Overview of South Africa's steel industry

Overview of South Africa’s steel industry

Iron and steel production dominates South Africa's heavy industry, providing material for the manufacture of structural goods, transport equipment, and machinery, and for the engineering industry. South Africa's total crude steel production of 9.4 million tons in 2004 was good enough to earn the country 20th place among the world's top steel producing countries according to the International Iron and Steel Institute (IISI). While the country could be considered a minnow as far as global production is concerned (its production accounted for less than one percent of world wide output), South Africa dwarfs other African countries by accounting for 57 percent of the continent's total production. During the first six months of 2005, South Africa produced 4.89 million tons of crude steel, up 3.9% year on year. It had been hoped that the industry would have grown more than that, but the appreciation of the Rand and a decline in domestic sales held back growth. South Africa's carbon, alloy and stainless steel deliveries totaled 8.17 million tons in 2004. Of these, 4.59 million tons were sold on the domestic market and 3.58 million tons were exported. The range of primary steel products and semi-finished products manufactured in South Africa includes billets, blooms, slabs, forgings, light-medium-heavy sections and bars, reinforcing bar, railway track material, wire rod, seamless tubes, plates, hot and cold rolled coils and sheets, electrolytic galvanized coils and sheets, tinplate and pre-painted coils and sheets. South Africa's main steel producers are Mittal Steel South Africa Limited (Mittal Steel SA), formerly known as Ispat Iscor, Cape Gate, Cape Town Iron and Steel Works Ltd (CISCO), Columbus Stainless, Highveld Steel and Vanadium Corp. Ltd. and Scaw Metals. Mittal Steel SA is the dominant steel producer on the African continent, producing 7.1 million tons of liquid steel per annum. The company produces around 75 percent of South Africa's total steel production. Accordingly, Mittal Steel SA holds the monopoly in the South African steel sector. This situation provides Mittal Steel SA a free hand in pricing. Since the company adjusts its prices according to the import price levels of competing products, South African domestic companies that depend upon Mittal Steel SA'a products are forced to pay higher prices. On the iron ore side, South Africa is the largest producer of iron ore on the continent, with reserves estimated at more than 9.4 billion tons. The country accounts for around 6.27 percent of the world's 150 billion tons of iron ore reserves. South Africa's total iron ore production amounted to 39.3 million tons in 2004, contributing about 3.3 percent to world production. Also during this period, 24.7 million tons of iron ore were exported from South Africa, accounting for nearly 3.9 percent of global trade.