Scaw Metals October Coverage Report

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Online Designmind - Design MindScaw Metals sign knowledge exchange agreement with German steel giant02 October 2013 http://www.designmind.co.za/index.php/news/build/commercial-build/item/625-scaw-metals-sign-knowledge-exchange-agreement-with-german-steel-giant#.Um94NVOjKSo

Scaw Metals Group, a leading South African manufacturer of a diverse range of high-quality steel products, has signed a knowledge exchange agreement with the German Steelmaking Company, Badische Stahl-Engineering GMBH (BSE) to drive technological advances and excellence at its steelmaking and rolling facilities. The agreement is in line with the group’s focus on driving a smarter and more efficient steel sector as a catalyst for growth in South Africa, in Africa and across key emerging markets.

The agreement, which will run for the next three years, will see experts from the BSE academy touring facilities and operations of Scaw’s Union Junction plant in Germiston, Johannesburg. They will provide an on-site assessment of Meltshop 3 and Morgan Mill. As part of the programme Scaw Metals will send 90 employees to the BSE Academy in Germany for training, which will take place over a six week period by the end of this year. The training these employees will receive, will address the gaps identified in the on-site assessment.

“Our focus on skills is a major step in ensuring we deliver the quality our clients expect from us. We believe that through this agreement, we will be able to offer our clients even more than we currently do,” said Bheka Khumalo, Executive Manager for Strategy for the Scaw Metals Group. Scaw Metals is a firm supporter of skills development in the local steel sector. “We believe that by giving our employees the best possible education and training, we can only benefit the entire industry and our clients. A smarter and more efficient steel sector is critical to fuel growth, not only in South Africa, but in the rest of Africa and the across key emerging markets,” Khumalo said.

The BSE Academy is the consultancy unit of Badische Stahlwerke (BSW), and has a long and illustrious track record and supports green entrepreneurship. It has successfully executed over 200 consultancy and training contracts, over 400 classical training seminars and has had 5,500 participants from 28 countries graduate in the past two decades. “One of the reasons we were attracted to BSW and BSE was that they are strikingly similar to Scaw with regards to their steelmaking and rolling operations. We can only reap the benefits from this agreement and thus enhancing not only our own standards but that of the entire industry in South Africa,” said Steve van Wyk, Acting Head of Operations at Scaw Metals Group.

The participants of the BSE programme will have full access to the BSW facilities. “Around 60% will be training on the BSW facilities and the remaining 40% will be focused on theoretical training,” van Wyk said. At the end of the training session, Scaw will formulate a specialist training process, in

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conjunction with the BSE Academy, which will look to revolutionise how Scaw provides training to new employees. “It will be like going through the process of getting a driver’s licence. Mg.co.za - Mail & GuardianScrapping over metals goes to court04 October 2013 http://mg.co.za/article/2013-10-04-00-scrapping-over-metals-goes-to-court/

Maningi Metals's scrapyard in the Jo'burg city centre has suppliers from all walks of life.Some companies or households will call the merchant up to collect scrap and other industrious entrepreneurs make the trip themselves with loaded bakkies. More frequently hawkers drag their trolleys into the yard before weighing the assortment of waste on an industrial scale and collecting a hard-earned reward.

Almost 90% of the scrap brought in is metal. Street collectors of scrap, with a bit of elbow grease, can earn anything between R40 to R200 a day. One young mother, with her child in tow, received R17 for a mountain of flattened cardboard. She is aware she could make far more if she brought scrap metal in, and some other single moms do, but she says it is harder to find.

Scrap metal industry's worthThe scrap metal industry is estimated to be worth between R15-billion and R20-billion a year. It is highly desired for products such as steel because it has already been beneficiated and requires a fraction of the energy to process. This, in the government's eyes, makes it vital to South Africa's industrial development — so much so that it is at the centre of a legal battle that will play out in the Pretoria high court on October 10 to 11 this year.

On September 16, the government imposed the first new restrictions that seek to clamp down on scrap metal leaving the country. There are a number of changes but the most contentious is that scrap merchants cannot sell products directly for export and must first offer it to local buyers at 20% less than the spot price before a permit to export it will be granted. These restrictions for waste and scrap that do not contain iron — non-ferrous metals — are already in place and those applying to iron-containing and stainless steel (ferrous) waste and scrap took effect on September 30.

ChangesThe changes were a long time coming — the debate between the government, the manufacturing industry and scrap merchants has been raging for more than a decade. Local consumers of scrap metal claim the prices are too high and that not enough is made available to them but the scrap merchants refute this and say local buyers want to pay too little.

A source associated with the trade said the dispute is complicated by the fact that the treasury and the department of trade and industry could not see eye to eye. The treasury told the Mail & Guardian it would not comment on internal government discussions. But the economic development department said it has introduced the scrap metal price preference system to help halt and reverse the bleeding of jobs and the shrinkage of the scrap metal processing industry over the past few years.

