Agni Steel takes advantage of IDC fund

Growing the industrial base of the Eastern Cape will assist in stimulating growth in the struggling steel industry, says the Industrial Development Corporation (IDC).

With the Downstream Steel Industry Competitiveness Fund, the IDC, in collaboration with government, hopes to increase competitiveness in the steel industry and incentivise production. Managed by the IDC, this fund will add to the various government interventions for the industry, which include tariff and local procurement measures as well as commitments for job retention, investment and upgrading.

Through these challenges, the IDC in partnership with Steel and Engineering Industries Federation of Southern Africa (SEIFSA) has been searching for the most innovative companies of the year in the metal and engineering sector.

“Through these challenging times for the steel industry, innovation is key. The value chain – primary steel mills, fabricators and domestic manufacturers at different levels are innovating and finding novel ways of staying sustainable and competitive while contributing to the economic growth story of the Eastern Cape region,” says Kingsley Dell-Robertson, Regional Manager for the IDC in the Eastern Cape.

“As the domestic steel industry continues to fight its way out of the global recession, major manufacturing and infrastructure projects, along with the expansion and diversification of the automotive sector, will help curb the effects of the steel crisis.”

“In an effort to build a local steel industry producing products at competitive prices, the IDC has invested over R1 billion in five steel mini mills. Agni Steel based in Port Elizabeth in the Eastern Cape is one of the mills in operation. Agni Steel, which manufactures steel billets, commissioned the first mini steel mill in the Eastern Cape in 2014. Through this project, the IDC has fostered beneficiation of local ferrous scrap metal that is normally exported unbeneficiated.”

“The investment has also facilitated job creation and helped the company absorb low skilled workers in the sorting and preparing of scrap metal for the furnace. To date phase one of the project has created 189 new permanent jobs. Agni Steels hopes to construct a new furnace to create an additional 54 new permanent jobs with approximately 60 temporary South African job opportunities during the construction phase.”

“Agni Steels SA could only roll out its second phase expansion plans because of government’s initiatives. We applaud government for bringing about an import duty on cheap steel being imported into South Africa. The most important factor sustaining the steel manufacturing industry in South Africa and jobs are mainly because of government’s initiative, by implementing the Price Preference System (PPS). This initiative will contribute to a greater job creation in South Africa,” says Hassan Khan, Director at Agni Steels SA.

With a view to fast-track support for the struggling steel industry, government, through the International Trade Administration Commission (ITAC) has introduced a price system for the industry in an effort to boost production in local foundries.

This follows an investigation on a number of downstream steel industry products, including wire products, screws, bolts and nuts, tube and pipe fittings, appliances, prefabricated structures, grinding media and roofing products – as ITAC sets out to help government build a competitive steel industry that can support investment and increase jobs and exports.

The steel and engineering industry has a strong base in East London and Port Elizabeth, centred on the automotive industry. Both the Coega and the East London IDZs have opportunities to develop downstream metals and engineering industries. While the steel industry – along with machinery and equipment – is still the third largest contributor to GDP in the province, much more still needs to be done to propel the sector out of crisis.

“Industrialisation in the Eastern Cape is key to economic growth – both provincially and nationally. Manufacturing still contributes significantly to the economy and for our province this is largely driven by the needs of the automotive sector. This industry is only set to grow with new investments such as our joint venture with BAIC (Beijing Automotive International Group) as just one example of the IDC’s investments in this province,” says Dell-Robertson.

“Interventions supporting the value-adding, labour intensive, downstream steel industry remains a priority for government. With serious challenges facing South Africa’s steel sector, building a sustainable and competitive industry is a priority. As we build sustainable steel businesses with diversified production, benefits will be felt, not only in the regional economies from which they are based but also in broader sectors and industries which will benefit,” says Mazwi Tunyiswa, Head of Basic Mining and Metals for the IDC.