Latest news with #Monage
Daily Maverick
4 days ago
- Business
- Daily Maverick
ArcelorMittal responds, says the mini-mill dream could melt down
ArcelorMittal SA has come out swinging against a recent Daily Maverick article that it says turned the national debate into a scrapyard brawl in favour of mini-mills and scrap metal traders. In a sharply worded statement, ArcelorMittal South Africa (Amsa) claims Daily Maverick 'misrepresents the complex reality of South Africa's steel sector' and unfairly promotes 'a misleading narrative in favour of mini-mills and scrap metal traders, particularly those who benefit from importing cheap finished steel.' The company argues that the journalist (me) presents mini-mills as a silver bullet and 'masks the vested interests of a small cohort of import-reliant firms', adding that the idea these facilities can simply replace integrated production is 'economically and technically untenable'. Cool. Amsa's voice is strained by its terminal injuries — it's long steel business – slated for mothballing come the end of September 2025 – and a policy environment the company says leaves it no choice but to start winding down. Depending on who you ask, the problem is either a failed state, a flawed business model, or both. Long steel's long goodbye Amsa has confirmed that unless a last-minute industrial miracle occurs, it will shutter its loss-making long steel operations at Newcastle Works, Vereeniging Works, and its rail-focused subsidiary. The company says it has exhausted the R1.68-billion bailout from the Industrial Development Corporation (IDC) and 'cannot assume any further financial risks related to the Long Steel Business beyond the next few months.' The closure directly threatens 3,500 jobs. But according to Elias Monage, president of the Steel and Engineering Industries Federation of Southern Africa (Seifsa), the ripple effects could be catastrophic: 'The signs of collapse are unmistakable. This is not just about a single mill – it is about an entire industrial ecosystem at risk.' Monage's message is no longer merely a plea for urgent intervention. In a June statement, he called for a full-scale reset: 'South Africa's steel and engineering sector stands at a perilous crossroads. Years of deindustrialisation, declining production, job losses and a steady erosion of competitiveness have brought us here. This decline is not the result of chance, but a culmination of systemic policy failures, a lack of coordinated action and inadequate implementation of recovery frameworks.' Dance if you want to dance Monage once championed the Steel Master Plan as a roadmap for reindustrialisation. Now he concedes the plan has 'not lived up to its potential'. Instead of decisive action, he describes a 'diffusion and inaction' that left industry leaders disillusioned. 'The Steel Master Plan had over 20 workstreams and 73 deliverables, but it lacked focus. Progress stalled, and as it did, industry leadership began to withdraw,' Monage says. The hard stats back him up: steel production remains 18% below its 2007/8 peak, capacity utilisation has slipped below efficiency benchmarks, and per capita steel consumption has dropped by 37% since 2013 – all while global steel intensity rises. Monage argues that South Africa needs a new 'strategic agreement for impact,' a compact that binds government and industry to shared, measurable objectives like achieving 4-5% annual growth in metals and engineering output. 'Business as usual will not suffice,' he warns. 'This moment demands a bold shift – from fragmented policies and siloed departments to a unified national compact anchored in public-private collaboration.' Let's play the blame game National Employers' Association of South Africa (Neasa) CEO Gerhard Papenfus has long argued that Amsa's woes are self-inflicted, a product of propping up an uncompetitive giant. But Amsa doesn't think the one-time, self-appointed envoy to Washington, DC, is arguing in good faith. 'Though Neasa does not publicly disclose its membership, multiple sources including Neasa press statements and trade forums highlight its strong representation of steel traders and re-rollers with minimal domestic productive capacity,' the company said. Amsa also countered that narrative directly. 'Mini-mills that can replace integrated primary steel production are economically and technically untenable,' the company insists. 'Mini-mills based on scrap cannot produce the full range of high-quality, flat and long products required by the automotive, mining, defence, renewable energy and construction sectors.' The core argument is that the Preferential Pricing System (PPS) and export restrictions have cost informal workers and recyclers R60-billion over a decade, while propping up a few scrap-based mills employing only 5,000 people. Government goes to the mat 'The PPS has not just failed; it has actively undermined the viability of integrated producers,' Amsa says. Worse still, it accuses mini-mills of gaming the system: 'Declining to purchase scrap at PPS-mandated discounts, only to subsequently call for tighter export controls to suppress prices further.' The Department of Trade, Industry and Competition (DTIC) has admitted it is in 'firefighting mode,' with Minister Parks Tau's working group scrambling to contain the fallout. But Monage is clear: 'Government must acknowledge that past interventions, however well-intentioned, have not delivered. Without leadership, clarity and decisive action, the socioeconomic consequences – more job losses, more factory closures, deeper erosion of capacity – will only deepen.' Meanwhile, globally… ArcelorMittal's global operations are booming. With Q1 2025 gross profit of $1.6-billion and strategic expansions in Liberia, India and the US, the global group is thriving while Amsa fights for its life. The South African story remains bleak: rail failures labelled 'the worst performance on record', soaring energy costs and shrinking domestic demand. Even with a smaller loss expected this month, Amsa warns that 'without immediate policy coherence', integrated plants like Newcastle and Vanderbijlpark could become relics. But Monage offers a final plea for collective ambition: 'No country can industrialise – or reindustrialise – without a resilient metals sector. Steel is the foundational input into mining, construction, transport, manufacturing, energy and agriculture. We must rescue the original intent of the Master Plan and build a future of inclusive, job-rich growth.' At stake is not just the survival of one steel mill or one company. It's the question of whether South Africa can once again build things. DM
The Citizen
05-06-2025
- Business
- The Citizen
Warning from industry that Steel Master Plan has stalled
