3.7 Company level interventions 3.7.1 The IDC acquired SCAW Metal from the Anglo American Corporation in 2012. The investment was seen as both strategic and defensive, to secure the local supply of steel for infrastructure build programs whilst curbing the pace of de-industrialization. The IDC introduced three Strategic Equity Partners to turn-around the business (1) Scaw Metals involved in steel and steel product manufacturing; (2) Grinding Media SA and (3) Cast Products, producing products for mining, rail and general engineering. 3.7.2 Intervention following Highveld closure – the restart of Highveld under Business Rescue was supported by IDC post-commencement finance, resulting in the structural mill being reopened with 250 workers and a contract Manufacturing Agreement with AMSA to manufacture steel sections and rail products. Given the available water, energy and gas supply, the balance of the Highveld property was converted into an Industrial Park, which currently houses 61 tenants, of which 38 are Black industrialists, employing a total of 1 600 people. The businesses in the Industrial Park conduct business with some 300 contract suppliers. Current interventions under consideration include restarting the four iron processing plants. To this end, Highveld has reached an agreement with SAIL Mining to process chrome into ferrochrome on behalf of SAIL, which will utilise one of the iron plants. The dtic participated in the Mapochs merger, resulting in the Competition Tribunal placing a condition on the buyers of Mapochs to supply vanadium ore to Highveld and other beneficiators who do not have resources; this intervention will see the restart of the second iron plant at Highveld. 3.8 Flat Steel pricing Agreement on a set of principles for flat steel pricing in SA that is priced appropriately to ensure that steel- dependent industries are competitive, while at the same time ensuring that the upstream steel mills remain sustainable. The pricing agreement signed in 2017 includes a commitment by the primary steel producer to price flat steel according to agreed principles, which include a methodology termed the “basket price” which excludes China and Russia but includes other steel-producing countries in the following ratio: 50% EU, 30% Asia and 20% NAFTA. The pricing principles replace import parity pricing, prescribing that in effect duties and safeguards are not added to the basket price. Since 2017, the domestic steel hot rolled coil price, which is periodically reviewed by the ITAC Steel Committee, is reported to have been within 1-5% of the basket price. Covid-19 highlighted the risk and challenges of a single flat steel producer in South Africa which was unable to supply all of the demand in the domestic market when production restarted. Against this background, two steel producers have signaled their intention to produce flat products. 3.9 Electricity Pricing Support The DMRE has approved the revised short term and long term frameworks for negotiated pricing agreements (NPAs) for energy intensive users, which set out the criteria for NERSA to evaluate, approve and monitor NPAs. The evaluation of NPAs at inception is based on the cost of supply. Direct Eskom customers can apply to Eskom and municipal customers apply through the municipal licensee, subject to certain criteria. Short Term Framework (STF): The STF aims to provide qualifying consumers with access to electricity prices that are lower than would otherwise be available to such consumers, for a period of up to 36 months, with an option to extend after review. Long Term Framework (LTF): The long-term NPA framework is targeted at large industrial operations that contribute to the base load electricity consumption and economic well-being of South Africa and require electricity price certainty for their operations. The intention is to provide qualifying consumers with access to a lower tariff for a period of up to 10 years, as the operation / sector would be unsustainable on the applicable standard tariff. The base incentive price may be a flat tariff throughout the year with no time-of- use or seasonal differentiation if the applicant can provide interruptibility that the system operator can utilise, within contractual limits, when the system is constrained.
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The South African Steel and Metal Fabrication Master Plan 1.0
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