Treasury’s order to buy local steel comes late in the day
IN some rare good news for the steel industry, the National Treasury has instructed the government and stateowned enterprises to procure locally produced steel products and components for construction with immediate effect.
“This is an important breakthrough for our industry as it recognises the major role played by the steel construction industry in developing the country and achieving job preservation and creation,” said Paolo Trinchero, CEO of the Southern African Institute of Steel Construction.
The institute, its member companies and the Department of Trade and Industry have been working together to safeguard the local steel industry, which has been undercut by an influx of cheap imports from China.
Trinchero said the SAISC needed to work with the DTI to ensure that training and capacity-building programmes were introduced to ina stitutions that led procurement and strategic sourcing. Monitoring and evaluation were necessary.
In 2008 Eskom asked the government for the right to import the steel it needed. As result, between 100 000 tons and 200 000 tons of steel were imported, with subsequent job losses and the closure of some companies.
“If this designation was put in place three years ago, South Africa would still have big companies fully operating and the likes of Evraz Steel and Vanadium would not be in business rescue,” said Kobus de Beer, industry development executive at the SAISC.
The global financial crunch, which had caused steel prices to fall sharply, had plunged Evraz Highveld Steel and Vanadium, South Africa’s second-biggest steelmaker, into a crisis.
ArcelorMittal South Africa CEO Wim de Klerk said: “We always believed this was vital for the resuscitation of the entire industry. This is why we dedicated resources to negotiate for the regulation of designation of local steel. The decision by the DTI is a clear indication that government has taken cognisance of the challenge facing the steel industry and is committed to its sustainability.”
De Beer warned that the process was still in its infancy and urged members to remain competitive.
“Our industry dare not relax, as the underlying assumption is that we will improve competitiveness and maintain high levels of engineering excellence and quality. Our members must redouble their exports efforts as this is the best proof of competitiveness and productivity,” he said.
Industry estimates suggest the steel industry accounts for over 1.2% of GDP and employs about 190 000 people.
The Treasury’s instruction came after ArcelorMittal recently agreed to supply Evraz with blooms and slabs for processing into heavy structural steel, which is used in construction.
De Klerk said: “The agreement will result in the reopening of Evraz’s heavy section mill, and strengthening the industry as locally produced heavy structural products will again be available to the South African market.”
Trinchero warned that some government buyers would balk at “buying South African”.
He added: “We will have to make every effort to hasten compliance. Any suspected import of fabricated product has to be reported and investigated.”
Although other buyers of structural steel, like mines, were not bound by the designation, it provided a strong platform from which to encourage private industry support for local content.
Designation of steel is vital to resuscitating the industry