While ministers punt industrialisation, the Steel Master Plan is not getting the sector anywhere. Why is it not working? The steel industry has warned that the Steel Master Plan has stalled and that South Africa urgently needs a new industrial compact as the country's steel and engineering sector stands at a perilous crossroads. Once the bedrock of South Africa's industrial economy, today the sector faces a stark reality: years of deindustrialisation, declining production, job losses and a steady erosion of competitiveness has hollowed out the industry. Elias Monage, president and chairman of the board of the Steel and Engineering Industries Federation of South Africa (SEIFSA), says this decline is not the result of chance, but a culmination of systemic policy failures, a lack of coordinated action and inadequate implementation of recovery frameworks. 'The launch of the Steel and Metal Fabrication Master Plan in 2021 offered a glimmer of hope. It promised to reposition the steel industry at the heart of South Africa's reindustrialisation agenda. Yet, nearly four years later, we are confronted with an uncomfortable question: has the Master Plan delivered, or has it collapsed under the weight of unfulfilled promises?' ALSO READ: Did government policy kill SA's steel industry? Concept of Steel Master Plan remains sound He says the concept of the Steel Master Plan remains sound as an inclusive, coordinated and well-resourced industrial policy is critical to saving strategic sectors, but the problem lies in its execution. 'Instead of clarity and action, we have seen diffusion and inaction. With more than 20 workstreams and 73 deliverables, the Steel Master Plan lacks focus. As progress stalled, industry leadership began to withdraw, disillusioned by government's inability to deliver on commitments.' Monage says today the signs of collapse are unmistakable. Steel production remains 18% below its 2007-8 peak, and capacity utilisation across all sub-sectors has slipped below the 85% benchmark for efficiency. In addition, per capita steel consumption has dropped by 37% since 2013, a sharp contrast to global trends where steel intensity continues to rise. Monage points out that these trends are not just statistics but translate into factory closures, job losses and the loss of critical productive capacity. 'If we are to reverse this trajectory, we have no choice but to fundamentally rethink South Africa's industrial policy. Business-as-usual will not suffice. Government must acknowledge that past interventions, however well-intentioned, have not delivered the intended impact. 'This moment demands a bold shift from fragmented policies and siloed departments to a unified national compact anchored in public-private collaboration.' ALSO READ: Has the Steel Master Plan collapsed? What should this new approach for the Steel Master Plan look like? Firstly, Monage says, there must be a Strategic Agreement for Impact between government and the steel and engineering sector that binds both parties to a shared vision with clear accountability. 'Crucially, it must define a singular, measurable objective, such as achieving 4 – 5% annual growth in metals and engineering output as a measurement for all policy instruments and initiatives. Without a clear north star, no policy can succeed.' Secondly, he says, the sector must streamline efforts into three focused workstreams: industrial policy, demand creation and financing. 'The industrial policy workstream must aim to establish a coherent framework that balances competing interests across the value chain from upstream primary producers to downstream manufacturers. Too often, policy has favoured one at the expense of the other. The vision must be unified and inclusive. 'The demand creation workstream must unlock catalytic projects that stimulate consumption of domestically produced steel and fabricated products. This includes leveraging state-led infrastructure initiatives, strategic procurement and facilitating partnerships that can turn project pipelines into real economic activity. 'The financing workstream must address the chronic undercapitalisation of the sector. A reindustrialising economy cannot be built on weak balance sheets and ad-hoc funding. What is required is a structured financial framework, including public-private funding vehicles and targeted incentives, to finance industrial and infrastructure projects that have multiplier effects across the economy.' ALSO READ: Competition Commission to investigate steel market Stop punishing the sector and rather offer incentives Thirdly, he says, we must reorient our approach to policy from punitive to incentive-based mechanisms. 'Businesses need predictability and support to invest and grow. Every policy instrument must undergo rigorous cost-benefit analysis. 'Those that do not work must be scrapped. Those that do must be scaled up. Industrial policy must become an iterative, evidence-based practice, not a once-off, static document.' Fourthly, he says, government must lead a national policy alignment drive. 'Energy security, rail logistics, port capacity and trade policy are all levers of industrial competitiveness. Right now, these levers pull in different directions. 'Coordination and coherence across departments and spheres of government is essential. The private sector cannot be expected to invest in an economy where the left hand of government does not know what the right hand is doing.' Monage says finally it is imperative that we reaffirm the strategic importance of the steel and engineering sector to South Africa's long-term economic prospects. 'No country can industrialise or reindustrialise without a resilient metals sector. 'Steel is the foundational input into mining, construction, transport, manufacturing, energy and agriculture. The erosion of this sector undermines every other sector's growth potential.' ALSO READ: ArcelorMittal shutdown: worry about socio-economic catastrophe Steel Master Plan did not live up to its potential He says the Steel Master Plan, in its current form, has not lived up to its potential, but that does not mean we should abandon it. 'Instead, we must rescue its original intent to galvanise industry and government behind a shared industrial vision and breathe new life into its structure and implementation.' Monage says SEIFSA and its members remain ready to co-create a new compact for industrial growth but cannot do this alone. 'We call on government, particularly the departments of trade, industry and competition, finance, public enterprises, infrastructure and transport to urgently come together with industry leaders to forge a new path forward. 'Time is running out. With every passing year of stagnation, the socio-economic consequences deepen — more job losses, more factory closures and a deeper erosion of South Africa's productive capacity. 'Let us focus on a Strategic Agreement for Impact between government and the steel and engineering sector with a singular commitment: to reignite South Africa's industrial engine and build a future of inclusive, job-rich growth. The steel sector — and South Africa — depends on it.'
