Page 21 - IDC

6 CITY PRESS, 31 JULY, 2016

business 36 Number of businesses Basic Metals and Mining
Machinery and Equipment

122 Number of businesses

R1.5 billion Total investment R26.7 billion Total investment
3 Number of women empowered businesses 65 Number of black empowered businesses

16 Number of black empowered businesses 8 Number of women empowered businesses

WHERE THE BUSINESSES ARE W
WHERE THE BUSINESSES AREHERE T

Gauteng Western Cape Gauteng Zambia
Investment value: R6.3 biillion
Investment value: R18 million
Investment value: R776.7 million Investment value: R311.2 million
Free State Mpumalanga North West Democratic Republic of Congo
Investment value: R5.9 million Investment value: R4.3 million Investment value: R5.9 billion Investment value: R153.9 million

KwaZulu-Natal Lesotho Eastern Cape Other countries
Investment value: R765.5 million
Investment value: R288.2 million
Investment value: R221.1 million Investment value: R1.7 million
Eastern Cape Northern Cape
Investment value: R169.8 million Investment value: R3.5 billion

Automotive and Transport Equipment Western Cape
Investment value: R1.1 billion
59 Number of businesses
Mpumalanga
R3.7 billion Total investment Investment value: R8 billion
10 Number of women empowered businesses
Namibia
Investment value: R16.6 million
WHERE THE BUSINESSES ARE
Zimbabwe
Gauteng Eastern Cape Investment value: R208.1 million
Investment value: R2 973.7 biillion Investment value: R450.7 million

Mozambique
KwaZulu-Natal Western Cape Investment value: R1.4 billion
Investment value: R138.2 million Investment value: R91 million
Abel Malinga is the divisional executive o f
mining and metals industries at the North West
Industrial Development Corporation (IDC) Investment value: R138.2 million
SOURCE: IDC ISABELLA MAAKE, Graphics24

sector implode; it had to roll up its sleeves UPPING THE ECONOMY’S
he Industrial Development Corporation (IDC)
decided some time ago that it couldn’t sit
back and watch South Africa’s manufacturing

