of stainless steel, but is operating at 50% capacity and has asked for tariff protection. About 80% of Columbus’ production is exported. It provides sufficient steel for the domestic markets and exports 80% of its production. It is one of the twenty largest forex earners in South Africa. It has a stable workforce of over 1500 direct workers and over 750 permanent service providers. It has an extensive and successful in-house training programme. It works closely with its customers to provide solutions and manufactures to order. Columbus has committed to the Steel Master Plan, to work to expand the value-added industry in South Africa and to rebuild industries such as the tanktainer and tube industries. Participation in the Auto Industry’s APDP2 is also critical. The stainless steel industry is able to make resources available to help the stainless steel sub-sector workstream of the Steel Oversight Council with the drafting of a sub-sector master plan. The stainless steel industry has a wealth of technical expertise that can assist in the designations and standardisation for the localisation programme. The industry can assist to investigate where stainless steel is narrowly specified in designated products in order to target imported products and evade localisation. For example, specifications for wide stainless steel plates and trademarked stainless steel grades are used to evade localization. Industry expertise can be drawn in to assist with product designations, material design and product designation for infrastructure projects and the standardisation of material requirements, subject to proper governance arrangements. Many opportunities have been identified where local stainless steel was not used in local engineering and construction projects across all sectors. Transparency in the procurement for the infrastructure programme is critical here as elsewhere, to allow access to product information on all projects where stainless steel is specified before imported products can be allowed. A sub-sector Master Plan for the stainless steel industry should be prioritized. Further discussions are taking place with Columbus to understand how these opportunities can be exploited. Columbus has invested nearly R2.5 billion in plant over the past twenty years. It has now committed to increasing production and other large investments, which will result in about 140 additional jobs, subject to certain conditions. The investors require a 25-50 year horizon for the investments, so the following are critical.
5.14.1 The predictability, cost and security of supply of electricity.
5.14.2 Logistics – the cost, availability and efficiency of rail and port services. Port and rail unavailability lead to the loss of shipping opportunities and the loss of customers.
5.14.3 Columbus has applied for a duty on imports of stainless steel products, which have increased substantially.
5.14.4 The availability of affordable stainless steel scrap, which is the input material for Columbus.
5.14.5 Export duties on chrome ore.
5.14.6 There are also risks in the future availability of key inputs, including gas, hydrofluoric acid, ferrosilicon and electrodes. 5.15 The re-rollers (Safal Steel and Durferco) produce intermediate cold rolled, galvanised and colour coated steel products for both the domestic and export markets. Safal Steel is the sole manufacturer of Aluminium- Zinc coated steel in Southern Africa. Both companies utilise modern technology, environmentally compliant processes and equipment. Additional investments are reliant on achieving certainty of supply, the cost of raw materials and ensuring ongoing demand for the products through achieving competitive pricing when compared to lower quality, imported substitutes. The challenge the re-rollers encounter is reliance on a single primary steel producer in South Africa for their hot rolled coil inputs and competing with the same producer in the domestic market on the products they produce. 5.16 The merchants have traditionally played two important roles: bulk-breaking and acting as a buffer between their customers and the steel mills by holding stock. This has been a very important aspect of the industry, relieving downstream manufacturers from holding large amounts of stock and tying up working capital. In return, the merchants have taken a margin, which they justify in terms of the risk they taking in holding stock on behalf of their clients. Some merchants are moving out of the servicing and merchanting businesses and are positioning themselves as international steel traders. If the model breaks down, it will present challenges for the upstream and downstream industry. Some opportunities exist for direct purchase by end-users, like water boards and other SOEs, from the mills, which has resulted in cost reduction to end users.
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The South African Steel and Metal Fabrication Master Plan 1.0
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