April Coverage Report

PRINTBusiness Day (Late Final)01 April 2016, p.2

Castings SA1 April 2016, p.6

Castings SA1 April 2016, p.8

Steel Construction1 Apr 2016, p.13

Cape Times (First Edition), Sport14 April 2016, p.23

Engineering News22 April 2016, p.27

Engineering News29 April 2016, p.6

Germistoncitynews.co.za - Germiston City NewsScaw looks to the future of the community.AVE: R972211 December 2015Articlelink: http://germistoncitynews.co.za/108095/scaw-looks-to-the-future-of-the-community/

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Bdlive-Business Day LiveSteel protection decision to be made by JuneAVE: R87 0011 April 2016Article link:http://www.bdlive.co.za/business/industrials/2016/04/01/steel-protection-decision-to-be-made-by-june

The fate of the 200,000 jobs dependent on the domestic steel industry will be known by June when the International Trade Administration Commission (Itac) is expected to make a decision on whether to grant aggressive protection to the sector.The commission started its investigation into the application for a safeguard remedy made by the embattled steel industry last week.Protection from very cheap hot-rolled coil, especially from China, is the bare minimum requirement for the survival of companies such as ArcelorMittal SA, Scaw Metals and Cape Gate. Hot-rolled coil is a bedrock input in the steel industry, and is used to make many other steel products.Should the industry collapse or need restructuring including plant closures, this could severely undermine the government’s plans to reindustrialise the economy. Safeguard duties could dramatically increase the price of some steel imports, and not just from China.Over the next three weeks, the downstream industry, which is likely to argue against making its inputs more expensive, will be able to submit information to Itac.The application for a safeguard remedy was made by the South African Iron & Steel Institute on behalf of its members — largely ArcelorMittal SA, which has a 70% market share and covered the costs of the applications — and is one of at least four such applications being made."The period of investigation for data evaluation for the purposes of determining the allegation of serious injury is 1 January 2012 to 31 December 2014, plus additional seven months information for 2012 to 2015 (1 January to 31 July)," said the Government Gazette.

The steel industry has also applied for the maximum allowable import duty on 10 types of products. So far, the maximum 10% import tariff has been approved on eight. The two outstanding are for hot-rolled coil, the most important one. Tariff protection for three has been implemented.Itac chief commissioner Siyabulela Tsengiwe said on Thursday a decision on the two outstanding applications would be reached by next month. The delay had been due to the requirement for additional information from the downstream industry, he said.Mr Tsengiwe expects to have made a "preliminary decision" by June that could see import protection for the country’s brittle steel-making industry.

"The quantum will be informed by financial information out of the investigation; I cannot tell you what that will be," he says.Donald MacKay, director of XA International Advisors, said the effect of the safeguard protection would be "quite large".

"We don’t know how much duty will be imposed; the duty can be as big as it needs to be to make things right (for the local industry)."I think the duty will be large and will put off the vast majority of imports. We are effectively going to cut off as much as R4bn of imports," he said.Mr MacKay described the trade relief being sought by the local steel industry as "aggressive". It would not only affect imports from China, the biggest culprit of dumped steel globally, but also from South Korea, Germany and Japan."Here is the problem: there are degrees you have to escalate these things, your safeguard duty is your nuclear option, it has almost no limits to just how big it can be, this should not be your first option out of the gate," he said.

Castingssa.com - Castings S.AScaw Metals is supporting the proposed amendments to the price preference system (PPS)AVE:R16 4517 April 2016Article link: http://castingssa.com/scaw-metals-is-supporting-the-proposed-amendments-to-the-price-preference-system-pps/

