Scaw Metals October Coverage Report
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Online
Designmind - Design Mind
Scaw Metals sign knowledge exchange agreement with German steel giant
02 October 2013
http://www.designmind.co.za/index.php/news/build/commercial-build/item/625-scaw-metalssign-knowledge-exchange-agreement-with-german-steel-giant#.Um94NVOjKSo
Scaw Metals Group, a leading South African manufacturer of a diverse range of high-quality steel
products, has signed a knowledge exchange agreement with the German Steelmaking Company,
Badische Stahl-Engineering GMBH (BSE) to drive technological advances and excellence at its
steelmaking and rolling facilities. The agreement is in line with the group’s focus on driving a smarter
and more efficient steel sector as a catalyst for growth in South Africa, in Africa and across key
emerging markets.
The agreement, which will run for the next three years, will see experts from the BSE academy
touring facilities and operations of Scaw’s Union Junction plant in Germiston, Johannesburg. They
will provide an on-site assessment of Meltshop 3 and Morgan Mill. As part of the programme Scaw
Metals will send 90 employees to the BSE Academy in Germany for training, which will take place
over a six week period by the end of this year. The training these employees will receive, will address
the gaps identified in the on-site assessment.
“Our focus on skills is a major step in ensuring we deliver the quality our clients expect from us. We
believe that through this agreement, we will be able to offer our clients even more than we
currently do,” said Bheka Khumalo, Executive Manager for Strategy for the Scaw Metals Group. Scaw
Metals is a firm supporter of skills development in the local steel sector. “We believe that by giving
our employees the best possible education and training, we can only benefit the entire industry and
our clients. A smarter and more efficient steel sector is critical to fuel growth, not only in South
Africa, but in the rest of Africa and the across key emerging markets,” Khumalo said.
The BSE Academy is the consultancy unit of Badische Stahlwerke (BSW), and has a long and
illustrious track record and supports green entrepreneurship. It has successfully executed over 200
consultancy and training contracts, over 400 classical training seminars and has had 5,500
participants from 28 countries graduate in the past two decades. “One of the reasons we were
attracted to BSW and BSE was that they are strikingly similar to Scaw with regards to their
steelmaking and rolling operations. We can only reap the benefits from this agreement and thus
enhancing not only our own standards but that of the entire industry in South Africa,” said Steve van
Wyk, Acting Head of Operations at Scaw Metals Group.
The participants of the BSE programme will have full access to the BSW facilities. “Around 60% will
be training on the BSW facilities and the remaining 40% will be focused on theoretical training,” van
Wyk said. At the end of the training session, Scaw will formulate a specialist training process, in
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conjunction with the BSE Academy, which will look to revolutionise how Scaw provides training to
new employees. “It will be like going through the process of getting a driver’s licence.
Mg.co.za - Mail & Guardian
Scrapping over metals goes to court
04 October 2013
http://mg.co.za/article/2013-10-04-00-scrapping-over-metals-goes-to-court/
Maningi Metals's scrapyard in the Jo'burg city centre has suppliers from all walks of life.
Some companies or households will call the merchant up to collect scrap and other industrious
entrepreneurs make the trip themselves with loaded bakkies. More frequently hawkers drag their
trolleys into the yard before weighing the assortment of waste on an industrial scale and collecting a
hard-earned reward.
Almost 90% of the scrap brought in is metal. Street collectors of scrap, with a bit of elbow grease,
can earn anything between R40 to R200 a day. One young mother, with her child in tow, received
R17 for a mountain of flattened cardboard. She is aware she could make far more if she brought
scrap metal in, and some other single moms do, but she says it is harder to find.
Scrap metal industry's worth
The scrap metal industry is estimated to be worth between R15-billion and R20-billion a year. It is
highly desired for products such as steel because it has already been beneficiated and requires a
fraction of the energy to process. This, in the government's eyes, makes it vital to South Africa's
industrial development — so much so that it is at the centre of a legal battle that will play out in the
Pretoria high court on October 10 to 11 this year.
On September 16, the government imposed the first new restrictions that seek to clamp down on
scrap metal leaving the country. There are a number of changes but the most contentious is that
scrap merchants cannot sell products directly for export and must first offer it to local buyers at 20%
less than the spot price before a permit to export it will be granted. These restrictions for waste and
scrap that do not contain iron — non-ferrous metals — are already in place and those applying to
iron-containing and stainless steel (ferrous) waste and scrap took effect on September 30.
Changes
The changes were a long time coming — the debate between the government, the manufacturing
industry and scrap merchants has been raging for more than a decade. Local consumers of scrap
metal claim the prices are too high and that not enough is made available to them but the scrap
merchants refute this and say local buyers want to pay too little.
A source associated with the trade said the dispute is complicated by the fact that the treasury and
the department of trade and industry could not see eye to eye. The treasury told the Mail &
Guardian it would not comment on internal government discussions. But the economic development
department said it has introduced the scrap metal price preference system to help halt and reverse
the bleeding of jobs and the shrinkage of the scrap metal processing industry over the past few
years.
