State of the Stainless Steel Nation - Fighting for the right to supply local parastatal projects Global Webinar Report Back - Utility Ferritic Stainless Steel's Role in SA’s Stainless Industry- Industry Insight - The price of carbon emissions a lot steeper in the face of increased EU regulations - Member News Cronimet - Stainless steel is a game changer in reducing carbon emissions- Market Intelligence - Zambia: A rising economic powerhouse
ISSUE 3: 2023
SUSTAINABLE STAINLESS! A GREENER FUTURE AWAITS
A RECYCLING HERO SCRAPS THE GRID
BATTLE OF THE SIPS!
Stainless vs. Plastics Drinking Water Debate
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Contents
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Market Intelligence Zambia: A rising economic powerhouse
SASSDA Perspective Why stainless steel is a ‘hero metal’ when it comes to sustainability Market Intelligence Round Up The Best of the GPS eNewsletter State of the Stainless Steel Nation Fighting for the right to supply local parastatal projects Education & Training Unleashing local potential through world-class Training Global Webinar Report Back Utility ferritic Stainless Steel’s role in SA’s stainless industry Industry Insight The price of carbon emissions a lot steeper in the face of increased EU regulations Member News Cronimet Stainless steel is a game changer in reducing carbon emissions
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Professional Profile Curiosity and collaboration are the secrets of success Technical Case Study Why Stainless Steel is the logical choice for electrification projects in corrosive locations Technical Case Study Battle of the ‘sips”: Unleashing the power of Stainless Steel in water solutions Industry News 2023 Manufacturing Indaba Report Back – Unlocking opportunities and shaping the future Sassda News 2023 Gauteng Golf Day: A Triumph of Industry Collaboration and Excellence Member News Columbus Stainless Steel awarded SAIW gold medal for pioneering 3CR12 stainless steel Obituary John Rowe: a lifetime of dedication to the stainless steel industry
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Adverts • Columbus Stainless •NDE
• Pferd SA • Cronimet
perspective
Stainless Steel is a ‘hero metal’ when it comes to sustainability
Contact us
TELEPHONE NUMBER 011 883 0119
EMAIL info@sassda.co.za WEBSITE www.sassda.co.za
In an era defined by increased greenhouse gases and an increase in global warming, the world has seen an urgent shift towards sustainability in various industries and sectors. Amidst this flux, stainless steel has emerged as a ‘hero metal’ given its stellar environmentally friendly credentials in various applications. As a result, it is set to play a
Sassda
MICHEL BASSON Executive Director michel@sassda.co.za FRANCIS LE ROUX Head of Administration francis@sassda.co.za
MANKABE MORE Education & Training & Marketing mankabe@sassda.co.za TEBOGO NKWE Market Intelligence and Lobbying Tebogo@sassda.co.za KIM STEVENS Events, Email Marketing and Website kstevens@sassda.co.za
critical role in the future development of South Africa to make it a sustainable living space for its citizens. This issue of the Stainless Steel Magazine therefore shines a spotlight on sustainability and the responsibility of our industry to make the environment safe for future generations.
JOSE HERON Accounts jose@sassda.co.za
LUISE ALLEMANN Content, Social Media and PR luise@mediaink.co.za
Stainless steel is published triannual and is distributed to stockists, distributors, fabricators, specifiers, consulting engineers, architects, mining, petrochemical and chemical industries, food beverage and pharmaceutical industries, consumer outlets, end-users, educational institutes and provincial and government departments. Sassda makes every effort to ensure the accuracy of the contents of its publications, but no warranty is made as to such accuracy and no responsibility will be borne by the publisher or Sassda for the consequences of any actions based on information so published. All opinions, views and expressions contained in this publication are not necessarily those of the management of Sassda. The contents of this publication enjoy positive protection under the Copyright Act and therefore copyright thereof is expressly reserved. Any copying, publication and distribution of part or whole of the publication is prohibited unless consent is granted by Sassda.
