South Africa’s manufacturing sector remains ”resilient” amid global pressures, but the price of carbon steel is holding back the country’s industrial drive, a senior government official said on Tuesday.
”One of the constraints that we’ve raised with respect to our whole industrial drive has been the pricing and availability of steel, and particularly carbon steel,” said Nimrod Zalk, chief director of industrial policy at the Department of Trade and Industry.
The Cabinet approved a multi-pronged industrial action plan last year to help drive Africa’s strongest economy in its quest to achieve a 6% growth rate by 2010.
South Africa is one of the world’s largest producers and exporters of chromite — used in stainless steel products — but has not escaped record steel prices due to market dominance by the local unit of steel giant ArcelorMittal.
South Africa’s Competition Tribunal fined ArcelorMittal R691,8-million in September last year for charging ”excessive prices” for flat steel products as demand for the metal from China and India drove prices up.
Zalk, who was briefing MPs on South Africa’s industrial policy action plan, said aside from the higher steel prices, government was also concerned with the lack of investment in the carbon-steel sector.
”We’ve actually seen the production of liquid steel decline in South Africa between 2004 and 2007, notwithstanding this large infrastructure, construction investment that’s happening … and that’s a matter of considerable concern to us,” he said.
South Africa has embarked on a multibillion-dollar infrastructure programme to prepare for its hosting of the 2010 Soccer World Cup.
Zalk said the government was trying to attract new carbon-steel investment into the country to enhance competition and increase security of supply, but did not mention specific companies it may be targeting.
”It’s a very complex area of work, which also includes some commercial sensitivities in terms of companies that we’ve had discussions with,” he said. — Reuters