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"It is part of a package of measures by government designed to stabilise the industry, including an initiative to improve the industry's competitiveness and several measures to increase demand for value-added locally manufactured products," the department said in a written response.

RestrictionsThe restrictions apply to all scrap but steel is the most critical as it represents about 70% of manufacturing inputs. State intervention in the minerals sector (Sims) was endorsed by the ANC at its national conference in Mangaung last year.

According to it, steel "is by far the most important raw material in manufacturing, which is probably the only sector capable of absorbing our massive number of unemployed", and it needed to be supplied to the economy at competitive prices. It also recommended the outright ban of all exports of scrap in a bid to foster a competitive advantage for the country.

"Many states have or had restrictions on scrap exports, including China, India and Russia. Sweden had restrictions before having to drop them when it joined the EU and many other developed countries used them in the past whilst developing." The government has tread more lightly than what Sims recommended but the discontent over a shake-up in the scrap metals industry will not be dealt with quietly.

Legal proceedingsNext week the Metal Recyclers' Association of South Africa (MRA) takes on the International Trade Administration of South Africa, the departments of economic development and of trade and industry and the National Union of Metalworkers of South Africa over the export restrictions.

The MRA declined to comment on the legal proceedings, saying the matter is sub judice.

Garth Strachan, chief director of industrial policy at the department of trade and industry (dti), said: "The dti has joined as the third respondent because the issue of the unencumbered exports of scrap metal, in circumstances where other countries have either a total ban or strong export taxes, is a matter of considerable concern for the dti and it is important this policy instrument to provide support to the manufacturing sector in South Africa is protected." While the legal matter is pending, some merchants are feeling the pinch.

Donovan Korff, a partner in Cobra Metals, which was established in 1980 — the first scrap merchant in the run-down Malvern area — sells only to local buyers. Price changes on non-ferrous metals are evident — for example, Korff shows a price list supplied to him by the foundry: the price for aluminium dropped from R14.50 a kilogram to R12.50 recently. And the price for light steel has dropped 30c.

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Citizen.co.za - CitizenShrug off those security concerns04 October 2013http://citizen.co.za/58501/shrug-off-those-security-concerns/

In today’s crime-ridden society, it is often a necessity for high profile celebrities or wealthy individuals to make sure that they are protected in every possible way. Most people’s homes are secured with security cameras, high walls and electric fences, but rarely do we see the luxury vehicles that they drive come with complete security features.

GoIndustry DoveBid SA has the sole mandate to dispose of four luxury armoured vehicles for Scaw Metals SA.

The sale comprises of two Mercedes Benz E500 Guard (black, 2010) with armour protection done in Germany and two BMW X5 3.5d (white, 2010) with armour protection done in South Africa. These vehicles are ideally suited to the security conscious VIP, celebrity or business person. All vehicles have IAC Level III armour plating which is suitable for high powered hand guns.

The Mercedes Benz vehicles have approximate mileages of 38 000km and 52 000km and the BMWs have approximate mileages of 76 000km and 132 000km. They have full service histories and are fully equipped with all the luxury amenities.

GoIndustry DoveBid will sell these vehicles by online auction. The bidding opens on October 10 and will close on October 17 at 2pm.

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Engineeringnews.co.za Focus on diversifying, R650m in African projects under 11 October 2013http://www.engineeringnews.co.za/article/focus-on-diversification-r650m-in-african-projects-under-way-2013-10-11

The diversification of steel and steel products manu- facturer Scaw Metals’ baseline products and markets in key sectors will create strong growth into the immediate future, particularly in Africa, where the company has about R650-million in projects under way. These are focused on a range of sectors, including oil and gas, mining and rail, and, Scaw says, it is actively exploring opportunities in Africa where the company already has an established foothold.

The continent, in the coming years, presents exciting opportunities. “Locally, government’s infrastructure development programme certainly should provide important demand from the local steel and construction industry, while infrastructure development in construction and rail combined with mining growth will simulate additional demand from the rest of Africa,” Scaw points out. Outside Africa, Scaw remains focused on developing its Australia base where the company has manufacturing facilities and an extensive distribution network that also distributes products from Scaw South Africa.

The company forecasts increased demand for its “premium products” internationally, highlighting that Scaw’s strategy and expan- sion plans align the business to absorb growth both locally and internationally. “Scaw [which is majority owned by the State-owned Indus-trial Development Corporation] lives its vision of being a South African-led globally competitive and responsible beneficiator of key raw materials into value-add steel products.”

However, it maintains that post the global financial crisis and given the significant investment in steel manufacturing capacity in China and other countries, the global steel industry will remain increasingly competitive. With new Scaw Metals Group CEO, Markus Hannemann, the group’s strategy is focused on growing capacity and capability in the manufacture of secondary value-add steel products. “Given the tough economic climate, the strategy also recognises the need to stabilise the business on a sustainable basis as the steel industry suffers globally,” notes the company.

