Feature
Steel Awards 2015
The state of the steel industry
Comment from Paolo Trinchero, SAISC executive director
The Southern African Institute of Steel Construction (SAISC) is concerned about the
immediate future of the local steel industry. This is according to SAISC executive director,
Paolo Trinchero. “On average South Africa produces about seven million tons of steel per
year of which about five million tons is locally consumed. He adds that China exported 100
million tons of steel last year and has the capacity to produce over 750 million tons. “It is
not uncommon for imported Chinese fabrications to land on our shores at a lower cost than
that of raw steel and there is a very real possibility that practices such as these could have a
catastrophic effect, not only on the South African industry but on the global steel industry.”
Turning to local issues, Trinchero says that each unit of the Medupi and Kusile power
stations required about 20 000 tons of steel per support structure. “In comparison, one
large shopping mall such as the Mall of Africa needed about 1 000 tons of structural steel
for its roof. So when we stop building power stations,
we will have to build twenty large shopping centres to
compensate for the lost work from each unit. This is
currently a very real challenge,” he says.
“The current difficulties being faced by the South
African steel industry cannot be over emphasised,”
he warned, reminding us of two key problems: the
total lack of project work and the unrestricted access
China has to South African markets. Trinchero says the
biggest challenge to the local fabricators is order book.
“Take one of the leading fabricators in South Africa
with capacities of 24 000 tons per year. Its current
order book is 600 tons we are told. That is a scary
statistic! It is hard to imagine one of South Africa’s
largest fabrication facilities running at 2% capacity.”
“The only opportunity left open to them was to
export. There are no more big projects on the South African horizon and the reality is they
and others will be retrenching a lot of workers unless we can secure overseas work. It
is a tragedy that our local industry is being decimated and it is surely in our interests to
support and protect it through incentives. We are working closely with government along
the lines of the following “wish” list which I have submitted:
• Investor confidence is key and government policy needs to create confidence.
• Release work into the economy. Prioritize and implement parts of the NDP that will have
the biggest impact.
• Encourage localization. While this is being done by the DTI already, it needs to be
embraced by SOEs and large local businesses.
• Help team SA to generate a substantial export revenue stream by looking for a wide range
of measures such as energy inputs, logistics etc.
• Ensure the protection of the entire industry from unfair competition.”
“We are encouraged by the latest initiatives of the government, industry and labour task
teams. It’s tough times at the moment for our industry, but we remain confident that we
will get through it,” Trinchero concluded.
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