9.6.6 The OEM Forum of the international OEMs published a Position Paper in June 2020 which outlines the vision and intent of its members to contribute towards job creation, economic growth and transformation. 9.6.7 The OEMs, as suppliers to the mining industry, operate in the same economic sphere as the mining rights holders. Given the Mining Charter requirement for the mining industry to increase its local content, the steel industry must be evaluated for product availability. 9.6.7.1 Most OEMs source steel and components, such as the steel for bodies, frames, and drives, from third party steel suppliers and component suppliers.
9.6.7.2 The steel component typically represents 30% of the mining goods’ cost in South Africa.
9.6.7.3 The OEM members import quenched and tempered steel for use on Dump Truck body fabrication. Products produced for use in earthmoving and mining are predominantly manufactured from quenched and tempered steel. Mittal in South Africa does not produce this grade of steel, so the steel is imported from Europe or Asia. 9.6.7.4 Local steel manufactures cannot meet the specifications required for these products and do not have the various plate size thickness required. 9.6.7.5 There may be a difficulty if Yellow Metal equipment is designated, but there is no exemption for steel that cannot be sourced locally to manufacture the equipment. 9.6.8 The demand for locally manufactured steel products has diminished year on year since 2010 due to a downturn in mining activity and a lack of infrastructure projects that require steel fabrication. Steel fabricated structures for infrastructure projects, when required, are often sourced by Government and the mines from outside South Africa, specifically from Asia, which has no benefit in terms of job creation or retention. 9.6.9 Steel is a major input cost to most OEMs, second only to labour, but provides no benefit in terms of preferential procurement, due to the downstream supply chain having a poor B-BBEE Scorecard. This in turn affects an OEM’s B-BBEE Scorecard and that of its customer. 9.6.10 The import process has inherently long lead times, quality issues and unstable pricing. It has been suggested that Government needs to offer local suppliers and fabricators some protection through incentives and duties on finished goods, based on local capabilities and competitive international benchmarking and not dumped products. 9.6.11 At the current local steel price, the OEMs state that it is cheaper to import the steel and / or components and / or completed machine than to manufacture locally. 9.6.12 Understanding the supply chain and the value chain is therefore critical and the dtic will work with the DMRE, MEMSA and the OEM Forum to identify measures which will stimulate local content and export potential. 9.6.13 Yellow Metal. As noted above, there are significant opportunities for the yellow metal sector in South Africa (municipal maintenance, construction, mining, agriculture, infrastructure) and in sub-Saharan Africa, especially SADC. 9.6.14 SA yellow metal manufacturers are disadvantaged in South Africa and the rest of Africa relative to international suppliers. South African manufacturers must be able to offer customer financing and aftermarket servicing packages to be competitive. This is a critical competitive factor. International OEMs also have access to finance from state agencies at close to zero percent interest. 9.6.15 R&D and IP are crucial in this sector. South Africa had leading technology, through companies like Boart Longyear and Bell. Boart was sold off to a foreign owner when AAC left South Africa. Suitable R&D support will need to be considered in discussions with the DSI. This is an important area for 4IR technology development. It should be raised to the priority list of the Presidential Commission on the 4IR in respect of technology and skills.
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The South African Steel and Metal Fabrication Master Plan 1.0
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