The state-owned South African development institution’s project with Hebei Iron & Steel Group (河北鋼鐵集團), China’s biggest manufacturer of the material by output, is set to make products specifically for the local market that would be sold at competitive prices, the institution’s Mining and Manufacturing Industries director Abel Malinga said in an interview in Johannesburg on Thursday last week.
“We are going ahead with it,” Malinga said. “We are not going to change our minds. China will not produce steel for us, for our needs. We have different needs.”
The new mill would produce as much as 5 million tonnes of steel annually, according to Malinga. That compares with the 6.6 million tonnes of crude steel the nation made last year, according to the South African Iron and Steel Institute. Some of the biggest local producers of the material, including a unit of ArcelorMittal, have announced plans to cut a total of more than 2,400 jobs as a surge in subsidized Chinese imports supplied at prices as much as 25 percent below local production costs have squeezed manufacturers’ margins.
One of those is Scaw Metals Group, in which the institution holds a 74 percent stake. It incurred a loss of 1.1 billion rand (US$73.45 million) in the financial year through March and is planning to cut 1,000 jobs, the institution said.
The institution is looking at applications to invest in Scaw in a move that could potentially break the company up into its four divisions in a restructuring that is aimed at making it a “sustainable business,” Malinga said.
The new mill would produce steel cheaper than other incumbents through utilizing its own sources of inputs including iron ore and coking coal in a plant equipped with new technology, Malinga said last month.
The new steel mill would produce its first steel by 2020, Malinga said, adding that the facility would be near Witbank in Mpumalanga Province or Richards Bay in KwaZulu-Natal province.