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perspective
One of the aspects grabbing international focus and the subject of our interview with Cronimet MD Bernard Maguire is the superior recyclability of stainless steel. With Worldstainless.org estimating that 96% of all stainless steel is recycled couples with the fact that recycling doesn’t degrade stainless steel’s quality and that this versatile material can be recycled repeatedly without losing its inherent properties, this reduces the demand for raw materials and minimises the environmental impact associated with mining and extraction . Lasting the distance Another key aspect of stainless steel’s sustainable strengths is its longevity and durability given that products made from stainless steel, have a longer lifespan, reducing the need for frequent replacements. This longevity contributes to resource conservation and waste reduction over time. If treated well, stainless steel will remain pristine for decades whilst giving full functionality and non-toxic performance. The corrosion resistance of stainless steel - evidenced in this issue’s Columbus Stainless 3CR12 Case Study – proves stainless steel’s ability to provide a longer life for products and structures, reducing the environmental impact associated with maintenance and replacements. Emission commission In addition, examples of how stainless steel can offset its production emissions compared to other materials reside in its functional performance in specific applications. We recently saw the implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM) regulations that aim to lower the environmental impact of steel being used in the European Union. The implementation of the regulations caused some debate, but the fact remains that carbon footprints need to be reduced where possible. In this issue, we will discuss a recent and insightful study by Oxford University on the effects of the CBAM regulations on the South African steel industry. Water saver In a country such as South Africa where water conservation remains critical, the corrosion resistance of stainless steel reduces the need for water-intensive maintenance activities, such as rust removal and painting. This indirectly contributes to water conservation by minimising the frequency of these processes. As such stainless steel will play an integral role in reducing the wastage rate of processed water in South Africa from levels of around 38% to less than 10%. Stainless steel also plays a vital role in hygiene and disease control in various sectors including medical equipment and food processing. This reduces the risk of contamination and the need for disposable materials, aligning with sustainable practices. In water applications,
stainless steel can in many cases replace plastics to improve life cycle costs, but we also look at the issue of micro- plastic contamination of water sources in this edition of the Magazine. Competitive cost However, it is one thing to proclaim the sustainability of a material, but it is important to be able to calculate its true impact of a material on sustainability and costs for future generations. The true performance of a material over a prolonged period can only be assessed through a science- based analysis, such as Life Cycle Assessment (LCA) or Costing (LCC). Stainless steel has a highly favourable life cycle assessment, considering its durability, recyclability, and low maintenance requirements. This type of analysis helps quantify and understand the environmental impact of a material throughout its entire life cycle. It also illustrates and measures a material performance under specific conditions and time periods. In most of these calculations, stainless steels remain unbeatable. Overall, by incorporating stainless steel into various industries and applications, there is potential for a positive impact on sustainability and environmental conservation. It is therefore essential for industries to continue exploring innovations and practices that further enhance the sustainable attributes of stainless steel and we hope this issue sheds some valuable light on this and other sustainability-related topics.
Enjoy the read!
Michel Basson Sassda Executive Director
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The best of the GPS e-newsletter Each month Sassda rounds up a selection of global and local market intelligence articles that are sent to our members in an easy-to-read package of content. They’re designed to highlight pockets of potential growth in demand for stainless steel. Here are some of the best articles from the last few issues... market intelligence
Coega Steels Mill project in Eastern Cape to provide rolled metal for manufacturing Coega aims to establish a state-of-the-art R160- Million rolling mill facility project in the Eastern Cape, to be built by next year. CEO of Coega Steels Hassan Khan says that the facility’s modern machinery and cutting-edge technology would catalyze the local manufacturing sector, supplying reliable and efficient sources of steel and finished products to vital industries such as construction, automotive, and infrastructure development ... Read more
LNG goes off the boil, but long-term prospects are good A recent in Stainless Steel World has stated; “The gas squeeze may have eased, but in the medium and long term, demand for LNG is likely to increase. The pattern of trade is changing, with Russia selling more oil and gas to India and China to make up for the markets it has lost in Europe. Meanwhile, Europe is importing more from the USA and Qatar, and even far-off Australia. Germany, which was slow to reduce its dependence on Russia, may have difficulty finding enough energy to power its industries; Italy on the other hand, whose national Eni has many investments in northern Africa, is better prepare ... Read more
Hope on the horizon as construction industry adds 104 000 jobs South Africa’s construction industry has added 104 000 jobs to the economy, outstripping trade by 12 000 new jobs. This comes as the country celebrates a 0.3% decrease in the unemployment rate, according to the Department of Statistics’ quarterly labour force survey for the second quarter of 2023. Eben Meyburgh, CEO of GVK-Siya Zama, one of South Africa’s largest privately owned construction companies, says this could be a sign of a turnaround after years of turmoil… Read more
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market intelligence
New R1.4-Billion shopping mall taking shape in South Africa Development is progressing on the new 50 000 square metre shopping mall at the heart of a massive new precinct taking shape in KwaZulu Natal. Westown Square is a R1.4-Billion retail centre being built in the Westown Precinct, which will anchor the wider Shongweni Urban Development project, valued at R30-Billion. Westown is a mixed-use precinct within a managed urban environment that has secured and approved development rights of approximately 520 000 square metres of bulk floor area in Shongweni… Read more
Steel industry vital for SA’s industrialisation, Majola says Trade, Industry and Competition Deputy Minister Fikile Majola has stressed the impact of the local steel industry and its importance to South Africa’s industrialisation, and the challenges that the sector is facing from local and global pressures, emphasising the need to build an “inclusive sector” that contributes to the economy.. . Read more
Billions in automotive investment pouring into SA South Africa is experiencing a multi-billion-rand automotive investment boom with the news that multinational automotive group Stellantis has confirmed its intention to invest R3-Billion in South Africa to establish a state-of-the-art greenfields automotive plant at Coega in the Eastern Cape ... Read more
Tesla taps stainless steel for long-awaited Cybertruck Tesla is sourcing some stainless steel panels for the exterior of its new Cybertruck from Finnish supplier Outokumpu Oyj, which has worked to accommodate the electric vehicle’s unconventional design, according to people familiar with the matter. The materials will be shipped to Tesla’s assembly factory in Austin, marking a major product shift for Outokumpu, the people said, asking not to be identified because the contract is private. The Helsinki-based company is Europe’s largest producer of stainless steel, and is well known for working with automakers when making exhaust systems… Read more
