Ina Opperman
Business Journalist
3 minute read
14 Jun 2021
3:12 pm

Steel CEOs applaud new steel master plan

Ina Opperman

The South African steel industry have been in a downward spiral since the global financial crisis of 2009, with manufacturing’s contribution to the country’s GDP decreasing by 44% from 24% in 1990 to 13% in 2018.

Steel CEOs were there to applaud when Trade, Industry and Competition Minister Ebrahim Patel and various industry stakeholders from the steel and metal fabrication sector, signed a master plan for the sector last Friday at the Hall Longmore facility in Germiston.

The master plan is a blueprint for the industry on how to re-energise itself and expand production and was developed in consultation with all stakeholders from the industry, including primary steel producers, downstream steel players, metal fabricators and organised labour.

“The signing of the master plan sets the foundation and commitment for the development and growth of this important sector. The ceremony offers an opportunity for us to reaffirm the commitment to the steel industry’s social compact and the agreed implementation agenda,” Patel said.

He warned that there is a long and steep road ahead to make the plan work, as the department noticed when implementing other master plans.

“Building consensus on the steel master plan and agreeing on the actions to anchor the implementation was a much easier process,” he said.

Minister Ebrahim Patel sings Steel Master Plan with industry

Minister Ebrahim Patel, third from left, signs steel master plan with industry stakeholders last Friday.

“The hard work has started in the implementation and will get even harder as we begin to collectively tackle actions that are very difficult, but necessary for the long-term development of this industry.

“We need to bring new hope to the nation, the workforce, the youth and graduates who have aspirations to enter this important industry. The implementation process will require a lot of trade-offs and a balanced approach for the betterment of the entire steel value chain.”

Malebo Mabitje-Thompson, deputy minister in the department, said de-industrialisation is a choice. “We should start to choose to work together to get industrialisation going and the steel master plan offers the opportunity to do this together as partners and citizens of South Africa.”

Role of steel industry

The steel industry forms an important part of South Africa’s industrial capacity, as a direct driver of growth, investment and jobs, as well as an indirect facilitator of South Africa’s construction, automotive and mining sectors, the department says.

South Africa is one of the largest steel producers on the African continent, second only to Egypt. The World Steel Association says local steel manufacturers produced 5.7 million metric tons of crude steel in 2019 and employs around 200 000 workers.

The top steel consuming industries, such as mining, construction and automotive, contribute R600 billion (15%) to the country’s GDP and employs eight million workers.

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The master plan

The master plan sets out the practical steps stakeholders in the steel and fabrication value chain must implement progressively and includes six priority areas:

  • Demand-side measures;
  • Supply-side measures;
  • African Continental Free Trade Area Agreement;
  • Transformation;
  • Human Resources and a Shared Vision;
  • Resource Mobilisation and the Steel Fund.

Steel Oversight Council

A Steel Oversight Council has been established, with 35 members from all parts of the industry, including up and downstream industry players, organised labour and public sector officials, to drive implementation of the master plan. The council met for the first time in February this year after the industry adopted the master plan.

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Strengths and weaknesses of the steel industry

According to the plan, the local steel industry has a number of strengths to lean on, such as local know-how, infrastructure availability, availability of scrap metal and iron ore, export potential, local and African demand, with the new African Continental Free Trade Area and designated product status for all government and parastatal projects.

The industry can also bank on government support for more regular modernisation for efficiencies, the automotive industry localisation drive and incentives and the increasing level of public and private sector investment to support the Presidential investment drive.

However, there are some challenges, such as our old and inefficient integrated steel plants, high electrical costs and unstable electricity supply, as well as high transport costs, the export of scrap metal and lack of export promotion.