Steel manufacturing major Scaw Metals is supporting the proposed amendments to the price preference system (PPS) policy guidelines for local scrap metal it has said in Engineering News. The PPS will govern future exports of ferrous and nonferrous scrap metal from South Africa through one harbour – Port Elizabeth.The amendments aim to align the PPS with the Second-Hand Goods Act and government’s black-economic-empowerment policy, while also tightening up permit application and administration processes.Scaw Metals CEO Markus Hannemann says the company fully supports the PPS framework because its intent is to ensure the steady supply of high-quality scrap-metal material to local users; it also proposes reasonable prices that will enhance support for the local steel industry. He adds that the local steel sector will benefit from the amended PPS policy because it will result in securing jobs, based on increasing South Africa’s competitiveness in handling local volumes of scrap metal and “levelling the playing field” in terms of international scrap metal handling.“With competitive scrap prices, the industry will undoubtedly grow, thus creating additional jobs that are sustainable, and boosting the knock-on effect for the supporting industries, including refractory companies, sand and chemicals companies, machine shops, spares departments and consumables,” Hannemann elaborates.Scaw Metals is serious about value addition, as opposed to the large-scale export of raw material to the detriment of industry, he states. Scrap is a precious resource, says Hannemann, adding that, by limiting or halting exports, the domestic volumes of scrap metal will increase and, subsequently, the price of local scrap metal volumes will drop.He says there is no risk in losing international trade because the countries to which South Africa exports scrap metals ban exports of their respective scrap metals outright. He mentions that this “recipe” will assist the steel manufacturing industry in regaining its footing.Seeking stabilisation Scaw Metals, like many other steel manufacturers in South Africa, recently succumbed to straining profit margins and overcapacity issues, implementing a restructuring

programme that saw the issuing and enforcing of a notice in terms of Section 189A of the Labour Relations Act.The company stated in August last year that the unfortunate decision to file for a Section 189A was necessitated by local and global conditions in the steel industry. Hannemann notes that Scaw Metals is currently in a post-Section 189 stabilisation phase: “We are focused on ensuring the high morale of the remaining workforce, and alignment of the business’ objectives remains the priority.”Beyond Section 189, he states that all Scaw Metals’ businesses are working towards improved performance.“We recognise the need to adapt to a dynamic, changing and competitive landscape,” says Hannemann, adding that the company can now explore new business prospects beyond its traditional boundaries.Imports and exportsScaw Metals’ exports are increasing year-on-year, compensating for weak domestic demand, Hannemann says, adding that the company’s largest overseas clients include North America, Europe, Australia and numerous African countries. However, the global economic slowdown, as a result of the China market crash, has affected Scaw Metals’ largest client base – mining. The market is further being crippled by China’s large-scale dumping of steel, which is reducing steel value and impacting on other sectors served by Scaw Metals. Therefore , Hannemann suggests that incentives to export value-added products should be considered by the South African government to mitigate further industry harm.“We encourage the use of 100% locally manufactured steel products. Local value addition is key to developing South Africa’s economy. The current local designation policy is inadequate to sustain the industry, and further designation opportunities exist and need to be implemented urgently,” he concludes.

Seifsa.co.za – SEIFSAHigh Profile Business Executives to judge SEIFSA awards08 April 2016AVE: R19 628Article link: http://www.seifsa.co.za/66-seifsa-news-press-releases-2015/527-press-release-2016-04-07-high-profile-business-executives-to-judge-seifsa-awards.html

The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) has announced the names of the panel of judges for the upcoming SEIFSA Awards for Excellence.Born out of the need to encourage growth and celebrate excellence in the metals and engineering sector, the SEIFSA Awards for Excellence offer a great opportunity for companies operating in this vital sector to receive well-deserved recognition by industry peers for their capabilities, expertise and innovation.“In such turbulent economic times and a challenging business environment, we at SEIFSA believe that it is critically important for those companies which excel at what they do to get the acknowledgement and recognition that they deserve,” SEIFSA Chief Executive Officer Kaizer Nyatsumba said.