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market intelligence
Transnet & Eskom’s failures have cost South Africa R200-Billion says Sars boss South Africa’s Medium-Term Budget Policy Statement reveals a concerning under collection of revenue. Sars commissioner Edward Kieswetter says rolling blackouts and a struggling freight rail system are the culprits, causing a significant contraction in net revenue despite a 7% increase in gross revenue. The mining sector’s profitability decline, marked by a 55% drop in provisional corporate tax collections (R24.6-Billion), is also a major contributor, impacted by lower commodity prices, global growth weaknesses, increased power cuts, and logistical challenges in the first half of 2023/24. … . Read more
SA manufacturing sector needs to find ‘glocalisation’ opportunities As consumer behaviour and preferences change in the wake of sustainable options, coupled with incoming decarbonised goods trade regimes, it is worth considering more “glocalisation” opportunities for the South African manufacturing sector. This was the consensus reached by a panel on globalisation and localisation during the second day of the 2023 Manufacturing Indaba .… Read more
Kinetiko Energy and IDC to Develop South African LNG Project
Gas exploration company Kinetiko Energy - through its subsidiary Afro Energy - has signed a non-binding Term Sheet with the Industrial Development Corporation (IDC), to co-develop a Joint Venture for the production of the country’s largest onshore Liquefied Natural Gas (LNG) project. Announced on 22 August 2023, the first phase of the project will deliver 50 MW of gas-equivalent energy and is expected to be developed over two to three years. The total cost of the project’s first phase will comprise $57.8-Million in equity from the IDC and $30.8-Million in debt through Afro Energy for a total of $88.6-Million... Read more
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state of the stainless steel nation
Stainless Steel sector fights for the right to supply parastatal projects
Sassda recently received excellent media exposure when it released information on its stance on the procurement of stainless steel or lack thereof in major government projects. What follows is the official news release that was distributed to the media …
The use of local stainless steel is crucial to driving demand and the subsequent beneficiation of this highly prized metal but work still needs to be done to cement the correct specifications of South African stainless steel components in key strategic projects. This is the view of the Southern Africa Stainless Steel Development Association (Sassda) which together with the local demand-creating structures of the Steel Master Plan (SMP) has identified and placed a focus on the following projects that can positively impact the local conversion of stainless steel. Sassda Executive Director Michel Basso n stated; “We firmly believe that increased local conversion of stainless steel is not just essential; it’s a game-changer for our industry and the national economy. These projects are our industry’s stepping stones to fostering local demand and boosting the stainless steel sector”. Eskom transmission towers Based on the need for local components in government projects, a key focus of the SMP Local Demand structures
has been on applying strong pressure on Eskom to engage more openly regarding the supply of transmission towers. The criteria for allowing local industry to participate in the supply of these items and/or its components and have firm targets for local content is still debated. However, in the interim Sassda has seen an opportunity to submit a change in the material specifications to allow for the use of South African 3CR12 stainless steel which is widely used across the globe in corrosive applications as a cost-effective alternative. This submission by Sassda - and its key members - based on Life Cycle Costing principles was received favourably by the committee but still needs to be accepted by Eskom. Bailey bridges Another government project with good potential for the use of stainless steel is the proposed construction of Bailey Bridges in rural areas. These are used in emergencies or as temporary structures for planned events. They are particularly useful in rural areas in the event of natural disasters like floods.
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“During the consultation process with government departments, we once again used the opportunity to submit that 3CR12 stainless steel should be used in corrosive environments to ensure the optimum lifespan of the installations. The submission was received in a positive light and will be taken forward,” reported Basson. Hollowware Sassda’s research also shows that more than 10 000 tons of finished holloware products e.g., pots, pans, cutlery etc., are imported to South Africa annually. This is in stark contrast to the early 2000’s when the local hollowware sector efficiently met 80% of domestic demand. By 2008, this figure plummeted to less than 50% and today it stands at a mere 10%. Basson reported; “The Steel Master Plan still sees value in resurrecting the industry and, as such, Sassda has started to research and update the information on local demand and local capacity. By determining and potentially addressing the gap, a sizable local demand can be created for stainless steel holloware products in South Africa with job creation attached to this growth. “ Automotive While investigations are ongoing to ensure the maximum volumes of stainless steel used in the local manufacturing of vehicles, there might also be room for creating more capacity for stainless steel products. Basson explained; “A major challenge hindering cost- effective production in the hollowware and cutlery industry is the demand for highly efficient automated processes. Fortunately, we see an opportunity for collaboration with the automotive industry, which boasts advanced technology and automation capabilities that can help us overcome this hurdle and revitalise our sector.” Notably, certain legacy companies in the automotive sector possess large presses which were historically dedicated to automotive production. However, as the automotive industry diversifies in response to emerging
trends such as electric vehicles, these presses are sometimes idle. “Together with NAAMSA, we’re exploring opportunities to leverage this spare capacity to produce semi-finished holloware components. This strategic alliance aims to empower the hollowware industry by providing access to advanced technology and diversifying production capabilities,” said Basson. Beer Kegs There has also been a commitment from the formal brewing industry in South Africa for the procurement and use of locally-made beer kegs within the context of competitive pricing and quality. The Department of Labour has accepted a local standard for beer kegs. This standard is based on the German equivalent and stipulates stainless steel as a suitable material for the application. The grade used in the food and beverage industry, including beer kegs, is Grade 304 stainless steel. A Western Cape based component manufacturer, Fabrinox, was identified by Sassda and the PtSA as a potential pilot producer. It is exciting to note that the required technology will be locally developed, built, and tested. The local material producer will form part of the project once the production process and manufacturing design are finalised to ensure that the material grades used can conform to the mechanical and other properties required by the manufacturing design. Basson reported that the grouping of stakeholders is currently conducting a technology audit and capacity overview. and are also discussing the ownership and future use of the IP to be developed during the project. This process aims to create world-leading technology and is committing to a continuous development process of the project lifecycle. Looking ahead Basson stated; “Overall, the potential for stainless steel in these projects is immense. Resurrecting and building these strategic stainless steel industries can lead to substantial demand and create accompanying job opportunities and economic growth.”
