Firm is hungry for scrap metal
The responsibility for ensuring and contributing towards the building of a viable green economy that will create the much-needed jobs in the country is taken very seriously by the National Empowerment Fund (NEF). According to the Green Economy Accord signed in 2011 by representatives from the government, business, labour and civil society, it is estimated that supporting initiatives that will lead to the development of a sustainable green economy will lead to the creation of 300 000 jobs by 2020.
“Such initiatives include the full participation of development financiers, such as the NEF, to support black businesses operating on the basis of the green economy model,” says NEF investment principal Eldene Govender.
One such business is the Boipatong Scrap Metal Consortium (BSMC), a 100% black-owned company that supplies steelmakers with recycled ferrous and non-ferrous scrap metal and is funded by the NEF for
R5 700 000 to buy stock (scrap metal), equipment and working capital requirements. The company received an additional R550 000 from the Vanderbijlpark-based steel manufacturer ArcelorMittal SA with its eight shareholders also contributing R114 300 to the working capital.
Six of the shareholders own a 63% equity in the company with the remaining shareholder owning 37%. BSMC has a three-year contract to supply ArcelorMittal SA with 108 000 tons of recycled scrap metal in three years, translating to R324 million over the period.
The eight shareholders own their small scrap metal companies, which will complement the consignment the BSMC is expected to supply to ArcelorMittal SA. In addition BSMC will source its stock from other local commercial scrap suppliers, such as Kingsley Beverages, Consolidated Wire Industries and Treppo Group. These commercial suppliers are expected to supply BSMC with at least 45 tons of scrap a week. BSMC is allowed to source metal from household users, too. The commercial advantage that BSMC has is that, although there are at least 10 scrap metal companies in the Vaal region, only BSMC is BEE compliant.