Industry organisations the Power Line and Substation Association of South Africa, the Manufacturing Circle, the Steel and Engineering Industries Federation of Southern Africa and the Association of Electric Cable Manufacturers of South Africa have written a letter to Electricity and Energy Minister Dr Kgosientsho Ramokgopa to express their collective concern about recent reports regarding the establishment of six Chinese manufacturers in South Africa.

According to recent media reports, following the South Africa-China Electricity and Energy Investment Mission last month, six Chinese companies are reportedly planning to establish manufacturing facilities in Gauteng, producing products including wire, transformers and pylons, with these facilities intended to support the National Transmission Company South Africa’s (NTCSA’s) transmission build programme.

The organisations say this announcement has raised significant concerns across the existing South African manufacturing and engineering industry.

They point out that the country already has an established industrial base, with companies that have invested considerable capital in manufacturing facilities, machinery, engineering capability, skills, technology and local supply chains to fulfil the electricity infrastructure requirement.

The organisations stress that the transmission expansion programme is an unprecedented opportunity to use, strengthen and expand the country’s existing industrial capacity.

However, when he spoke to Engineering News & Mining Weekly during the conference in China, Ramokgopa was of the view that the country did not have the requisite capacity to fulfil all the demand.

The organisations have, however, stressed the need for the programme to drive local industrialisation.

In the interview, the Minister assured that measures would be taken to ensure localisation targets.

However, the organisations assert that there is a fundamental difference between manufacturing a product in South Africa and building South African industrial capability.

“A foreign-owned company establishing a factory in South Africa may create local production and employment. “However, this does not necessarily develop South African ownership, South African manufacturing capability, local technology ownership, indigenous enterprise development or sustainable domestic supply chains,” they argue.

The organisations want the Department of Electricity and Energy to clarify the identity and status of the six companies; the intended market for the new manufacturing facilities; the capacity of existing South African manufacturers; localisation and South African ownership; the impact on existing manufacturers; the NTCSA procurement framework that will apply to these companies; and how these proposed investments align with government’s broader industrial policy.

The organisations have also requested an urgent meeting with the Minister, the Department of Electricity and Energyt, the Department of Trade, Industry and Competition, the Independent Power Producer Office and the NTCSA to discuss this issue.