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education and training
Unleashing Local Potential Through World-Class Training
One of Sassda’s core pillars is Education & Training to ensure the upliftment of stainless steel skills in South Africa and across the continent. In a recent interview with Engineering News, Sassda Executive Director Michel Basso n outlined the association’s current approach to this vital aspect of the work it does…
during the pandemic where we innovated and offered far more online offerings, and this continued in 2022.
Which programmes does Sassda offer in this regard? What do they entail?
Sassda offers an array of training programs at various technical and academic levels to give access to all levels of staff in organisations. This would start with a short Introduction to Stainless Steel Course that would typically be aimed at administrative staff and complete newcomers to the stainless steel industry. Sassda also offers courses for shopfloor staff at fabricators on handling, storage and fabrication of stainless steel that can even accommodate non-literate staff members. On the more technical and academic level, Sassda presents a Fundamental and an Advanced Course accredited with a CDP rating which cover the metallurgy of the different grades, properties, corrosion mechanisms, Life Cycle Costing, and grade selection of stainless steel. The Advanced Course also offers a Columbus mill visit as part of the curriculum. Sassda engages past the stainless steel industry to offer CPD-accredited workshops to the architectural, construction,
What is the demand for education and skills development in the local stainless steel industry?
For many years, the South African stainless steel industry has identified training and the development of productive and skilled staff as one of the major stumbling blocks to the growth of the industry. It therefore stands to reason that the role of a development association, such as ourselves, is to give the industry access to accredited and meaningful training that will address these hurdles. During the last few years Sassda experienced a large growth in students especially
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water, and mining industries. To remain as flexible and accessible as possible, Sassda presents these products in person and as an online experience. Our courses and other training products can be customised and are aimed at educating and empowering people to sustain the growth of the local industry, but also to give training access to people who normally might be excluded. In so doing, we can add to the individual’s self- worth and that is sometimes is worth more than gold. How has Sassda worked with universities? Why is it beneficial for Sassda to work with tertiary education institutions? As an association, Sassda’s role in education and training is different to that of industry-based institutes when it comes to our relationship with tertiary institutions. In terms of research and technology development, industry institutes play a major role in conjunction with universities. Sassda works with specific universities by presenting our Fundamental and Advanced Courses as part of the curriculum. We also present workshops to architectural departments at universities and technikons as part of technical training and awareness. Sassda also gives inputs
regarding industry requirements and the potential future impact on subject material to various entities in higher education. Interestingly, Sassda has also presented to primary school standards as part of technology as a subject. What are Sassda’s long-term aims for promoting awareness of the importance of the stainless steel industry? Education, training, and technical advice remain critical in spreading awareness and information regarding the material and the industry. Worldstainless, the international development body, has research showing the relationship between a country’s per capita use of stainless steel and its GDP. The higher the local consumption and use of stainless steel, the higher the GDP. It might not be similarly applicable to South Africa but increased local use and conversion of stainless steel can create sustainable jobs of around three to five jobs (or even more in some product ranges) per ton. By creating awareness around the use of local stainless steel cutlery and hollowware we can, for example, annually localise 10 500 tonnes of currently imported stainless steel products. This could equate to between 30 000 and 50 000 potential new and sustainable jobs.
