Bongani Mdakane | 29th January 2024
The imminent collapse of South Africa’s steel industry poses a threat to thousands of employment, according to a warning from the Steel and Engineering Industries of Southern Africa (Seisfa).
As of now, the industry employs 362 000 people, compared to 577 000 15 years ago. Seisfa COO Tafadzwa Chibanguza made this remark on Friday. More job losses are likely, he said.
The main reasons behind the closure of the ArcelorMittal South Africa (Amsa) facility were slow economic growth, low gross fixed capital creation, energy-related structural constraints, and logistical challenges. Businesses at every stage of the value chain have to cope with these problems, and Chibanguza said that without quick action and reform, it is unlikely that they will be resolved in the medium term.
Therefore, with a few modifications to account for the Amsa closure, it may be conceivable to estimate the current pace of employment declines into the medium term in the absence of reform.
He is alluding to Amsa’s declaration at the end of the previous year that it was considering closing its factories in Newcastle and Vereeniging, which would have a devastating effect on the economies of both towns and eliminating 3 500 jobs.
According to Chibanguza, the steel and engineering industries play a pivotal role in the South African economy, serving as the foundation of the nation’s unparalleled industrial base within the continent.
According to him, “the value chain represented in the sector comprises the full metals value chain, from merchants and service centres to metal fabrication, heavy and light engineering, and metal manufacturing [ferrous and non-ferrous].”
Numerous other industries, such as water, logistics, mining, construction, agriculture, and many facets of the electrical supply business, depend heavily on this industry for its input needs. In addition, the industry exports 40% of its total output, generating an annual gain in foreign exchange revenues of $20-billion for the country.
The CEO of the National Employers Association of South Africa, Gerhard Papenfus, predicted that continued government meddling in the steel sector will lead to the sector’s inevitable steady decline and Amsa’s eventual extinction.
“Minister Patel continues to introduce and renew these duties despite the harmful effects. This raises the question, why continue with a policy that is reducing the competitiveness of the steel downstream and hastening the alarming trend of de-industrialisation, which is a primary cause of the sharp rise in unemployment and ensuing socioeconomic instability?
“The only way to stop the steel industry’s fall is to stop and reverse the department of trade, industry and competition’s irrational initiatives. In the near term this will cause disruption, but over time, the industry will return to balance.”
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.