Among the panel of this year’s judges are Business Unity South Africa CEO Khanyisile Kweyama ,Chamber of Mines Safety, Environment and Quality Executive Thuthula Balfour; KPMG Director Boitumelo Ngutshane; Constructional Engineering Association Executive Director Louis Breckenridge; Centre for Industrial and Scientific Research Project Manager: Fabrication, Capital and Transport Equipment Sector Chule Qalase; Consulta Founder and CEO Professor Adre Schreuder; Gijima Managing Executive Werner Guse, and Environmental Impact Management Services Senior Environmental Consultant Nicus Durieux.“The panel will meet over two rounds of adjudication to determine the category finalists and winners,” Mr Nyatsumba said.The SEIFSA Awards for Excellence offer seven different categories, namely:

The Most Innovative Company of the Year, which will be awarded to a company which showed the highest level of innovation in research and development or production in 2015.

The Health and Safety Award of the Year will be offered to a company with the best legal compliance record in Health and Safety or the lowest Lost-Time Injury Frequency Rate in 2015.

Entries are also invited from companies whose Corporate Social Investment (CSI) programme/s in 2015 had a major impact on the lives of their beneficiaries.

Companies rated the highest in customer service performance in 2015 will receive the Customer Service Award of the Year.

The Most Transformed Company of the Year Award will be received by a company that showed the highest transformation level in the composition of its Board of Directors, Executive Management and Managerial Team in 2015. This award category pits companies employing fewer than 100 people against those of similar size, and companies employing more than 100 companies against others of similar size.

This is the Decade of the Artisan, and an award will be made to the company that trained the highest number of artisans in 2015.

The Environment Stewardship Award will go to a company that has made the biggest or best strides towards conserving the environment or mitigating the impact of its operations on the environment in 2015.

Mr Nyatsumba encouraged manufacturers operating in the metals and engineering sector to submit their entries for the seven categories as soon as possible. The Awards are open to both SEIFSA members and non-members.Winners of the Awards will be honored in a ceremony that will take place on the first day of the two-day Southern African Metals and Engineering Indaba, scheduled to take place on 26 and 27 May 2016 at the IDC Conference Centre, in Sandton.Last year’s winners included Scaw Metals, ABB Group, Hazelton Pumps International and Voith Turbo, among others.

Engineeringnews.co.za - Engineering NewsAMSA confirms another round of steel price increases from May 119 April 2016AVE: R25 009Article link: http://www.engineeringnews.co.za/article/amid-perceptions-of-steel-glut-amsa-confirms-long-steel-shortages-2016-04-12

Steel producer ArcelorMittal South Africa (AMSA) has place allocation restrictions on domestic consumers of rebar and wire rod, owing to a combination of weak domestic orders at the end of 2015, supply disruptions and an unexpected surge in restocking-related domestic orders since the start of the year. Acting CEO Dean Subramanian told Engineering News Online on Tuesday that the group expected the backlog to persist until June for rebar and until mid-July for wire rod. He insisted, however, that there was “absolutely no link” between the allocation restrictions and the introduction of 10% duty protection for the two products in question. In addition, he said the three price increases announced on long-steel products since the beginning of 2016 bore no relation to the increase in protection levels. Price rises had, instead, been precipitated by currency fluctuations, an increase in iron-ore and coal prices and a recovery in international steel prices, which still remain below the January 2015 price on rebar of $367/t (free on board China). Some customers had been taken aback by the notice of supply limitations, particularly in light of the perception of a global steel glut. One AMSA customer who spoke to Engineering News Online on condition of anonymity said the rebar restriction would probably result in it having to forfeit a recent African order, which would now probably be supplied out of North America. Subramanian said it had played open cards with its long-steel customers regarding its current supply constraints, which were restricted to the long-steel

environment. He indicated that there had been some operational difficulties at AMSA’s Newcastle mill, as well as at other domestic mills, but indicated that the backlog had arisen primarily as a result of weak domestic orders in the fourth quarter of 2015, which had forced AMSA to allocate product to export markets. There had since been a strong recovery in domestic orders, driven primarily by restocking activity. AMSA had halted all rebar and wire rod exports from the start of the second quarter and had also ramped up production at Newcastle to 4 750 t a day in an effort to deal with the backlog that had arisen. It was also shifting 10 000 t of slab from its Vanderbijlpark operation, in Gauteng, to Newcastle, which would be converted to billet. In addition, it had sourced a further 5 000 t from an external local source over the coming three months. “Even though the above initiatives have resulted in further costs to AMSA it reflects the current commitment to serve the domestic

