OPINION / LETTER: SEIFSA weighs interests of whole steel sector

LETTER: Seifsa weighs interests of whole steel sector


Ebrahim Patel. Picture: FREDDY MAVUNDA

As an employer organisation that sits in the middle of the steel value chain and counts among its members the primary steel producers, steel merchants and downstream fabricators, the Steel & Engineering Industries Federation of Southern Africa (Seifsa) must consider the best interests of the entire sector, not just some parts of it.

This has not been the case for some of the participants in the recent debate on the future of the steel sector that has been raging in the pages of this newspaper, and online.

This is a diverse sector of the economy with 13 subsectors of its own and players with different interests and agendas, some of which are hidden but often presented as being in the best interests of the entire sector. Therefore, caution is advised in evaluating some of the wild claims that are made from time to time, in which some intermediaries with an interest in making a quick buck through arbitrage may be prominent protagonists.

Seifsa wants a prosperous country that boasts an internationally competitive metals & engineering (M&E) sector, and works daily with all stakeholders who have the same objective in mind, be they in government, labour or even other employer organisations. In our approach to issues we try to be more nuanced and less emotional.

This article was triggered by Peter Bruce’s recent columns in this publication (“Steel yourself for Ebrahim Patel’s price controls, a loser’s game”, February 10, “Bend the knee and smite your rivals for an easy ride”, February 17″, and “A scrap with critics after a call to scrap duties”, February 24). As a former journalist who once worked with Bruce, I have known him to be a campaigning man who writes with presumed authority on a wide range of topics.

Over the past seven years that I have been head of Seifsa I have also got to know the National Employers Association of SA’s (Neasa’s) Gerhard Papenfus, whom Bruce presents as a reliable commentator on the fortunes of the metals sector. Alas, I know Papenfus as a man who holds strong views on a number of contentious issues and excels at levelling criticism at everyone — government, labour and especially Seifsa — in his efforts to paint himself as a champion of small business.

Unlike Papenfus and his organisation, Seifsa does not believe solutions to SA’s problems lie in hankering after some form of the past, nor do we see labour as an inherent enemy. Instead, we believe in constructive dialogue (to the extent that we can have such dialogue) with all stakeholders, including labour, in a joint search for solutions to the challenges confronting our sector.

Suspect quality

Unlike Neasa, we are not selective in our acceptance and use of facts while discarding those we find inconvenient. Though some of the largest players in the M&E sector are among our members, most (66%) of companies affiliated to associations that are members of Seifsa are small, employing fewer than 50 people. Therefore, we always seek to represent the interests of all companies in the sector, rather than a small — perhaps more vocal — section of them.

So, what are the facts regarding steel supplies, prices and ArcelorMittal SA’s role in the industry? We believe a country of SA’s size needs a primary steel producer. We do not believe relying on imports as a solution to the country’s steel needs would be wise. Apart from long delivery lead times that would negatively affect the country, over a short period the price of steel imported into the country — the quality of which is sometimes suspect — would rise considerably, and we would be hostage to the vicissitudes of the international market.

A formally protected industry was recklessly thrown open to international competition overnight, without being given a chance to gird itself for that competition. Most of the countries from which the majority of steel and steel products imported into SA originate offer production and export incentives to their companies. SA, which has some of the highest input and administered costs in the world, cannot match those incentives.

Yes, there has been an acute shortage of steel in the local market since last year’s lockdown, which affected all industries. Due to this situation steel prices have shot up over the past few months. SA has not been the only country to be similarly affected. Steel shortages have also been experienced in other parts of the world and global steel prices have increased by as much as 50% on average due to the severe disruptions to production. The situation is expected to improve considerably over the next three months.

We continue to accept the bona fides of trade, industry & competition minister Ebrahim Patel and wait eagerly to make our inputs to the final version of the Steel Master Plan. Like Seifsa, Patel and his team have to balance the interests of the entire steel value chain, not only those of the people who happen to make the loudest noise or have clever connections. That is not an easy job to do, but done it must be.

Kaizer M Nyatsumba
Seifsa CEO