Without far greater focus and prioritisation, Macsteel CEO Mike Benfield believes the Steel Master Plan will remain captive to high levels of ambition with limited real-world effectiveness.

There has been little implementation progress since the master plan’s official launch in 2021, when representatives from labour, business and government signed the 80-page document during a ceremony held at Hall Longmore’s factory in Wadeville, on Gauteng’s East Rand.

In fact, Benfield tells Engineering News & Mining Weekly that there has been “no traction” since that high-profile event, which was held against the backdrop of steel shortages and rising prices, partly because of ArcelorMittal South Africa’s (AMSA’s) delayed restart following Covid-linked production cuts.

As things stand, prices remain high and are rising, but steel demand is sluggish, largely because of ongoing weaknesses in key steel-consuming sectors and the fact that steel merchants are reluctant to return to the damaging past practice of selling stock below its replacement value.

While attention is rightfully being given to the negative impact of Transnet’s poor performance on AMSA’s production, Benfield notes that market conditions are such that supply is no longer the main constraint.

“I’m generalising, of course, but there is currently an overhang of inventory in the market and some of our competitors have even stated that they had their worst February ever.”

The decision by AMSA to idle furnaces may have been precipitated by Transnet, but Benfield says it is being prolonged by the weak demand outlook and the uncertainty that has arisen following Russia’s invasion of Ukraine.

There is particular frustration at the lack of infrastructure progress, despite government’s ongoing promise that economic and social infrastructure lie at the heart of the Economic Reconstruction and Recovery Plan.

Benfield believes that the Steel Master Plan will remain ineffective until firm commitments are made to a prioritised list of infrastructure projects, particularly in the areas of rail, ports and power.

He is somewhat heartened by moves by Transnet to allow for grater private sector participation on its rail network and to facilitate private port terminals. However, actual projects are few and far between.

“Government realises that they don’t have to own the infrastructure, which is a positive development.

But we are still not seeing the pathway, through the tender activity, to accelerated project activity.”

One of the current constraints relates to the precipitous fall in empowerment scorecard levels across the sector, which is lowering the local procurement incentive. Yet efforts to raise the problem with government have not proved successful, despite the fact that there is now little scorecard value in buying local.

Much of government’s focus, instead, has been on limiting grey products from entering the country, which, while important on the margins, is not addressing the fundamental lack of demand in the economy.