market,” Subramanian said. Scaw Metals CEO Markus Hannemann confirmed the order and told Engineering News Online that it would seek to release capacity to supply Newcastle. However, he stressed that the company was facing a major problem of scrap availability, which was limiting its ability to produce. Subramanian indicated that AMSA was assessing other ways to increase Newcastle’s output, possibly up to 5 000 t a day. However, he indicated it was also encouraging customers to offer it better visibility of their anticipated future demand so that supplies could be stabilised and backlogs avoided. “If customers place long-term orders with the mill we will be able to plan better. But if customers trade in the spot market the focus becomes far more short-term and we have to find export outlets for the steel so that we can run the mill at sustainable levels.” He also indicated that AMSA had no intention of reversing its decision to seek safeguard protection on several flat- and long-steel products over-and-above the 10% duties that had already been introduced on a range of steel grades. Import levels remained high, with some 103 000 t of foreign steel having landed in South Africa during February alone, the bulk of which came in the form of hot-rolled coil. The International Trade Administration of South Africa (Itac) and the South African government were pursuing consultations with downstream steel consumers to assess the impact of even higher protection on primary steel. It was reported recently that Itac would make a determination in June.

Engineeringnews.co.za - Engineering NewsAMSA confirms another round of steel price increases from May 119 April 2016AVE: R25 009Article link: http://www.engineeringnews.co.za/article/amsa-confirms-another-round-of-steel-price-increases-from-may-1-2016-04-19

eel producer ArcelorMittal South Africa (AMSA) has confirmed yet another round of price increases on both flat- and long-steel products, announcing average increases of 10% from May 1 and reinforcing what has become an established pricing trend since the start of 2016. However, acting CEO Dean Subramanian has again insisted that the latest increases have nothing to do with recent moves to raise import barriers and are, instead, the result of a recovery in international prices from depressed 2015 levels. Prices, AMSA notes, plunged by 38% between January and December 2015, as a consequence of falling demand and overcapacity, particularly in China. The resulting steel glut, made

many steelmakers unprofitable and others unviable, with South Africa’s second-largest producer, Highveld Steel and Vanadium, entering business rescue in early 2015. The company has since ceased operations and retrenched workers after a bid to sell the operation as a going concern failed in January. AMSA has itself pursued a far-reaching cost-reduction and restructuring programme, with its Vereeniging Works having been curtailed.

It has also warned that the sustainability of its Saldanha Works is at risk, owing to fast-rising electricity prices. Scaw Metals, meanwhile, has also downsized operations and cuts jobs. AMSA has also led the campaign to increase import protection, from 0% previously to the 10% bound rate allowed for under South Africa’s World Trade Organisation commitments. It has succeeded in securing such protection on a range of long- and flat-steel products and is awaiting a determination from the International Trade Administration Commission of South Africa (Itac) on the last few products, including hot-rolled coil (HRC) other bars and rods. The majority of the 103 000 t of foreign steel having landed in South Africa during February was in the form of HRC. In addition, the JSE-listed company has submitted five applications for safeguard duties, which, if successful, will impose far higher protection levels over and above the 10% duties already secured. Itac is expected to make a determination on the application in June.