global webinar report back
Ferritic Stainless Steel’s Role in unlocking Sustainable Growth
Setting the Stage: Sassda’s Vision for Sustainable Growth Speaking at the recent Worldstainless webinar Sassda Executive Director Michel Basson elaborated that Sassda serves as a crucial platform for its members, collectively dedicated to promoting sustainable growth and development within the industry. The primary focus is on the conversion of stainless steel within the South African economy. Sassda’s strategic approach revolves around creating local demand through localisation, subsequently evolving these products and capacities into export-worthy commodities. However, the emphasis is on meaningful localisation, ensuring competitiveness in terms of both price and quality on a global scale. The stainless steel market in South Africa finds its major consumers in the automotive, agri-processing, food and beverage, architectural, and general engineering sectors. Initiatives to localise production, such as beer kegs,
Worldstainless regularly convenes its members to deliberate crucial aspects of stainless steel’s correct and sustainable utilisation. Sub- committees, including Sustainability, Market Development, and Safety, facilitate in-depth discussions. The recent second-semester meeting conducted online from Brussels in October 2023, featured a presentation from Sassda and focused on insights on stainless steel sustainability in Southern Africa…
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hollowware, and catering industry products, are gaining momentum. Yet, the challenge lies in not only sustaining these efforts but also ensuring the tonnage produced can replace lost markets and drive substantial local consumption. Challenges and Opportunities A visual representation of the stainless steel market in South Africa, displayed since 2018, revealed a disconcerting trend of production decline since 2015. This decline was attributed to various challenges, including the decrease in exports to Europe, European Union Carbon Border Adjustment Mechanism (EU CBAM) regulations, lacklustre economic growth, consistent electricity supply issues, and a deficiency in domestic market share. However, Sassda, under the gambit of the Steel Master Plan (SMP), sees a roadmap to navigate these challenges. The SMP, driven primarily by the private sector and facilitated by the Department of Trade, Industry, and Competition (the dtic), comprises two principal legs – creating local demand and progressing towards an export market. Sassda’s mandate places a pivotal focus on local demand creation, emphasising its potential to yield more tonnage than mere localisation efforts. The Role of Utility Ferritic Stainless Steel Within the SMP, Sassda has identified two projects with the potential to significantly impact local demand and export capacity. The Eskom transmission towers and rural steel bridges, requiring structural profiles, present an opportunity to develop rolling capacity in South Africa. The incorporation of stainless steel in material specifications for corrosive areas immediately addresses local demand
in mining and infrastructure industries. Additionally, the regional availability of stainless steel structural elements holds promise for applications in corrosive mining environments and coastal infrastructure development, including gas exploration and production in Namibia and Mozambique. With private enterprises investing in large-scale renewable electricity generation and Eskom unlikely to return to its former energy generation capacity, utility stainless steels are cost-effective alternatives for coastal and other corrosive installations. Another opportunity has arisen from the growing impact of extreme weather conditions on existing infrastructure, prompting the government to endorse the Bailey Bridge concept for cost-effective repairs in corrosive areas. While these projects may not lead to sustainable consumption increases, they act as enablers for developing capacity for future infrastructure in Southern and East Africa. The 3CR12 Advantage: A Testimony to Endurance Originating from Columbus Stainless in the late 1970s, 3CR12, a low-cost, corrosion-resistant stainless steel initially designed for the mining industry, is now found in structural applications in the mining, water handling, rail transport, sugar, pulp and paper industries, and general industry. The Marion Island weather base, built on a 3CR12 grating platform, stands as an early testament to the materials enduring qualities, with minimal impact on the ecologically sensitive environment. While the current high cost and scarcity of welded profiles limit the general use of 3CR12 in structural applications, examples such as the Gateway Bridge in KZN
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showcases its effectiveness. Unlike galvanised pedestrian walkways requiring maintenance every 5 to 7 years, the painted 3CR12 structure resists filiform corrosion, remaining untouched after years of service. Debunking the Stainless Steel Cost Myth Addressing the perception that stainless steel is an expensive option, Sassda underscored the long-term cost efficiency of the material. Despite the high initial acquisition costs, these costs are offset by minimal maintenance and replacement expenses throughout the project lifespan. Comparatively, the initial costs of 3CR12 align closely with galvanised carbon steel, and the material’s 96% recyclability further enhances its total life cycle cost efficiency. A Call for Sustainability: Environmental Stewardship Despite the high carbon footprint associated with stainless steel production globally, it has a minimal environmental impact during installation and its unparalleled post-lifespan recyclability rate. This point was emphasised by a case study at a hydrometallurgical plant in Chile. Material selection
for a walkway across corrosive areas in the plant considered three options: Mild steel (the cheapest option), requiring coating maintenance every four years; 3CR12 (unpainted), requiring cleaning every 15 years with high-pressure water; and Lean Duplex (an expensive material with exceptional mechanical and corrosion characteristics) requiring cleaning every 15 years with high-pressure water. In addition to highlighting the sustainability of life cycle costing, the message resonates that while stainless steel production in South Africa contributes to a high carbon footprint, its physical installation has minimal environmental impact. The material’s post-lifespan recyclability rate stands unbeatable among other materials, making stainless steel a wise, cost-effective, environmentally friendly, and sustainable choice. As Sassda advocated for utility ferritic stainless steel, the hope was for political will and a shared vision in the initial market space to drive these wise choices forward. In the intricate dance between economic growth, industry development, and environmental responsibility, utility ferritic stainless steel emerges as a key player, unlocking opportunities for the South African stainless steel industry’s sustainable future.
