However, steelmaking and the downstream production of value-added products from steel are not short-term activities: they require long-term investment and some predictability for the industry. The decision to break up Iscor was based on short-term thinking: integrated production of steel is essential for its viability and it is not unreasonable to hope that the suppliers of ore, coal and other inputs would be receptive to participating in integrated steel production. Revitalizing investments in the industry must be based on long-term objectives and take into account the environmental considerations and the imminent need to green production processes. The goal of production of green steel by 2050, based perhaps on the hydrogen economy, should be adopted by government and the industry. Funding for the green economy is available on favourable terms and should be seen as a key component of the way forward for the steel industry. This will apply equally to foundries and smelters, who will increasingly come under pressure from their customers (such as the international auto industry OEMs) to be green. Long-term objectives are essential to transform the industry too. Helping Black investors to buy into failing companies which require large capital injections to turn them around is not attractive in a market which is not growing. Additional work will be undertaken on detailing opportunities for greening the industry and driving transformation. Already a set of clear opportunities are emerging to restore stability to the industry and to position it for growth. Establishing longer-term investment goals based on the greening of the industry and greater competitiveness, with growing infrastructure projects in South Africa and the African Continental Free Trade Area, will be a more viable path. The key medium-term goal is to match supply to demand: there is over-capacity in basic long steel commodity products, but no supply of many of the steels which are required by the auto industry, the mines and the mining and yellow metal equipment sectors. The steel industry should have a clear goal - to produce some or all of the steel and components which these industries will need to comply with their local production targets. There is widespread agreement in the feedback that supply-side interventions must be implemented more rapidly and effectively than in the past, but that the most important interventions must be to increase demand. The continued loss of domestic and export demand has devastated the industry. The Master Plan identifies some key interventions which can be driven or influenced by the industry.
Key emerging opportunities set out further in this document include:
Growth measures:
• Infrastructure drive: South Africa has a renewed focus on infrastructure, with the establishment of the Infrastructure Fund. The Office of the Presidency is managing the drive directly, providing an important impetus to growth. Discussions are now under way to identify locally-produced products that need to be drawn from suppliers for the new investment. Consensus has been developed at Nedlac in December 2020 that inputs for infrastructure should be manufactured locally. The Steel Master Plan sets out proposals for the effective implementation of localization, which emphasizes the need for the industry to be able to work with Infrastructure South Africa to provide information and options at the design stage of projects and not when it is too late to prevent components being specified which must be imported. Alignment of government infrastructure plans: The Department of Human Settlement is committed to a major expansion of housing and facilities. The DMRE is committed to powering these homes with LPG gas and solar water heating, which creates major opportunities for the domestic steel and steel products industry. The targets set out in the DMRE’s Integrated Resource Plan for powering South Africa should be localized as far as possible and supported by the industry. Similarly, the Road to Rail programme provides both increased efficiency and substantial work opportunities for the industry. • Localisation: South African SOEs like Transnet purchase significant quantities of steel products, such as rails. Transnet has committed to review their requirements and to work with the local industry on building local supply chains for large-scale projects and consumables. In addition, government is working with businesses across the economy, through Nedlac and other platforms, to improve the level and proportion of locally produced goods, including in the hardware and home improvement sector. Discussions have also begun with the mining industry on their procurement, which includes about R20 billion per year of consumables from the steel industry and significantly more on capital projects.
4 The South African Steel and Metal Fabrication Master Plan 1.0
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