South Africa

South Africa’s steel industry in trouble

Load-shedding and logistics bottlenecks are wreaking havoc on the country’s steel and engineering industry and require urgent intervention.

This is the view of the Steel and Engineering Industries Federation of Southern Africa CEO Lucio Trentini, who told Newzroom Afrika that the challenges the industry faces have had a disastrous impact.

Trentini said South Africa’s steel and engineering sector is a strategic and important sector of the country’s economy. 

It consists of around 10,000 companies that employ over 220,000 blue-collar workers. It is a R900 billion sector, and its contribution to GDP is around 3%.

Trentini said this sector “sits smack in the middle of our economy”, as it is a supplier and customer to major sectors like mining, construction and manufacturing. 

“So when our sector is beset with challenges, those effects are felt right throughout the economy,” he said. “If this sector is not meeting its true potential, the consequences are felt throughout the economy.”

Trentini highlighted load-shedding as the “main growth killer” of the sector in the past two years. 

“While positive things are happening at a macro level on the ground, particularly for those companies that don’t have the deep pockets to put in alternative energy sources, it’s really tough, tough days ahead,” he said.

He said the only way to address these issues is for the private sector to work as closely with the government as possible and enter into public-private partnerships.

“We believe by working with the government and their different ministries and departments, we can certainly make a contribution and do what needs to be done on an urgent basis because time is running out,” he warned.

South Africa’s steel and engineering industry was dealt a massive blow at the end of 2023 when ArcelorMittal South Africa announced that it would shut its long steel products business and cut as many as 3,500 jobs.

The company said the unit would be placed in care and maintenance and cited the country’s moribund economy for its decision.

The Newcastle Works, the Vereeniging Works, and rolling facilities, which use Newcastle material as feedstock, will be affected.

“The ArcelorMittal South Africa board and management have reached this point after having exhausted all possible options,” CEO Kobus Verster said in a statement.

“We have a duty to ensure that the business remains sustainable in the long term, in the interests of the company and its stakeholders.”

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