Scaw believes increased value-added beneficiation is important to ensuring the long-term sustainability of the South African steel manufacturing industry. Meanwhile, Scaw plans to take advantage of government’s R4-trillion infrastructure development programme, which it says “certainly presents exciting opportunities for the local manufacturing and construction industry”.

The company notes that its strategic plan combined with its recognised capability makes it well aligned to play an important role in assisting in delivering government infrastructure projects. In terms of government’s aim to curb scrap exports, the company says it is not too late for government to implement this plan. “Scrap is the key input to the majority of South Africa’s mini-mills and foundry busi- nesses. The ripple effects of the export of quality scrap from South Africa have been detrimental to the local metals manufacturing industry. The resultant shortage of scrap has placed upward pressure on local scrap prices,” states Scaw. The metals manufacturing industry is sensitive to scrap costs, says the company, as the key ingredient represents more than 50% of total cost of manufacture. Since 2009, some 100 foundries have closed in South Africa.

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“Undoubtedly, the curbing of scrap exports will lead to lower scrap prices, ultimately benefiting the local metals manufacturing industry with increased competitiveness and the possibility of desperately needing growth,” highlights Scaw, adding that high steel and scrap prices hinder competitiveness.

Low scrap and steel prices beyond improving direct international competitiveness will spurt the growth of secondary manufacturing of metal products in South Africa. A competitive secondary metal manufacturing industry is vital to fuelling an efficient value-add sustainable steel industry, notes Scaw.

Iol.co.za/business - Iol Business ReportInvestors snap up IDC’s R1.5bn public issue18 October 2013 http://www.iol.co.za/business/news/investors-snap-up-idc-s-r1-5bn-public-issue-1.1593702#.Um97wlOjKSo

Johannesburg - The Industrial Development Corporation (IDC) launched a R1.5 billion public bond issue yesterday, the first of a target of R12bn in the next 18 months, to meet what its chief executive described as “growing funding commitments”. Chief executive Geoffrey Qhena, who briefed the portfolio committee on economic development on Wednesday, said the bond issuance was in line with the development financier’s desire to increase its funding activities “continuing to play a central role in providing industrial finance”.

The state-owned entity reported that the bond was registered on the JSE. It will have maturity terms of three, five and seven years. IDC chief financial officer Gert Gouws said the response from investors had been “overwhelming”. The issue had been 2.6 times oversubscribed. The seven-year bond had a fixed interest rate of 8.34 percent. He said the IDC would increase its borrowings in the next three years while managing its gearing ratio, which was 19 percent at the end of March. Engineering News reported that the IDC planned to issue up to R12bn in bonds in the next 18 months. Last month it announced that it had stepped up R2.7bn in funding to boost youth entrepreneurship.

Interviewed after meeting the portfolio committee, Qhena acknowledged there had been a rise in impairments but he attributed this to the “economic conditions” associated with the global recession. He said a greater focus on capital projects in the past financial year to March had contributed to a drop in job creation from its investments – from about 44 000 in 2012 to under 24 000 in 2013. Qhena said the takeover of Anglo American’s Scaw Metals plant had saved 6 000 jobs, but these were not counted as new.

Scaw Metals recorded a loss of R78 million in the year after financing costs. Major IDC subsidiary Foskor recorded a loss of R165m. The Small Enterprise Finance Agency, which the IDC took over this year, lost R64m. The IDC, which was established in 1940, suffered the worst impairments and write-offs in its 73 years. Its impairment ratio has climbed from 15 percent of its portfolio in 2009 to 18 percent in March.

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The annual report said: “The impairment and write-offs charge to the income statement of R2.26bn… was 38 percent higher compared to financial year 2012.” Nearly R800m of impairments were in the media and motion pictures categories. Gouws acknowledged that the IDC’s level of impairments had been increasing gradually. “This reflects the corporation’s increased risk appetite towards distressed clients, as well as other ailing industries, such as the textiles industry. It also reflects the IDC’s increased focus on early stage projects and start-up companies.”

He echoed Qhena’s view that the main reasons for impairments included the deterioration in trading conditions together with low market penetration. “Depressed commodity prices and unfavourable exchange rates continued to impact on the IDC’s business partners. Business units contributing significantly towards the increase in impairments included textiles, media, ICT and mining,” he reported. It wrote off R470m in the 2013 financial year compared with R157m for 2012, and R722m in 2011. Gouws said the IDC wrote off investments “when the exposure is considered unrecoverable and only after all viable restructuring options have been exhausted”. The IDC disbursed a record R16bn in 2013, but its profit fell by 40 percent to R1.9bn. “The IDC’s performance in 2013 was mixed,” said Qhena. Revenue rose to R14.5bn compared with R10.9bn in 2012 but cost of sales increased to R6.2bn from R4.3bn in 2012. - Business Report

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