“We reiterate that these price increases are not related to the recently implemented import duties, but based purely on international steel and raw-material price movements,” Subramanian stresses. International steel prices, he adds, have increased by 20% over the past month and the May increase has sought to “moderate” the increase of domestic steel consumers. “Over the last month, the price of traded steel sourced from China has increased by more than 20% ($80/t) on HRC and 30% ($90/t) on reinforcing bar (rebar).” However, the increases in the long-steel sector have also come with an indication from AMSA that it has been forced to implement a strict allocation of rebar and wire-rod customers, owing to shortages of such products in the domestic market. The group expects the backlog to persist until June for rebar and until mid-July for wire rod. In a note to customers, AMSA says the base prices for flat- and long-steel products will rise as follows from May 1: HRC, cold-rolled and galvanised coil will increase by R750/t. Plate (including quench and tempered) will rise by R900/t. Flange and profile plate rises by R1 150/t. Colour coated coil increases R200/t. Rebar (including smooth and mining bar) rises R750/t. Wire rod, mesh bar, bolt and nut, grinding media, rounds, rails, medium and light sections (including windows and fencing) will increase by R600/t. “We reiterate that these price increases are not related to the recently implemented import duties, but based purely on international steel and raw material price movements. This is further highlighted, by the fact that although international steel prices increased by 20%, we have taken all stakeholders’ into consideration and opted for a more moderate 10% average increase,” Subramanian concludes.

Moneyweb.co.za – Moneyweb29 261 jobs on the line – Solidarity28 April 2016AVE: R51 560Article link: http://www.moneyweb.co.za/news/industry/29-261-jobs-line-solidarity/

Large-scale retrenchment processes, initiated in the past year, will hit the mining sector hardest, says trade union Solidarity.According to its records, 29 261 mining jobs hang in the balance as 36 companies in the sector engage in retrenchments (see table below). Formal retrenchments would also lead to numerous indirect job losses, “…in mining 1.7 job opportunities are created for every permanent appointment made”, Solidarity general secretary Gideon du Plessis told reporters in Pretoria.

The retrenchments, which come on the back of weak commodity prices and poor economic growth, have been further exacerbated by rising electricity tariffs that are pushing marginal businesses “over the edge”, said Du Plessis. The selling and takeover of unprofitable mines as well as mines being “mined out” or placed on care and maintenance have also lead to retrenchments. Du Plessis said the impact of previous strikes, which depleted companies’ cash reserves, have also led a “bloodbath” in the sector.According to the union, the timing and content of the reviewed Mining Charter, drafted and published without input from the industry, is also a cause for concern. “This type of central control over business creates uncertainty. This is the last thing that the industry needs right now,” said Dirk Hermann, CEO of Solidarity. That the Charter doesn’t provide exemption opportunities with respect to the 1% contribution of turnover required to be placed in a community fund nor the 5% contribution of payroll required to go toward human resource development will have a negative effect on businesses in trying times.“That’s a huge number that a loss making company must still pay because it’s based on turnover and not based on profit. A company making a turnover of a few billion rands may still make a loss but then

they still have to pay this, over and above royalty tax, over and above all the other taxes they pay, over and above the social labour plans that they have adhere to,” Du Plessis told Mineweb.The spill-over effects of weak commodity prices, an influx of cheap Chinese steel imports and state of the mining sector are also weighing on the metal and engineering industry. Retrenchment processes by the likes of Evraz Highveld Steel, Samancor Smelters, Scaw

Metals, Macsteel, ArcelorMittal South Africa and Aveng Trident Steel among others threaten the jobs of 7 918 employees in the sector.Solidarity has been party to 88 retrenchment processes in the past 12 months and its records show that 58 549 jobs in various sectors of the economy are at risk due to the current “retrenchment crisis”. “These numbers don’t paint the picture of the whole of South Africa, they only include the processes that solidarity is involved with or aware of,” Hermann said.

Engineeringnews.co.za - Engineering NewsRED-HOT CRISIS29 April 2016AVE: R4 551Article link: http://www.engineeringnews.co.za/article/red-hot-crisis-2016-04-29

Steel industry globally is in crisis. There is a glut of material; exports from countries such as China have surged, placing strain on steel industries in many other parts of the world. South Africa has already seen the closure of Highveld Steel and Vanadium, as well as parts of ArcelorMittal South Africa and Scaw Metals. Import protection has increased and there is the prospect of even higher safeguard duties to come. Resolving this red-hot crisis without a host of unintended consequences, especially for downstream consumers, is easier said than done

BroadcastSAFM- Morning TalkSolidarity conducts research on job losses---Continue29 April 2016AVE:R71 497