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"It is part of a package of measures by government designed to stabilise the industry, including an
initiative to improve the industry's competitiveness and several measures to increase demand for
value-added locally manufactured products," the department said in a written response.
Restrictions
The restrictions apply to all scrap but steel is the most critical as it represents about 70% of
manufacturing inputs. State intervention in the minerals sector (Sims) was endorsed by the ANC at
its national conference in Mangaung last year.
According to it, steel "is by far the most important raw material in manufacturing, which is probably
the only sector capable of absorbing our massive number of unemployed", and it needed to be
supplied to the economy at competitive prices. It also recommended the outright ban of all exports
of scrap in a bid to foster a competitive advantage for the country.
"Many states have or had restrictions on scrap exports, including China, India and Russia. Sweden
had restrictions before having to drop them when it joined the EU and many other developed
countries used them in the past whilst developing." The government has tread more lightly than
what Sims recommended but the discontent over a shake-up in the scrap metals industry will not be
dealt with quietly.
Legal proceedings
Next week the Metal Recyclers' Association of South Africa (MRA) takes on the International Trade
Administration of South Africa, the departments of economic development and of trade and
industry and the National Union of Metalworkers of South Africa over the export restrictions.
The MRA declined to comment on the legal proceedings, saying the matter is sub judice.
Garth Strachan, chief director of industrial policy at the department of trade and industry (dti), said:
"The dti has joined as the third respondent because the issue of the unencumbered exports of scrap
metal, in circumstances where other countries have either a total ban or strong export taxes, is a
matter of considerable concern for the dti and it is important this policy instrument to provide
support to the manufacturing sector in South Africa is protected." While the legal matter is pending,
some merchants are feeling the pinch.
Donovan Korff, a partner in Cobra Metals, which was established in 1980 — the first scrap merchant
in the run-down Malvern area — sells only to local buyers. Price changes on non-ferrous metals are
evident — for example, Korff shows a price list supplied to him by the foundry: the price for
aluminium dropped from R14.50 a kilogram to R12.50 recently. And the price for light steel has
dropped 30c.
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Citizen.co.za - Citizen
Shrug off those security concerns
04 October 2013
http://citizen.co.za/58501/shrug-off-those-security-concerns/
In today’s crime-ridden society, it is often a necessity for high profile celebrities or wealthy
individuals to make sure that they are protected in every possible way. Most people’s homes are
secured with security cameras, high walls and electric fences, but rarely do we see the luxury
vehicles that they drive come with complete security features.
GoIndustry DoveBid SA has the sole mandate to dispose of four luxury armoured vehicles for Scaw
Metals SA.
The sale comprises of two Mercedes Benz E500 Guard (black, 2010) with armour protection done in
Germany and two BMW X5 3.5d (white, 2010) with armour protection done in South Africa. These
vehicles are ideally suited to the security conscious VIP, celebrity or business person. All vehicles
have IAC Level III armour plating which is suitable for high powered hand guns.
The Mercedes Benz vehicles have approximate mileages of 38 000km and 52 000km and the BMWs
have approximate mileages of 76 000km and 132 000km. They have full service histories and are
fully equipped with all the luxury amenities.
GoIndustry DoveBid will sell these vehicles by online auction. The bidding opens on October 10 and
will close on October 17 at 2pm.
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Engineeringnews.co.za
Focus on diversifying, R650m in African projects under
11 October 2013
http://www.engineeringnews.co.za/article/focus-on-diversification-r650m-in-african-projectsunder-way-2013-10-11
The diversification of steel and steel products manu- facturer Scaw Metals’ baseline products and
markets in key sectors will create strong growth into the immediate future, particularly in Africa,
where the company has about R650-million in projects under way. These are focused on a range of
sectors, including oil and gas, mining and rail, and, Scaw says, it is actively exploring opportunities in
Africa where the company already has an established foothold.
The continent, in the coming years, presents exciting opportunities. “Locally, government’s
infrastructure development programme certainly should provide important demand from the local
steel and construction industry, while infrastructure development in construction and rail combined
with mining growth will simulate additional demand from the rest of Africa,” Scaw points out.
Outside Africa, Scaw remains focused on developing its Australia base where the company has
manufacturing facilities and an extensive distribution network that also distributes products from
Scaw South Africa.
The company forecasts increased demand for its “premium products” internationally, highlighting
that Scaw’s strategy and expan- sion plans align the business to absorb growth both locally and
internationally. “Scaw [which is majority owned by the State-owned Indus-trial Development
Corporation] lives its vision of being a South African-led globally competitive and responsible
beneficiator of key raw materials into value-add steel products.”
However, it maintains that post the global financial crisis and given the significant investment in
steel manufacturing capacity in China and other countries, the global steel industry will remain
increasingly competitive. With new Scaw Metals Group CEO, Markus Hannemann, the group’s
strategy is focused on growing capacity and capability in the manufacture of secondary value-add
steel products. “Given the tough economic climate, the strategy also recognises the need to stabilise
the business on a sustainable basis as the steel industry suffers globally,” notes the company.
