7 INFRASTRUCTURE PROGRAMME AND LOCALISATION. Nedlac negotiations have produced commitments to local production. The Steel Master Plan seeks to implement these commitments. 7.1 Designation of products for local manufacture and addressing evasion of designated products is a key issue. The dtic has designated a wide range of steel products for local production, which requires public entities to buy locally-made steel. This is a significant step forward and has assisted local firms. However, there are gaps in implementation with some entities not adhering to the rules. This results in South African companies owned by both black and white shareholders losing contracts from SOEs and municipalities, with the resulting loss of the business and / or jobs. Industry has given examples of product specification that have the effect of excluding local production. Representations from some stakeholders to the Facilitator have suggested that in some cases, these are for unjustified reasons. Products are sometimes over-specified or could easily be replaced by locally manufactured alternatives with the same function, performance and quality. The proposal by industry stakeholders for an effective Compliance Investigation Unit, supporting the SABS and other state bodies such as the Auditor General and backed up by meaningful accountability and penalties, can address this problem. This proposal will be considered by the Steel Oversight Council. Ultimately, however, two measures are essential: 7.1.1 A commitment from the SOEs, SALGA and the metros that they will adhere to the designations unless there is a compelling reason to deviate and that they will give early warning of such deviations and be transparent about them. The dtic will work with the Department of Public Enterprise (DPE) and the Department of Transport to prioritize signing charters with the major SOEs (initially Transnet, Eskom, ACSA, SANRAL, PRASA and Denel), with detailed targets and mechanisms to be agreed after signature of the charters in memoranda of agreement. 7.1.2 There should be an investigation into the possibility of altering BBBEE procurement rules to reduce the points awarded for purchasing from middlemen who add little or no value (below a significant threshold to be defined i.e. not repackaging or relabeling) and add points for local manufacture. The dtic will discuss with the National Treasury the option of including value-add and local manufacture requirements in procurement regulations and the policies adopted by the SOEs and municipalities.
7.1.3 Designations must be reviewed from time to time to ensure that they are current.
7.1.4 The National Treasury has listed measures which can be used in case of evasion of designations and other restrictions. These are listed in Annexure C. 7.2 Agree with the Infrastructure and Investment Office in the Presidency and Infrastructure South Africa to optimize localization of components for their infrastructure projects which include public funds. A delegation from the steel industry met the Investment and Infrastructure Office in the Presidency about local content for the pipeline of infrastructure projects which will be driven by Infrastructure South Africa. A proposal for maximizing local content has been workshopped with the industry, the unions and the dtic and has been sent to the head of Infrastructure SA. The agreement should include measures to optimize localization by eliminating the rewards for using middlemen who do not add production value and simply import components, by maximum transparency in procurement, by involving the industry at an early stage in project design and by ensuring that designs are based on specifications which do not exclude local production. Key programmes include water pipelines and reticulation, railway network expansion, port expansions, renewable energy and large-scale housing programmes. In the second phase, detailed memoranda should be agreed which set out the procedures and targets and how they will be monitored. It has been proposed that a review be conducted of the way BBBEE points are allocated and to include more points for local production. 7.3 The Department of Human Settlement will in many areas be making serviced land available rather than completed housing. It is vital that the industry work with the retailers and government to prepare for this by further development of steel frame housing options and that standards be established which do not allow the sale and use of dangerously thin steel sheeting. The Steel Oversight Council should lead this discussion. 7.4 State-Owned Enterprises and Local Government. The dtic will work with the DPE, COGTA and the Steel Oversight Council to reach agreement with the State-Owned Enterprises (including water boards), SALGA and the metros to drive localization. In the first phase, the dtic and the industry will aim to sign a charter
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The South African Steel and Metal Fabrication Master Plan 1.0
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