Department of Trade & Industry Republic of South Africa The - PDF document

2015/05/12 Department of Trade & Industry Republic of South Africa The Current Dynamics in South Africa’s Steel Industry Paris, 12 May 2015 Contents ● Background ● Basic Iron & Steel Market ● Legislative Developments 1

2015/05/12 Background ● Manufacturing contribution to GDP 13 percent in 2014 ● Government retains a keen interest in growing primary steel capacity; ● Downstream sector has become the focus of harnessing investment injection, growth and development ● Robust activity in subsectors such as rail; energy; construction; automotive; packaging; white goods; general engineering; petrochemical; machinery and equipment. ● Downstream value addition of steel anticipated to provide a thrust to the current levels of development. Background ● Output in the steel industry is intrinsically interlinked with the performance of intensive steel use sectors such as mining, manufacturing and building & construction. ● Investment levels remain depressed in all these sectors and thereby pose a significant risk to the domestic steel value chain and any state developmental plans. ● Infrastructure development key to the sustainability of the steel sector in South Africa. Demand from key programmes energy, road and rail, port, water and social (housing, schools and hospitals) infrastructure. ● South Africa is anticipated to sustain an annual steel demand rate of 6 to 10 percent for the next decade. 2

2015/05/12 Basic Iron & Steel Production 160 140 Index: 2010 = 100 120 100 80 60 40 Basic Iron & Steel Capacity Utilisation 95 90 Percentage Utilisation (%) 85 80 75 70 65 60 55 50 3

2015/05/12 Basic Iron & Steel Gross Fixed Capital Formation 5000 700 4500 600 4000 500 3500 R' Millions R' Millions 3000 400 2500 300 2000 1500 200 1000 100 500 0 0 Metals, metal products, machinery and equipment Basic iron and steel Construction Basic Iron & Steel Employment 34500 34000 Number of Employees 33500 33000 32500 32000 4

2015/05/12 Base Metals & Articles of Base Metal Trade 16,000 14,000 12,000 10,000 US$ Mllions 8,000 6,000 4,000 2,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Trade Balance Exports Imports Legislative Developments: Carbon Tax • Government confirmed implementation date • Treasury scheduled draft bill for public comment • Objectives:  Carbon pricing encourage a shift in production patterns towards low-carbon & more energy-efficient technology  Carbon-intensive factors of production, products and services likely replaced with low-carbon-emitting alternatives  Carbon price create incentives for R&D/technology innovation in low-carbon alternatives 5

2015/05/12 Thank You 6