Scaw believes increased value-added beneficiation is important to ensuring the long-term
sustainability of the South African steel manufacturing industry. Meanwhile, Scaw plans to take
advantage of government’s R4-trillion infrastructure development programme, which it says
“certainly presents exciting opportunities for the local manufacturing and construction industry”.
The company notes that its strategic plan combined with its recognised capability makes it well
aligned to play an important role in assisting in delivering government infrastructure projects. In
terms of government’s aim to curb scrap exports, the company says it is not too late for government
to implement this plan. “Scrap is the key input to the majority of South Africa’s mini-mills and
foundry busi- nesses. The ripple effects of the export of quality scrap from South Africa have been
detrimental to the local metals manufacturing industry. The resultant shortage of scrap has placed
upward pressure on local scrap prices,” states Scaw. The metals manufacturing industry is sensitive
to scrap costs, says the company, as the key ingredient represents more than 50% of total cost of
manufacture. Since 2009, some 100 foundries have closed in South Africa.
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“Undoubtedly, the curbing of scrap exports will lead to lower scrap prices, ultimately benefiting the
local metals manufacturing industry with increased competitiveness and the possibility of
desperately needing growth,” highlights Scaw, adding that high steel and scrap prices hinder
competitiveness.
Low scrap and steel prices beyond improving direct international competitiveness will spurt the
growth of secondary manufacturing of metal products in South Africa. A competitive secondary
metal manufacturing industry is vital to fuelling an efficient value-add sustainable steel industry,
notes Scaw.
Iol.co.za/business - Iol Business Report
Investors snap up IDC’s R1.5bn public issue
18 October 2013
http://www.iol.co.za/business/news/investors-snap-up-idc-s-r1-5bn-public-issue1.1593702#.Um97wlOjKSo
Johannesburg - The Industrial Development Corporation (IDC) launched a R1.5 billion public bond
issue yesterday, the first of a target of R12bn in the next 18 months, to meet what its chief executive
described as “growing funding commitments”. Chief executive Geoffrey Qhena, who briefed the
portfolio committee on economic development on Wednesday, said the bond issuance was in line
with the development financier’s desire to increase its funding activities “continuing to play a central
role in providing industrial finance”.
The state-owned entity reported that the bond was registered on the JSE. It will have maturity terms
of three, five and seven years. IDC chief financial officer Gert Gouws said the response from
investors had been “overwhelming”. The issue had been 2.6 times oversubscribed. The seven-year
bond had a fixed interest rate of 8.34 percent. He said the IDC would increase its borrowings in the
next three years while managing its gearing ratio, which was 19 percent at the end of March.
Engineering News reported that the IDC planned to issue up to R12bn in bonds in the next 18
months. Last month it announced that it had stepped up R2.7bn in funding to boost youth
entrepreneurship.
Interviewed after meeting the portfolio committee, Qhena acknowledged there had been a rise in
impairments but he attributed this to the “economic conditions” associated with the global
recession. He said a greater focus on capital projects in the past financial year to March had
contributed to a drop in job creation from its investments – from about 44 000 in 2012 to under 24
000 in 2013. Qhena said the takeover of Anglo American’s Scaw Metals plant had saved 6 000 jobs,
but these were not counted as new.
Scaw Metals recorded a loss of R78 million in the year after financing costs. Major IDC subsidiary
Foskor recorded a loss of R165m. The Small Enterprise Finance Agency, which the IDC took over this
year, lost R64m. The IDC, which was established in 1940, suffered the worst impairments and writeoffs in its 73 years. Its impairment ratio has climbed from 15 percent of its portfolio in 2009 to 18
percent in March.
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The annual report said: “The impairment and write-offs charge to the income statement of
R2.26bn… was 38 percent higher compared to financial year 2012.” Nearly R800m of impairments
were in the media and motion pictures categories. Gouws acknowledged that the IDC’s level of
impairments had been increasing gradually. “This reflects the corporation’s increased risk appetite
towards distressed clients, as well as other ailing industries, such as the textiles industry. It also
reflects the IDC’s increased focus on early stage projects and start-up companies.”
He echoed Qhena’s view that the main reasons for impairments included the deterioration in trading
conditions together with low market penetration. “Depressed commodity prices and unfavourable
exchange rates continued to impact on the IDC’s business partners. Business units contributing
significantly towards the increase in impairments included textiles, media, ICT and mining,” he
reported. It wrote off R470m in the 2013 financial year compared with R157m for 2012, and R722m
in 2011.
Gouws said the IDC wrote off investments “when the exposure is considered unrecoverable and only
after all viable restructuring options have been exhausted”. The IDC disbursed a record R16bn in
2013, but its profit fell by 40 percent to R1.9bn. “The IDC’s performance in 2013 was mixed,” said
Qhena. Revenue rose to R14.5bn compared with R10.9bn in 2012 but cost of sales increased to
R6.2bn from R4.3bn in 2012. - Business Report
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