A story published in the Mail & Guardian newspaper about President Ramaphosa’s speech at the South African Investment Conference held recently praises him for his announcements on energy and steel investments that have purportedly been pledged for South Africa. I have questioned what one of these investments entails because very little information is given and it could or could not be in the foundry industry.
Some of the pledges made in the steel and manufacturing sectors, said Ramaphosa, included a consortium of French companies, represented by the French South African Chamber of Commerce and Industry, committing R50 billion in what they said were a number of sectors in the economy, including energy; Scaw Metals investing R2 billion to expand its Wadeville plant in Ekurhuleni, Gauteng; Velocity Ventures from United Arab Emirates investing R470 million in an aluminium and steel plant in Gauteng and a Chinese company building a R300 million steel plant in Thaba ’Nchu in the Free State.
For the metals beneficiation industries in South Africa this is encouraging news if, the said pledges, come to fruition. However, let us not forget that in 2015 there was a big fanfare of how the IDC was working with Chinese investors on a new five million ton per annum steel mill, which was to focus on the local and regional export markets. This has not materialised.
The figures given for the aluminium and steel plants indicate that they are not talking integrated OEM plants but rather mini-mills. The fact that the steel industry has been in decline is in no doubt. There are many reasons why but one of the chief protagonists, according to many in the industry, is the indifference of the only local producer and supplier. This has led to an influx of steel imports which has adversely affected the profitability and capacity utilisation rates of the domestic steel producer, says government. They have reacted unfairly say many downstream users, by imposing duties on imported material especially if you consider ArcelorMittal have closed their Saldanha plant and are about to have a three-month shutdown of their Newcastle furnace.
The dilemma of unpredictable supply has led to an alternative steel mill culture and a number have opened over the last few years. They are good for many reasons so let’s hope the pledges are for more of these to be established and give our downstream industries more choice.
Hopefully though, none will involve the IDC. The current debacle at 80% IDC owned Cast Products South Africa (CPSA) is not encouraging. CPSA was placed in business rescue at the end of last year and proceedings begun in January 2022. The appointed business rescue practitioners are releasing a plan in mid-April and only once it has been approved can a story be done.
I have to acknowledge that and have been reassured that: “The joint Business Rescue Practitioners on this project are certified by The Companies and Intellectual Property Commission (CIPC), an agency of the Department of Trade, Industry and Competition in South Africa.”
“They were appointed by the CPSA board of directors in line with Section 129 of the Companies Act (voluntary placement of company in business rescue) after a thorough selection process conducted by the board, which included a number of potential Business Rescue Practitioners being interviewed. They are paid in line with section 143 of the Companies Act (“Remuneration of practitioner”). The consultants that the Business Rescue Practitioners use meet the requirements demanded by the Companies Act and the mandate of the Business Rescue Practitioners.”
This is great to hear but let us wait to see what the plan is and who the consultants are.
