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

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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

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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.

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Basic Iron & Steel Production

40 60 80 100 120 140 160 Index: 2010 = 100

Basic Iron & Steel Capacity Utilisation

50 55 60 65 70 75 80 85 90 95 Percentage Utilisation (%)

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Basic Iron & Steel Gross Fixed Capital Formation

100 200 300 400 500 600 700 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 R' Millions R' Millions

Metals, metal products, machinery and equipment Basic iron and steel Construction

Basic Iron & Steel Employment

32000 32500 33000 33500 34000 34500 Number of Employees

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Base Metals & Articles of Base Metal Trade

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 US$ Mllions 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

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Thank You