Industrial Development Corporation in ZAR 45 billion steel mill project with China

17 February 2015

The Industrial Development Corporation is carrying out a twin pronged strategy of helping to set up five mini steel mills to promote competition in the downstream market while planning to build a bigger mill to focus on exports.

Mr Abel Malinga, the IDC's divisional executive responsible for mining and manufacturing said that “The IDC will work with Chinese investors on the big five million tonne per annum steel mill which will focus on the local and regional export markets.”

Mr Malinga said that the IDC would be investing a little more than ZAR 1 billion in five steel mini mills, three of which were already up and running with another two coming on stream in the next year or so.

The big steel mill could be built in one of three locations Richards Bay in KwaZulu Natal, Phalaborwa in Limpopo or Middelburg in Mpumalanga and the three mini mills already operating are at Coega in the Eastern Cape (Agni Steels), with two in Gauteng (Unica in Pretoria and Fortune Steel in Nigel). Another would be built in Durban and another was planned in Gauteng.

Mr Malinga said that the beauty of the mini mills is that they are crafted to supply small and micro enterprises with steel inputs. A big benefit is that the customer tends to come to the plant to procure his needs. This cuts out the middlemen a steel merchant which reduces prices by 50%. Our aim is to have the South African steel industry producing products at competitive prices. The financials of these mini plants are looking good.

He said that the IDC is not against backward integration where beneficiation and mining are carried out together, like the old Iscor did before it was broken up. The IDC is already involved in mining iron ore on a limited scale, such as at the Postmasburg mine the Sedibeng Iron Ore mine which was a partnership with the Indian firm, TATA Steel.