THE Industrial Development Corporation’s (IDC’s) plan for a homegrown steel mill has been put on the backburner with the state-owned company saying its feasibility was currently difficult to support.
“Due to the persistent unfavourable global economic climate and continued over supply in the global steel markets, it is difficult to have a conclusive decision,” it said in a statement.
“The current market conditions are continuously being monitored and the feasibility study is also constantly being evaluated in accordance to that,” it added.
Geoffrey Qhena, CEO of the IDC, said in November 2015 that it would press ahead with construction of a $5bn mill because South Africa did not want to be caught napping when the steel sector recovered.
“We are taking into account what’s happening in the steel industry, but we also don’t want to be caught in a situation where we don’t do anything while the steel industry is recovering,” he said.
He was speaking to the parliamentary oversight committee on economic development. The plant was to be built in joint venture with Hebei, the Chinese state-owned steelmaker, at a location in South Africa’s Limpopo province.
The plant was also one of the motivating factors behind proposed amendments to the Minerals & Petroleum Resources Development Act (MPRDA) that call for domestic pricing on iron ore and coal, steel-making ingredients.
A decline in international prices has put the skids under South Africa’s steel making industry.
Last year, Evraz Highveld Steel and Vanadium closed its doors while Arcelor Mittal South Africa has unveiled a number of restructurings since 2015.
The price for hot rolled coil rose to $800 per tonne in 2011 before more than halving in value by the end of 2015. At the beginning of 2016, prices rose above $400/t before falling again.
The spread in hot rolled coil prices was $168/t at the interim stage of AMSA’s 2016 financial year having recorded a spead of $174/t in the six months of the previous financial year.