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industry insight
Irshaad Kathrada, a South African student at Oxford University and the cousin of political stalwart Ahmed Kathrada, recently achieved distinction in his MSc in Sustainability, Enterprise, and the Environment. His noteworthy study, titled Estimating the Impact of the European Union (EU) Carbon Border Adjustment Mechanism on South African Steel and Aluminium Industries (click here to see full paper) , delves into the potential ramifications of the EU’s carbon border adjustment mechanism (CBAM) on South African exports in the steel and aluminium sectors The price of carbon emissions: A lot steeper in the face of increased EU regulations
In a comprehensive approach, Kathrada collaborated with local entities, including Sassda, and generously shared the complete paper with the industry. Employing a mixed-method methodology, he utilised the gravity model of trade for econometric estimates, complement- ed by interviews with 21 stakeholders, spanning policy makers, producers, financiers, and academics. The study forecasts a significant impact on South African exporters, estimating a potential decline in direct revenue ranging from 6% to 9%. Had the CBAM been in effect in 2022, this would have equated to a staggering loss of between $114-Million to $185-Million in sales for the year. Stakeholder interviews underscored additional threats, including heightened competition in domestic and alternative markets, alongside input supply shortages as global steel and aluminium markets adjust to reduced EU access. While acknowledging the commendable ambition of the EU’s climate policy, the study highlights potentially severe adverse effects for several countries, even those with limited direct exports to the EU. Balancing these impacts with the imperative to achieve net-zero emissions by mid-century becomes a critical aspect of the research. Local assessment of the EU CBAM regulations on the South African stainless steel industry necessitates consideration of several factors. The industry’s vulnerability hinges on the carbon emissions associated with its production processes, potentially leading to increased costs for exporting to the EU. Consequently, local companies may
need to implement adjustment strategies, adopting cleaner technologies and investing in renewable energy, energy efficiency measures, or other carbon reduction initiatives. However, such adjustments come with financial implications, as compliance with CBAM regulations could elevate costs, potentially impacting the industry’s competitiveness in EU markets. A thorough evaluation of the economic feasibility of implementing carbon reduction measures and their impact on product pricing becomes imperative. Positive relationships between the EU and South Africa could mitigate immediate impacts through trade relations and negotiations. The South African government has the opportunity to engage with the EU in discussions on acceptable emission benchmarks, transitional periods, or other measures to facilitate a smoother adaptation to the new regulations. Given South Africa’s position in the global market, EU regulations are poised to influence global market dynamics for stainless steel. The South African industry retains the option to explore alternative markets or collaborate with the EU on initiatives promoting sustainable production. Despite the challenges posed by the CBAM regulations, South Africans are resilient and view them as a potential catalyst for technological innovation in the local stainless steel industry. This perspective suggests an opportunity for the development and adoption of cleaner and more sustainable production methods, reflecting the potential for innovation in a challenging area of production.
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member news
In a ground-breaking effort to reshape the stainless steel production landscape, Cronimet, a global specialist in stainless steel scrap, ferroalloys, and primary metals recycling, is leading a sustainability revolution. This stems from the company’s innovative use of stainless steel scrap as a cost-effective and sustainable substitute for virgin prime material. Stainless Steel is a game changer in reducing carbon emissions
Stainless steel scrap - defined as a secondary raw material containing essential elements like nickel and chrome - offers a more affordable alternative to traditional primary materials. Cronimet South Africa Director Bernard Maguire explains, “Traditionally, the primary reason for using stainless steel scrap was its cost advantage in the melting process. However, as the world grapples with serious CO2 emissions
issues and their long-term impact on the environment, we recognise the need for a paradigm shift.” Maguire also shares compelling statistics, emphasising that approximately 95% of all stainless steel scrap is reused, underscoring its crucial role in the circular economy’s effectiveness. Recycling stainless steel scrap also emerges as a powerful tool in mitigating environmental concerns,
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Global view Looking further afield, recyclingtoday.com states that a recent Cronimet Group Sustainability Report showed its business units recycled 1.57-Million metric tons of stainless steel in 2021. In addition, the company publicly announced plans to “reduce directly caused CO2 emissions across the Group by 2030 and become CO2 neutral in Scope 1 and 2, achieving the Net Zero standard of the Science Based Targets initiative (SBTi) by 2050.” The company also expressed, “We are convinced that, as a company in the circular economy, we can make our contribution here, we aim to make a significant contribution to resource efficiency by returning valuable raw materials to the materials cycle. We want to go beyond this and make our corporate practices even more sustainable at every point: for the environment, our employees, our company, and for society.” Elaborating on this global outlook, Maguire says the potential economic benefits and increased access to global contracts are driving Cronimet’s sustainability initiatives. However, he stresses; “Unlike businesses compelled by external pressures, Cronimet is not greenwashing; it is genuinely focused on sustainability and the difference it can make.” “Traditionally, the primary reason for using stainless steel scrap was its cost advantage in the melting process. However, as the world grapples with serious CO2 emissions issues and their long-term impact on the environment, we recognise the need for a paradigm shift.” A substantial solar investment In a bold move toward achieving a zero-emission target by 2030, Cronimet has adopted a group policy to primarily operate with solar energy. Following a significant investment over the last 12 months, the South African operation is now completely independent of the Eskom power supply grid. The commissioning of a new solar system by early 2024 will set Cronimet apart from many recycling companies, marking a crucial milestone in the journey toward sustainable practices. “By harnessing solar energy we’re not only making a long-term business decision but also contributing to the larger goal of reducing electricity costs and minimising our carbon footprint,” concludes Maguire.
conserving natural resources, and diverting materials from waste dumps. A star performer in the circular economy The recycling and reusing of stainless steel scrap is therefore a game-changer in the current environmental landscape, in the face of the growing pressure to reduce emissions. Maguire reports that greater investment into tests and algorithms to evaluate the advantages of curbing carbon emissions, has also proved the substantial environmental benefits of stainless steel scrap compared to mining nickel from the ground. Stainless steel therefore takes centre stage in the circular economy given that the advantages of utilising stainless steel scrap are manifold, with cost-effectiveness and reduced environmental impact at the forefront. However, the long lifespan and life cycle of stainless steel, a testament to its durability, also present a unique challenge. Unlike other materials ending up in waste dumps, stainless steel is diverted, remelted, and reused, significantly contributing to sustainability efforts. Maguire notes that this has created a global shortage of scrap stainless steel.
