Date: 29/06/2004
Source: Department of Trade and Industry
Title: M Mpahlwa: Iscor's 75th anniversary
SPEECH BY MINISTER OF TRADE AND INDUSTRY, MANDISI MPAHLWA, AT ISCOR'S 75TH ANNIVERSARY, 29 June 2004
GOVERNMENT'S VISION FOR STEEL: AN INTEGRATED SOUTH AFRICAN STEEL INDUSTRY
We are here today to commemorate the 75th Anniversary of a pillar of the South African economy: Iscor. Iscor has been a key player in South Africa's industrialisation since its establishment in 1928. Today its is the largest company in the iron and steel sector of our economy, as well as on the African continent.
Basic iron and steel consists of 7.4 per cent of the manufacturing industry and contributes 2.5 per cent to gross domestic product. The sector has generated an exponential growth in exports, from around R5bn in 1990 to R30bn in 2003, with a trade surplus of R27bn.
As the leading player in this sector, Iscor is a highly successful operation derived from a low cost production base. Over recent years it has worked with LNM, one of South Africa's largest foreign investors, to substantially improve its efficiencies and transform itself into a world-class operation. This has made it one of the most efficient global steel producers. Therefore Iscor can truly be considered to be one of the National Champions of the South African economy.
There has been much debate in the press recently about the role of Iscor in the South African economy. Accordingly it would be appropriate to say a few words about the vision that government holds for the steel industry in South Africa.
Government's focus over recent years has shifted from the successful stabilisation of the macro-economy, towards the more detailed microeconomic constraints to growth and employment in the South African economy. This has been reflected in its Microeconomic Reform Strategy as well as some of the agreements that came out of the historic conclusion of the Growth and Development Summit in June last year. Of particular importance has been the focus on improving efficiencies in the economy, and in particular, examining price structures in both the public and private domains. Concerns with pricing structures were further emphasised in the President's State of the Nation Address on 21 May 2004. However, our microeconomic concerns are by no means restricted to pricing structures but extend to issue such as the quality of infrastructure, as well as the need to fast-track skills development in the economy.
Within the context of microeconomic reform, the main objective of the dti's Integrated Manufacturing Strategy is to generate greater downstream value-addition and employment, through the increased integration of value chains. We believe that the presence of Iscor - a world-class steel producer such - in this country provides a strong basis for a vibrant and integrated steel industry in South Africa.
While the basic iron and steel industry has performed extremely well, we are less satisfied with the progress made in the downstream steel. For this reason we are of the view that the steel industry in South Africa cannot be described at this juncture, as an integrated industry. There is currently an impasse in the development of such an integrated steel industry.
On the one hand, the primary steel industry is highly exposed to export markets. Primary steel is exported at relatively low margins, in a highly competitive international commodity market. On the other hand, the downstream domestic steel industry is currently not large enough to absorb the bulk of domestic primary steel output. This raises a strategic challenge, particularly when the volatile commodity cycle enters it downward phases. This is not only a strategic challenge for the upstream industry, but also for the country. This impasse can only be resolved by all parties taking a long-term outlook on the development of the South African steel industry. There is common ground amongst all players that there is a strategic imperative to grow downstream steel beneficiation and employment. Such downstream development is the true litmus test of an integrated steel industry in South Africa.
Contrary to the view of certain commentators, Government sees the upstream steel industry as a fundamental pillar of the South African economy. We wish to see impediments to the growth of the entire steel value chain systematically and holistically addressed. We do not see this as a zero sum game, but rather in terms of a long-term sustainable and profitable strategy for the entire industry. This means systematically and concurrently addressing issues such as pricing, logistics, and skills development, as well as any other relevant blockages to development of the steel value chain.
Government has already taken steps to begin dealing with some of these blockages. These include an accelerated programme of investment spending to upgrade the countries' transport infrastructure, coupled with policy reform to deal with inefficiencies in this sector. The Department of Labour is also taking steps to fast-track skills development through the Sector Education and Training Authorities. The dti is working actively with key sectors of the economy to identify and help eliminate sector-specific impediments to growth and employment. We are willing to bring all our efforts to bear to accelerate this process within the steel sector.
It is in this spirit that we wish Iscor all the best in its future endeavours, and to assure you that Government is fully supportive of the long-term development of a sustainable, profitable and integrated steel industry in South Africa.
