Steel woes helped to prompt new regulations

The tighter regulations that are being proposed to control the export of scrap metal most certainly have something to do with the trouble South Africa’s steel industry is in, according to Henk Langenhoven, chief economist at the Steel and Engineering Industries Federation of South Africa (Seifsa).

The challenging environment facing the steel sector has already resulted in a major producer, Evraz Highveld Steel, closing its doors.

The availability of scrap in the domestic market is crucial to Seifsa members, who use a great deal of scrap in their processes, said Langenhoven.

The industries that use scrap are lobbying the government to prioritise the use of local metals such as steel in infrastructure projects, despite the availability of cheap Chinese imports.

“Nobody can compete with the Chinese. That is the big problem worldwide,” said Langenhoven. “They are simply putting it on the global market at prices that cannot be competed with.”

Almost all countries, including South Africa, have protection measures against Chinese steel at the moment, Langenhoven said. Although the South African steel sector is vital for the mining sector, there is no denying it requires a more competitive edge.

“We did fall behind in terms of technology, there is no doubt about it. That is fairly widely acknowledged and has to be rectified,” said Langenhoven.

“[During the apartheid years] we had sanctions; no one wanted to compete with us. And China was not even on the world map 20 years ago. All dynamics shifted and we didn’t keep up with the tech.”

South African steel accounted for 65% of the local market in 2002, but this has slipped to 48% now, according to Langenhoven.