9.6.16 The designation and enforcement of South African yellow metal equipment with a minimum local content is crucial, covering front-end loaders, TLBs, loggers, haulage tractors and dumpers. Consideration is being is given to a designation of yellow metals, which can maximise locally manufactured equipment for the imminent infrastructure stimulus package, and discussions on governance processes are underway. However, local manufacturers have already ceased production on at least one line because of the zero- rating of imports. The local manufacturers are under pressure and import tariffs at the bound rate are very important for their survival. 9.6.17 The international OEMs are open to discussion on localisation and this should be pursued energetically. 9.6.18 The Steel Oversight Council will be requested to consider a proposal that components provided for local assembly operations which satisfy local content requirements should be duty-free. The anomaly at present is that built-up imports are duty-free, but some components are subject to duty, which places South African manufacturers at a disadvantage. The industry will be requested to identify and make applications to ITAC to investigate these duties. 10 EXPORTS 10.1 Exports can be increased. A national SA Inc campaign to grow exports and to convince firms to focus outwards as well as inwards is essential. It should be driven by the Steel Oversight Council, with all stakeholders playing a role. The first priority of the export campaign should be the Mozambique oil and gas field projects. The Steel Oversight Council will convene a forum of stakeholders to discuss and launch the export campaign. 10.2 Annexure H sets out the industry’s exports in 2019. Structural steel, wire products and tubes and pipes have large exports, which could be substantially increased, especially into sub-Saharan Africa. SADC must be the target market in the first instance. SADC countries (excluding South Africa) imported about R50 billion of iron and steel products in 2019. While SADC exports are mainly overland, there is a view in the industry that logistics costs and the tariffs and inefficiencies on the railways and at the ports are significant problems for exports. This must be addressed urgently. 10.3 The excess of both flat steel and long steel could be exported into SADC and sub-Saharan Africa. The SADC region does not have excess capacity for long or flat steel and could absorb most of South Africa’s excess capacity. It is estimated that Africa (excluding South Africa) below the Equator imports about 50% of its rebar from outside the continent. Total steel demand in Africa is estimated at 35 million tons per year, of which the Continent produces about 12-15 million tons. The largest demand is from North Africa, which is supplied mainly from Europe. (Egypt has doubled its capacity over the past decade, but supplies mainly North Africa). Upgrading the value-add of the mini-mills by supplying them with high-quality billets (from ore) instead of scrap would allow the South African industry to cost-effectively supply most of the region’s long steel requirements. South African producers state that the import competition from Asian markets in African markets enjoys export rebates from their governments, which places South African exporters at a 12-15% price disadvantage. The South African producers say that a cost reduction of 6-10% on South African exports would make them competitive. It must be noted that mini-mills are rapidly being established across the Continent, with at least 15 mini-mills, as well as small bore tube plants and finishing lines, operating in Kenya alone, with others in other SADC and East African countries. There is an increasing trend for Indian operators on the East coast and Brazilian, Chinese and Turkish operators on the West coast to establish small cold-rolling mills, galvanizing plants and tube-making plants. These plants cold roll thin sheets and rebar and light sections. They typically produce about 15 000 tons per month each. There is a now a colour-coating line in the North of Mozambique to produce about 6 000 tons per month for the oil and gas fields. This must be considered when developing an export strategy which takes into account the importance of local partners and JVs. Establishing an export strategy, including partnerships and JVs, is therefore urgent. Iscor’s Saldanha plant was built as a state of the art integrated producer. It has been mothballed. It has been proposed that the plant be restarted and incorporated in a West Coast steel complex, including the re-rollers and other users. Exports from Saldanha are geographically well placed for Africa, the USA, South America and the EU. Investigations in this respect are under way.
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The South African Steel and Metal Fabrication Master Plan 1.0
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