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Issue 3 – 2023
market intelligence
Nestled in the heart of Southern Africa, Zambia stands as a beacon of political stability and economic vibrancy. The country has consistently maintained a healthy macroeconomic environment, achieving an impressive average annual economic growth rate of 6% since 2003. Rich in natural resources, particularly copper and cobalt, Zambia’s mineral sector has long been a driving force behind its economic expansion. Beyond mining, the nation boasts fertile arable land, abundant hydropower resources, and a thriving tourism sector with immense potential for further development. Economic Landscape and Growth Sectors Zambia’s economic landscape is characterised by the symbiotic relationship between its key sectors. The agriculture sector, buoyed by good soil and expansive arable land, plays a pivotal role in food production and export. The minerals sector, led by copper and cobalt mining, contributes significantly to the nation’s revenue. Efforts to diversify the economy have led to a growing focus on manufacturing, adding value to mineral and agricultural products. The tourism sector, propelled by the country’s natural beauty, wildlife, and waterfalls, presents vast growth opportunities. Zambia’s commitment to economic diversification is evident in various ongoing projects across key sectors. Agriculture Sector Initiatives Farm Block Development Programme: This initiative, led by the Ministry of Agriculture, aims to provide land for large- scale agribusiness through private sector investment. • Nansanga Farm Block Core Venture: A joint venture project spearheaded by the Industrial Development Corporation (IDC), involving the development of 12 hectares of land with an estimated investment of US$230-Million. Zambia: A Rising Economic Powerhouse
• Chikubilo Farm Block Development: Focused on commercial farming, particularly cotton production in Lundazi, Eastern Province, covering 54,200 hectares of secured customary land. • Livestock Breeding Centres: A conceptual project by the Zambian Government aiming to establish livestock breeding and artificial insemination centres across the country Tourism Sector Transformation • Mulungushi International Conference Centre Redevelopment: A major project led by MICC Limited and IDC, involving the refurbishment of the existing centre into a modern international conferencing facility with a US$400-Million estimated investment. • Long Acres Lodge Redevelopment: A planned transformation of Long Acres Lodge into a modern commercial complex, including a 5-star hotel, shopping mall, and office park through Public-Private Partnership (PPP).
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Issue 3– 2023
market intelligence
Key economic indicators… Real GDP recovered to 4.6% growth in 2021 and 3.0% in 2022 after contracting 2.8% in 2020. The recovery was driven mainly by wholesale and retail trade, agriculture, and mining and quarrying. Inflation dropped from 22.1% in 2021 to 10.1% in 2022, driven mainly by the reduced food price shocks. The policy rate was maintained at 9.0% in 2021 and 2022, owing to inflationary pressures,
weaker medium-term growth prospects, and vulnerabilities and risks to the financial sector. Source: Worldbank.org
• Twin-Palm Mixed-Use Real Estate Development: A 32-hectare project near Lusaka’s Central Business District, combining commercial, business, residential, tourism, and leisure facilities. Transport Sector Infrastructure • Solwezi–Kipushi Road Project: Upgrading the Solwezi– Kipushi road to bitumen standard in North-Western Province, including toll gates. • Mansa Airport Project: The development of Mansa Airport into an international gateway to exploit tourism potential in the Northern part of the country. Energy Sector Innovations • Kapamba Hydro Power Station: A 12MW hydropower plant project executed by ZESCO through an EPC contract. • Luapula River Hydro Power Scheme: A massive project spanning seven different sites on the Luapula River, with the potential to generate 800–1,200 MW of power. Mining Sector Advancements Copper City Industrial Park/Multi-Facility Economic Zone: A project focused on value addition to copper and other mining-related activities in Kabwe District, Central Province. ICT Sector Developments Computer Assembly Plant: A joint venture led by the Zambia Information and Communication Technology Authority to establish a computer assembly plant supplying schools in Zambia and the region. As Zambia continues its journey of economic diversification and sustainable growth, these projects underscore the nation’s commitment to harnessing its abundant resources and creating a thriving environment for local and international businesses alike. The unfolding narrative of Zambia is one of opportunity, innovation, and inclusive development.
Construction Sector Advancements • Redevelopment of Zambia International Trade Fair Grounds and Mukuba Hotel: A project aimed at creating a world-class conferencing and exhibition facility and expanding Mukuba Hotel into a five-star facility. • Lusaka South Multi-Facility Economic Zone : A 2,100-hectare economic zone in Lusaka, seeking partners for financing, development, and management.
