• Export promotion: The African continent represents a significant opportunity for South African steel makers and downstream processors. African countries (excluding South Africa) purchase nearly R400 billion of iron and steel each year and promotion activities must focus on opening these markets for SA steel, while at the same time promoting local partners in those countries. The Master Plan proposes that consideration be given to combined and integrated efforts to promote exports, particularly to the rest of the continent – an approach described as South Africa Inc. These should include export credit insurance, export rebates, consideration of an industry-level fund to support export efforts and greater use of South Africa’s diplomatic relationships. Improved and early intelligence on projects and opportunities in Africa and a sharp focus on the most promising areas (such as agriculture, oil and gas, mining and infrastructure) are critically important. The development of a comprehensive approach to export promotion, especially focusing on SADC and sub-Saharan Africa, is essential for the industry to grow. The development of DFI and venture capital funding to support the development by South African exporters of JVs in Africa will be a critical success factor. SADC and the AfCFTA are a natural market, with some logistical advantages. A forum will be launched with interested parties to discuss the SA Inc approach to export promotion. • The Competition Commission has been consulted in respect of the development of JVs for export promotion: The Commission is in principle in support that aggregation of demand and sharing of information on planned projects should be supported.However, the process to deepen footprints in export markets must be accompanied by measures to protect the availability of products for local customers at competitive prices and to promote domestic industrialisation. In this regard, a possible exemption can be considered to ensure a balanced approach. • Climate resilience and greening of the industry: The green economy also provides opportunities for innovation and the development of new products. There are opportunities in the development of renewable energy, water recycling for a much drier South Africa, desalination, the building of dams, pipelines and reticulation. Green processes in production are likely to become a significant competitive advantage, especially in the export market. The Steel Master Plan proposes that the industry agree to a target for the industry to reach carbon neutrality by 2050, especially for the steel mills, foundries, forges, smelters and other power-intensive processes. This will include the increased use of renewable power, gas replacing coal power, the development of the hydrogen economy, water recycling and the more efficient use of water and waste reduction and recycling (the circular economy). Major gas pipelines are proposed, which will make lower-emission gas available for power and will also create significant work for the industry. • Development of industry value chains: key manufacturing and mining value chains offer an immediate opportunity for growth. The implementation of the Automotive Master Plan will increase the demand for locally produced metal components as OEMs pursue their localization commitments under the plan. Discussions are now underway between the auto industry and steel sector players. In addition, work has begun with the mining industry to optimize procurement of locally produced steel products and engineering services. Sub-sector Master Plans are essential in this industry because of its scope. They should be developed by bringing together the entire supply chain and value chain for the sub-sector. • Reducing the administrative burden on doing business and aligning departmental regulations and incentives: The President’s Economic Recovery Plan has referred to this. The steel industry, more than anything else, needs growth in the economy in order to flourish. Rules and regulations from different departments and levels of government needs to be aligned to ensure on-time and to-cost execution of projects.
Stability measures:
• Establishment of a Steel Industry Development Fund: establishment of a fund to support critical industry projects is proposed, with funding sourced from a small levy on all primary steel sold in South Africa. • Government funding: Government has established a R1.5 billion Downstream Steel Development Fund through the IDC to provide funding to the industry at concessional rates, and address weak balance sheets. In addition, the dtic industrial funding branch is developing a metal fabrication fund. There is a need and an opportunity to optimize these two funds to unlock growth opportunities and to reduce the administrative burden.
5 The South African Steel and Metal Fabrication Master Plan 1.0
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