Issued by: Department of Trade and Industry
29 June 2004
Source: Department of Trade and Industry
Title: M Mpahlwa: Iscor's 75th anniversary
SPEECH BY MINISTER OF TRADE AND INDUSTRY, MANDISI MPAHLWA, AT ISCOR'S 75TH ANNIVERSARY, 29 June 2004
GOVERNMENT'S VISION FOR STEEL: AN INTEGRATED SOUTH AFRICAN STEEL INDUSTRY
We are here today to commemorate the 75th Anniversary of a pillar of the South African economy: Iscor. Iscor has been a key player in South Africa's industrialisation since its establishment in 1928. Today its is the largest company in the iron and steel sector of our economy, as well as on the African continent.
Basic iron and steel consists of 7.4 per cent of the manufacturing industry and contributes 2.5 per cent to gross domestic product. The sector has generated an exponential growth in exports, from around R5bn in 1990 to R30bn in 2003, with a trade surplus of R27bn.
As the leading player in this sector, Iscor is a highly successful operation derived from a low cost production base. Over recent years it has worked with LNM, one of South Africa's largest foreign investors, to substantially improve its efficiencies and transform itself into a world-class operation. This has made it one of the most efficient global steel producers. Therefore Iscor can truly be considered to be one of the National Champions of the South African economy.
There has been much debate in the press recently about the role of Iscor in the South African economy. Accordingly it would be appropriate to say a few words about the vision that government holds for the steel industry in South Africa.
Government's focus over recent years has shifted from the successful stabilisation of the macro-economy, towards the more detailed microeconomic constraints to growth and employment in the South African economy. This has been reflected in its Microeconomic Reform Strategy as well as some of the agreements that came out of the historic conclusion of the Growth and Development Summit in June last year. Of particular importance has been the focus on improving efficiencies in the economy, and in particular, examining price structures in both the public and private domains. Concerns with pricing structures were further emphasised in the President's State of the Nation Address on 21 May 2004. However, our microeconomic concerns are by no means restricted to pricing structures but extend to issue such as the quality of infrastructure, as well as the need to fast-track skills development in the economy.
Within the context of microeconomic reform, the main objective of the dti's Integrated Manufacturing Strategy is to generate greater downstream value-addition and employment, through the increased integration of value chains. We believe that the presence of Iscor - a world-class steel producer such - in this country provides a strong basis for a vibrant and integrated steel industry in South Africa.
While the basic iron and steel industry has performed extremely well, we are less satisfied with the progress made in the downstream steel. For this reason we are of the view that the steel industry in South Africa cannot be described at this juncture, as an integrated industry. There is currently an impasse in the development of such an integrated steel industry.
On the one hand, the primary steel industry is highly exposed to export markets. Primary steel is exported at relatively low margins, in a highly competitive international commodity market. On the other hand, the downstream domestic steel industry is currently not large enough to absorb the bulk of domestic primary steel output. This raises a strategic challenge, particularly when the volatile commodity cycle enters it downward phases. This is not only a strategic challenge for the upstream industry, but also for the country. This impasse can only be resolved by all parties taking a long-term outlook on the development of the South African steel industry. There is common ground amongst all players that there is a strategic imperative to grow downstream steel beneficiation and employment. Such downstream development is the true litmus test of an integrated steel industry in South Africa.
Contrary to the view of certain commentators, Government sees the upstream steel industry as a fundamental pillar of the South African economy. We wish to see impediments to the growth of the entire steel value chain systematically and holistically addressed. We do not see this as a zero sum game, but rather in terms of a long-term sustainable and profitable strategy for the entire industry. This means systematically and concurrently addressing issues such as pricing, logistics, and skills development, as well as any other relevant blockages to development of the steel value chain.
Government has already taken steps to begin dealing with some of these blockages. These include an accelerated programme of investment spending to upgrade the countries' transport infrastructure, coupled with policy reform to deal with inefficiencies in this sector. The Department of Labour is also taking steps to fast-track skills development through the Sector Education and Training Authorities. The dti is working actively with key sectors of the economy to identify and help eliminate sector-specific impediments to growth and employment. We are willing to bring all our efforts to bear to accelerate this process within the steel sector.
It is in this spirit that we wish Iscor all the best in its future endeavours, and to assure you that Government is fully supportive of the long-term development of a sustainable, profitable and integrated steel industry in South Africa.
Issued by: Department of Trade and Industry
29 June 2004
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