and actively get involved in rescuing and A
Treinforcing it.
This is according to Abel Malinga, the executive in charge PROJECT IN
of mining and metals industries at the IDC, who says the
strategic shift – from mere facilitator of development finance PARTNERSHIP
to proactive participant in the economy – was imperative if
the country wanted to arrest its slide into deindustrialisation. mettle WITH THE
“We needed to be more proactive and have a better
understanding of the sector. Our economy is part of the
global village, so our sectors also have to be globally IDC
competitive.”
The development finance agency is stepping in to spur
the export of local expertise and machinery to the growth
market that is Africa, while nurturing the local automotive
sector, and ensuring that upstream and downstream steel
operations modernise and innovate to survive and become
competitive.
“As a division, we want to be at the centre of economic Saving the steel industry, growing black
growth and transformation of the economy,” he says. How the
“Because being at the centre means you’re able to look in industrialists across sectors, upping localisation
all directions. If you look at the constraints facing industry,
we have to look at what government can do to unblock
those constraints.” and preventing deindustrialisation – the IDC has IDC has
It’s no secret that mining and metals are under immense
pressure in South Africa. The steel industry in particular – its hands full. Christina Kennedy talks to Abel
“the lifeblood of any industrial economy” – is under threat steeled
from cheap imports resulting from a global oversupply of Malinga, who heads the mining and metals
the metal, and mines are downsizing, shelving plans for
expansion or closing down altogether as the global industries at the corporation
commodities slump continues. itself
That’s why Malinga’s division is focusing its energies on
two areas to help industrialise the South African economy.
One of these is localisation. “There are a lot of important HOT STUFF The IDC has been stepping in to stop pockets of
products we have the opportunity to produce, but we are SA is deindustrialisation from plaguing the South African
not competitive,” Malinga says. “We need to address that Africa’s economy, with the purchase of Scaw Metals and
aspect of the downstream value chain [the processing of raw largest Palabora Copper being cases in point.
materials into final products].” steel Scaw Metals, which makes specialised steel products
The second focus area is working with existing players to producer serving the mining, construction, railway and other
modernise operations and ensure their competitiveness – and it is industrial sectors, was sold by Anglo American during its
and encourage government to procure as many local estimated unbundling process.
products as possible for its infrastructure projects. the The IDC sees its acquisition of a 74% stake as helping
The steel industry requires special intervention, in part primary to ensure that steel is competitively priced in the local
because the country has lagged behind global steel steel economy and that the local beneficiation of natural
developments, and energy and logistics costs have sector resources is promoted.
skyrocketed while environmental concerns have taken contributes The survival of the company preserved 7 000 jobs and
centre stage. R140bn means that the specialised products that Scaw makes
But South Africa is Africa’s largest steel producer and it is to the from recycled local scrap metal and iron ore will not
estimated the primary steel sector contributes R140 billion to economy need to be imported.
the economy, as well as more than 322 000 direct and The Palabora Copper mine in Limpopo was threatened
indirect jobs. And downstream industries, which use steel as with closure a few years ago, sparking fears that
an input, employ a further 1.3 million people. Phalaborwa would become a ghost town. But thanks to
This means that if this sector implodes, it will place an investment by the IDC to modernise the smelter’s
immense strain on an economy already hamstrung by the production facilities, its life span has been extended by at
“triple crisis” of unemployment, poverty and inequality, least 20 years.
made worse by sluggish economic growth. Abel Malinga, the IDC executive in charge of mining
With the recent closure of Highveld Steel and the loss of and metals industries, explains: “The copper smelter was
more than 3 000 jobs, it’s not overstating the case to say the established 50 years ago and the technology used was
South African steel industry has “one foot in the grave”, says old, and neither environmentally compliant nor efficient.
Malinga. “But it’s the only copper-smelting facility in South
Given this backdrop, the IDC felt it necessary to step in to Africa and, if it had closed, our copper would have had to
temporarily protect the primary steel industry – but this be exported to be refined – or we would have had to
does not include regulating steel pricing, which should be import copper rods.
determined by the markets, he points out. “So, we took a conscious decision to become part of
Malinga says his division has adopted a value-chain the consortium acquiring the asset to slow down the
approach to funding the steel industry, recognising that deindustrialisation of the economy. By investing
there are opportunities for economic activity at all stages in R600 million, we saved 1 000 jobs and ensured that the
the linkages between the upstream (raw materials facility complied with environmental standards.
extraction) and downstream (processing) sectors. “It was about protecting jobs and ensuring that the
And, with roughly half of the local demand for metals beneficiation of copper concentrate continues locally.”
currently being met by imports, one of the main challenges,
Malinga says, is how to go about replacing these imported
goods with locally produced products.
“That’s why in our value chain we have to produce final adds. The automotive sector, for one, is doing well, and the “Mining operations can’t afford stand time, and we have an “We need to address issues related to a lack of
products, not just mining and exporting our raw materials, IDC wants to help boost the number of vehicles assembled opportunity as South African business to service the mining competitiveness, and create opportunities for business amid
such as iron ore. Our intention is to add value to and produced in South Africa, while increasing the local and construction industry on the continent. People say it’s local uncertainty.
commodities – so we can export value-added products as content used in those cars. difficult to do business on the continent, but it’s just that the “It’s not about the amount of money we invest, but the
well as sell them locally.” “We have identified the automotive sector as one of the operating environment is different. We have to modify the catalytic role we can play. We see the South African
Malinga adds: “Ours is not just a funding role, but one of important parts of the steel value chain where we can have way we do business to take into account the peculiarities. economy from a bird’s-eye perspective, and can see where
working with industry to find solutions to make the a major impact.” “And South Africa’s financial services sector is well the bottlenecks and constraints are.”
upstream industry more competitive, while making sure we And, he says, many other opportunities lie in South established, so doing business here is much easier than it is Adds Malinga: “There are also opportunities to create new
don’t harm the downstream industry.” Africa’s proven track record in manufacturing machinery on the continent – for example, in terms of obtaining credit. manufacturing capacity for new entrepreneurs. A key focus
The IDC is helping steel companies to reduce costs and other products, which can be exported for use in Yes, there are huge opportunities. We haven’t taken full area for us is to support black industrialists [especially in the
internally and improve their productivity by investing in new mining, construction and infrastructure projects on the advantage of the African market.” coal sector] and emerging businesses.”
technology to become environmentally friendly, energy continent. He is animated about the IDC’s role in helping to He says his division is keen to engage with entrepreneurs,
efficient and, ultimately, more competitive. “We have the expertise, plus close proximity to that transform South Africa into a manufacturing economy and especially in the steel industry, about their plans to set up
However, there are “pockets of steel industry growth”, he market – and we can provide after-sales service,” he says. “a force to be reckoned with”. new factories or expand their existing operations.