The man behind Iscor, Eskom, IDC
Iron Giant | Hendrik van der Bijl’s vision for South Africa continues to shape the lives of all of its citizens even today
ON December 4 1948, Australia’s Sydney Morning Herald ran a short front-page wire news item announcing the death in Johannesburg of Dr Hendrik Johannes van der Bijl, 61, who was “internationally known for his discoveries which led to the development of radio-telephony”.
The UK’s Royal Society journal dedicated nine pages to the obituary of a society fellow admitted just four years earlier.
But more telling is that the economy and lives of South Africans continue to be affected by the work of a man who was the driving force behind the creation of Escom (now Eskom), Iscor and the Industrial Development Corporation, among other entities.
Hendrik van der Bijl was born in Pretoria in 1887. He completed his schooling in the Cape because of the danger presented by the Anglo-Boer War, and studied in Germany at Halle and Leipzig, where he obtained a PhD.
Moving to New York to work for the Western Electric Company, Van der Bijl collaborated with the US Department of Defense on communications technology involving vacuum tubes.
His reputation extended back to South Africa and prime minister Jan Smuts offered him a position as scientific and technical adviser to the Department of Mines and Industries.
Once in the role, Van der Bijl took note of the country’s fledgling primary steel industry, which — in fits and starts notably driven by Sammy Marks — had tried to convert railway scrap and ore to steel.
Recognising that a cheap supply of electricity to the steel industry could form the backbone of the country’s manufacturing economy, Van der Bijl laid plans that would result in legislation paving the way for the establishment of the Electrical Supply Commission (Escom) and the Iron and Steel Corporation (Iscor).
Intended to be a parastatal but run as a commercial entity — an intractable duality that still plagues Eskom and casts a shadow over South Africa’s economy — Escom was established in 1923 at a cost of R16million, with Van der Bijl its first chairman. The outlay was repaid to state coffers in 10 years.
Iscor’s establishment followed, with Van der Bijl at its helm for 13 years from 1925.
Van der Bijl also recognised that the state needed to invest in entities strategically critical to the economy, and drove the formation of the IDC in 1940 to this end. He was chairman for three years.
During World War 2 Van der Bijl served as Smuts’s directorgeneral of supplies, whereafter he drove the expansion of the steel industry into a new town named after him, Vanderbijlpark.
He served in various roles, including encouraging the formation of a shipping entity for goods moving between the US and South Africa, and as a cabinet minister. Van der Bijl was also elected a foreign associate of the US National Academy of Sciences.
There is little supplementary information about him. Dirk J Vermeulen, his biographer, noted this week: “His wife gave the South African Institute of Electrical Engineers some very important artefacts and documentation covering his work in our industry, but I suppose his children were not much interested in his very significant contribution to the development of our country.”
Van der Bijl helped formalise and centralise a nascent industry that had begun in 1882 when the South African Coal and Iron Company was set up, with industrialist Marks getting permission to build factories and furnaces for the smelting of iron in 1892.
Marks was also involved in the establishment of Union Steel Corporation in 1911, which began production in Vereeniging two years later, and the Transvaal Blast Furnace Company in 1917.
In 1924, with the country’s potential for steel production and iron ore supply gaining attention, Scaw Metals was established in Johannesburg. Cape Gate followed in 1929.
Van der Bijl’s Iscor, after beginning production in 1934, set up a heavy plate mill at Vanderbijlpark a decade later, with a fully integrated steelworks in the town running by 1953 and several upgrades following through to the ’70s.
It also began building steel- works in Newcastle, KwaZuluNatal, in 1971.
The beginnings of Highveld Steel and Vanadium were seen in the ’60s.
After privatising and listing on the JSE in 1989, Iscor bought out Union Steel.
In 1996 Iscor began construction of its Saldanha Steel plant, with 50% backing from the IDC.
Saldanha came online in 1999, with Iscor buying out the IDC’s stake three years later.
The local industry drew the attention of several multinationals, including Evraz, which bought just more than 80% of Highveld in 2007. But the most notable deal was LNM Holdings’ business assistance agreement with Iscor which would lead to Lakshmi Mittal’s control of South Africa’s dominant steel player in the early 2000s.
In 2001, given Iscor’s heavy debt load of R5.8-billion and market struggles, the Iscor board decided to unbundle its iron ore assets into a new entity, Kumba Resources, while retaining just less than a quarter of the associated mining rights. Its coal assets would eventually be owned by Exxaro Resources.
To compensate for removing its vertical integration from mine to steel press, an agreement was struck under which Iscor would essentially absorb Kumba’s debt load in exchange for a forward supply of iron ore at a rate of cost-plus 3% from its Sishen and Thabazimbi mines for a minimum of 25 years.
Iscor’s assets, which soon fell under Ispat Iscor and then Mittal Steel, included its plants in Vanderbijlpark, Vereeniging, Newcastle and Saldanha.
Among the casualties of the current downturn in the steel market are Highveld, which applied for business rescue last year, and the Thabazimbi mine, which entered its closure phase after 80 years of operation last year.
The state needed to invest in entities critical to the economy He drove the expansion of the steel industry into a new town