry is largely in survival mode, which means that cost-cutting - rather than investment in new technology, new plants and improved processes - is dominating the thinking of much of the industry," it said.

Measures to be implemented

Some of the growth-stimulating measures outlined in the document include export promotion into the African continent, which represents a significant opportunity for South African steelmakers and downstream processors. African countries purchase nearly R400 billion of iron and steel each year, and the plan will focus on opening these markets for local entities and promotion of partnerships.

Local procurement is also seen as one of the key growth drivers, with state-owned entities such as Transnet committing to review their procurement requirements and to help improve local supply chains for large-scale projects and consumables.

According to Lucio Trentini, operations director at Steel and Engineering Industries Federation of Southern Africa (SEIFSA), allowing local companies across the value chain and communities that "depend on steel to suffer closure is unthinkable".

Trentini stated that historical trends in the metal and steel sector show that "if some parts of our local industry close, there will be no way to revive them".

The underlying problem of slow growth in the domestic economy has also impacted domestic appetite for steel, in what has been further exacerbated by the effects of Covid-19 lockdowns.

Source: News24

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