Governments’ negotiations with Arcelor Mittal South Africa (Amsa) on how to rescue the steel industry stem from the common consensus that steel-making capability in South Africa is necessary to give the country a competitive edge in terms of manufacturing and driving economic growth. This was a theme at a an event about the company’s 2016 factor report on Wednesday, where Amsa chairman Mpho Makwana said that more products needed to be made in South Africa for the industry to have a fighting chance.
As an example, he mentioned the country’s often heralded automotive sector, which actually does not do much for local steel.
“If you look at Arcelor Mittal in the US, for instance,” said Makwana, “more than 30% of our steel is carried in the average car that is made there. In South Africa, a mere 6% of our steel goes into the cars that are assembled here. That has far-reaching implications in terms of jobs. You want that number to be as close to the 30% benchmark as possible.”
Makwana said Amsa could strive to become South Africa’s version of South Korea’s primary steel producer POSCO, whose steel, or a certain quota thereof, is mandatorily used in Samsung and LG products, as well as Hyundai and KIA automobiles.
“We don’t have that benefit in South Africa because we are not yet a brand-centric country in terms of brands that are manufactured in South Africa and symbolically carry South African steel so that you can drive a car with pride knowing it is made locally with local steel.”
He said that, while Cadac gas canisters and locally manufactured Defy fridges use local steel, more needs to be done in terms of developing local brands.
Give and take
Makwana said that last year top CEOs of big and small steel players including former Amsa CEO Paul O’ Flaherty, together with the secretary generals of the two major unions went and met government together and said, “We need you to save our sector. It is bleeding from foreign attack.”
But that rescue plan will involve a give-and-take between government and Amsa, where the former will assist in protecting the sector from cheap imports and legislating that certain products must contain local steel content, while Amsa has had to make concessions on various legacy issues, including the R1.5 billion fine, while also putting a cap on future earnings and changing it’s pricing regime for local consumers.
SOurce: Mineweb.com