In 2017, the South African mining sector’s contribution to GDP declined to 5.1% – down from 6% in 2015 and 5.4% in 2016 – illustrating the extent of the slowdown the sector is facing. The industry attributes the decline both to subdued commodity prices and policy and regulatory uncertainty. The continuing decline has led to mass retrenchments and mothballing of
assets and projects.
The current slowdown will affect
The international drive to reduce greenhouse gas (GHG) emissions in terms of the Paris Agreement commitments could be positive for the industry in terms of the adoption of platinum fuel cell technology. However, as alternate competing battery technologies are adopted, the demand for platinum will remain under threat, with the mining sector exposed to enormous risk. Consequently, there is an urgent need to develop new applications and markets for platinum as well as to provide international markets with reassurance on the sustainability and security of platinum supply.
The fuel cell industry development initiative is aimed at exploring and facilitating new market opportunities for platinum, to ensure the continued growth of PGM mining. In early 2016, the IDC established a steering committee of mining houses, local engineering and manufacturing companies and technology providers to work with government to jointly craft and implement a roadmap for PGM beneficiation in South Africa – with the special focus being on fuel cells.
Globally, the demand for energy storage has risen and continues to grow, especially as a result of the rise of distributed energy generation models. For SA, energy storage systems offer the ability to complement distributed energy generation through transmission and capital deferrals and arbitrage (storing production surplus during low demand periods and meeting higher demand during peak periods). In addition, significant opportunities are emerging in the form of mineral beneficiation-linked energy storage solutions utilising key SA mineral resources like vanadium, nickel and manganese.
Key Action Programmes
1. Interventions for a sustainable steel industry
1.1 Monitoring and evaluation of short to medium term interventions Nature and purpose of the intervention
Steel is fundamental to manufacturing in SA, accounting for significant value-add and representing about 190,000 jobs in the direct iron-ore, steel making and fabrication industries. Top steel-consuming industries (mining, construction, autos) contribute ~R600 billion to SA’s GDP (~15%) and employ ~8 million people (directly and indirectly).
For the past 2 years, since the onset of the global steel crisis, government, in consultation with a broad range of stakeholders, has proposed and implemented a number of policy measures to save the industry from the threat of closure and loss of capacity – balancing support for both the upstream and downstream steel industry.
the long-term sustainability of the sector and its supporting services, which could result in ruinous knock-on effects – especially on mining inputs manufacturers – as both capex and opex levels dip. Overall, the domestic medium to long-term prospects for local suppliers of goods and services is unfavourable and growth in revenues will have to be explored in export markets.
For the next three years the dti will closely monitor the implementation of the programme and general developments in the sector and will participate in local and global forums to ensure continuing support and intervention across the whole steel value chain.
- A competitive primary steel industry;
- A fair price for downstream manufacturing;
- Development of local capacity and capability through increased local content;
- Investment growth along the whole value chain, including technology upgrades;
- Job retention and creation.
- Inadequate investment in plant maintenance, equipment and upgrades.
• Discontinued production of certain key primary steel products (particularly higher value-added flat products) for mining, tooling, rail and automotive applications.
- Downstream industry facing increasing competition from low-priced imports of finished goods, which continues to erode manufacturing capacity and capability and shrink the local share of domestic and regional markets;
- High logistics costs;
- Difficulty of access to fairly-priced scrap metal is a threat to new and future mini-mill investments (global trends are moving towards more profitable modern mini-mills).
An interdepartmental task team was established in 2017 to develop a short-term framework which sets out the criteria against which a transparent negotiated pricing agreement can be evaluated, approved and monitored. The target is medium to large industrial consumers supplied by Eskom or a municipality – aiming to provide qualifying consumers with access to lower electricity prices for a period of up to 24 months.
Given the current energy demand-supply situation, the proposed short-term framework is a positive initiative for energy-intensive users. While the intention is to transition to higher levels of value-addition and reduce our dependency on resource-based energy and capital-intensive industries, the smelting and refining stages are required to move to higher levels of value-add with important backward/side-stream linkages.
The following interventions are in progress:
- Silicon Smelters Pricing Framework Implementation – implementation of the pricing framework for silicon smelters.
- Approval of short-term framework for energy intensive users – preventing the closure of more smelters, refineries and foundries through approval and implementation of the broader pricing framework for industrial customers.
- Long-term policy, programme and project interventions – aligning electricity provision with industrial policy: pricing, access to the grid, quality of supply and procurement.
2018/19 Q1-Q4: 2018/19 Q4:
Determine and monitor monthly steel pricing in accordance with the agreed flat steel pricing agreement and monitor all commitments agreed with industry. Submit reports to ITAC Steel Committee.
Monitor roll-out of Downstream Steel Competitiveness Fund through the IDC-led steering committee.
Annual Report assessing the impact of all support measures (tariffs, designation, incentives) and reciprocal commitments (jobs, investment, pricing); submit recommendations for adjustments where required.
Lead departments/agencies: the dti, EDD, ITAC, IDC Supporting departments/agencies: NT
1.2 Medium term interventions
Nature and purpose of the intervention
The effects of the global steel crisis have been severe as miners, primary steel mills and downstream manufacturers struggle to sustain jobs and invest in new capacity. The impact of the crisis is exacerbated by the fact that the steel industry in SA faces the following deep challenges:
A re-built, globally competitive SA steel industry that supports and balances the interests of both upstream and downstream sectors.
In the medium term, mass transportation initiatives in the metros and by major fleet owners offer an opportunity for the country to introduce fuel cell-based transport solutions that will help reduce GHG emissions.
The dti/IDC study on fuel cell opportunities in the public transportation sector was completed in June 2017, laying out the proposed activities related to the public transportation sector which could stimulate the required demand for the localisation of fuel cells in SA. The action plan suggests that:
2018/19 Q3: 2018/19 Q1-Q4:
Short- to medium-term electricity pricing framework implemented for steel and other energy-intensive users.
Chrome export tax proposal submitted.
Trade policy measures implemented (rebates, “other” products, trade remedy and customs duty increases).