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Issue 3 – 2023
professional profile
Curiosity and collaboration are the secrets of success
In this issue, we profile NDE National Supply Chain Manager Jeanré Hanekom whose career insights show the power of effective communication and adaptability as well as the importance of resilience. He also outlines the challenges facing the South African stainless steel industry and suggests innovative strategies for overcoming them... Please provide some background on where you come from, your school and tertiary education and where you first started working? I am originally from Gqeberha (Port Elizabeth) in the Eastern Cape where I attended DF Malherbe High School. While my initial career goal was to become an engineer, a transformative experience during some holiday work in the logistics field, led me to pursue studies in Logistics Management at the University of Stellenbosch. In 2008, I decided to further strengthen my expertise by achieving my certification as a Certified Supply Chain Professional (CSCP) through Apics. I began my professional career as a Supply Chain Manager at Fabrinox in Paarl, under the mentorship of the MD André Visser . What are some of the key projects, that you have worked on that have challenged you but also helped to shape your skills, experience and career advancement? NDE operates in the retail and distribution industry and maintaining optimal inventory levels is therefore paramount, as we take pride in ensuring stock availability to effectively manage our customers’ expectations. Shortly before the onset of the COVID-19 pandemic, we made the strategic decision to introduce Demand-Driven Planning Software. The software’s navigation became challenging due to the constraint variabilities arising from widespread supply chain disruptions caused by the pandemic. Fortunately, despite the expected initial challenges, implementing the new software was a success. We now benefit from improved inventory management and the ability to meet customer expectations more effectively. This is a core value at NDE.
“Even when dealing with difficulties, the resilience of South Africa’s people highlights the importance of staying positive for the country’s improvement”
What is your current position and how would you describe a typical day on the job?
I joined the NDE Cape Town team in 2008 as a Product Manager and have been with them ever since. Over the years, I’ve held various positions, progressing from Logistics Manager to Operations Manager. Currently, I serve as the National Supply Chain Manager and sit on the company’s Management team. I start my day by reviewing reports on sales, inventory, purchasing, and cash flow. A daily walkthrough of our facility keeps me informed about physical operations and connected to ongoing activities on the floor and with staff. Regularly addressing emails has become the norm in today’s business environment, and no day is complete without attending a few meetings. I also travel around the country to NDE’s other
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Issue 3– 2023
professional profile
branches to ensure that all aspects of our branch logistics and operational management continue to be first-rate. I work with several teams across the business, problem-solving on the go, and continuously refining our systems as the business grows. What would you say are the biggest i. work and ii. life lessons you have learnt thus far? Even though it may be considered cliché, the most significant work lesson I’ve learnt is the importance of effective communication. Clear, open, and honest communication fosters trust and collaboration. It also reduces misunderstandings and contributes to a positive work environment. In addition, embracing adaptability has been crucial to my success. The ability to adapt to changes, whether in organisational structure, technology or market conditions, has allowed me to navigate challenges and contribute to solutions. In my life, a key lesson has been the value of resilience. Life is unpredictable, and facing setbacks is inevitable. Developing resilience has empowered me to bounce back from challenges, learn from setbacks, and approach new opportunities with a positive mindset. Another crucial life lesson for me has been the importance of maintaining a balance between personal and professional aspects of my life. The lines between these domains can easily blur, with potentially dire consequences for both your private and professional life if you don’t consistently try to maintain this balance. “I am determined to maintain a curious and inquisitive mindset throughout my career. I believe that staying continuously engaged and interested in the dynamics of our business is crucial for personal and professional development” How do you hope to take your career to even greater heights - what are your plans for the future? Continuous learning! At NDE I have been fortunate to have been given exposure to various areas and disciplines of the business and not just the area of my expertise. This has enabled me to gain a holistic view of the inner workings of the company and has been hugely beneficial when it comes to making decisions. As a result, I am determined to maintain a curious and inquisitive mindset throughout my career. I believe that staying continuously engaged and interested
in the dynamics of our business is crucial for personal and professional development. I have recently been presented with an opportunity to collaborate with a company in a completely different industry, stepping outside of my usual comfort zone. My strategy is to absorb as much information as possible, learn best practices, and embrace diverse ways of thinking. I intend to bring these insights back to NDE to continuously enhance our supply chain processes. In your opinion, what are the biggest challenges the South African stainless steel industry is currently facing and what are some of the innovative ways these can be overcome? In South Africa, the manufacturing sector has experienced a prolonged decline, attributed in part to our failing infrastructure, particularly concerning Eskom and Transnet. Regrettably, there are no quick fixes for these challenges. Addressing the manufacturing challenges in South Africa requires a comprehensive and collaborative approach involving various stakeholders, including the government, industries, educational institutions, and the private sector. Even when dealing with difficulties, the resilience of South Africa’s people highlights the importance of staying positive for the country’s improvement. What do you consider the most exciting innovations/product developments happening in stainless steel right now and what sectors hold the greatest potential for the use of stainless steel in the future? Whilst not a ‘new’ development, duplex stainless steel continues to attract increased attention as a result of it’s ability to withstand aggressive corrosive environments in industries like oil production, gas, and mining. NDE was one of the first companies in Africa to procure duplex stainless steel for the mining industry in Zambia more than a decade ago, and we continue to be leaders in the industry due to our continuous supply of quality material from our world-class suppliers. Our in-house expertise allows us to assist our customers with making the best material choice for their specific applications and environments. While the initial cost of duplex stainless steel might be higher compared to alternative materials, the long-term advantages, including enhanced durability, minimised maintenance, and prolonged service life, often justify the upfront investment. Identifying a specific sector with future potential is difficult to answer. The remarkable aspect of stainless steel has always been its versatility, finding applications across a wide array of sectors.
To read more about NDE go to: www.nde.co.za
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