Johannesburg-based precision water-cutting and -profiling company AquaJet Profiles noted record-high aluminium sales profit margins earlier this year, owing to the sanctions placed on Russian suppliers exporting to the US, claims AquaJet Profiles director Preeshan Naidoo.
The sanctions were placed on Russia’s aluminium producer Rusal, the second-largest in the world outside China, as well as several Russian oligarchs, businesses and agencies to punish Moscow for its alleged meddling in the 2016 US election.
“South Africa needs to acknowledge the significance of the US markets. While there is potential in emerging markets, and not forgetting the huge client base in the Asian market for raw materials, the US is still one of the largest consumers of finished products,” Naidoo avers, maintaining that South African producers still depend on the US markets to a large degree.
However, policy restrictions, rising labour costs, rising electricity costs and potential amendments to the South African Constitution reflect negatively on South Africa’s economy, which results in weaker confidence from foreign investors, he points out. This has a knock-on effect on the aluminium industry.
“Globally, we [companies] all depend on our respective commodities or skills while continuing to balance skilled labour and rising costs.”
A major focus in the aluminium industry is the rapid advancements owing to the Fourth Industrial Revolution. “Advances in artificial intelligence are being exercised and will reduce labour negatively by impacting on the unemployment rate,” Naidoo outlines.
He concedes that local manufacturing needs to be prioritised to the point that the added-value products produced improve South Africa’s demand for education and training in the aluminium and general metals industry.
“We require the development of more finished products for local manufacturing. We should be challenged to add more value to our raw materials and commodities prior to export,” Naidoo maintains.
Moreover, he mentions that using raw materials that are locally available for manufacturing will result in an increase in gross domestic product, a decline in unemployment and profitability from exports as a result of the weak rand.
“South Africa is a commodity-rich country and should export more finished goods, building on the significant potential of the automotive sector in the manufacturing industry. We have the experience and infrastructure,” Naidoo concludes.