Steel-Master-Plan_Overview-of-Launch_March-2021-1 (2)

Steel Implementation Plan Version 1.0

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Key Deliverable to date 1.

2.

3.

4.

5.

Steel Master Plan 1.0 drafted consolidating the comments, engagements and feedback received from the steel industry and stakeholders in labour and government Steel Oversight Council was convened on 9 February, where the Master Plan was approved and an implementation road-map discussed Six focus areas for implementation identified with working groups (industry, labour and government) established The Working Groups have met and identified the following priorities with teams set up to work on the deliverables Timelines indicated in the proposed implementation plan reflect the end-date when the work should be completed, not the start date.

Technical work across the deliverables must commence immediately 2

OVERVIEW  This Steel Master Plan will guide the stabilization and progress of the industry. In designing the Plan, it was therefore important to bring together key stakeholders to build consensus on a policy that can drive towards a competitive, dynamic and inclusive industry and which is able to provide a stable platform for investment, growth and job creation.  The Implementation Plan will cover the immediate priorities, setting out the areas of focus within the first six months, the first year, and the first three years. The programmes listed are grouped under the following key areas: Supply-side; Demand-side; AfCFTA; Resource Mobilisation; Transformation; and HR development  The deliverables also include sharpening the implementation of the on-going support measures afforded to the industry  Price and cost-competitiveness was a common thrust across all work-streams and identified as a key impediment to the development and growth of the sector. Input costs are a key issue 3

CROSS-CUTTING PRIORITIES

• Develop an industry report on increasing productivity and moving to wage stability • Develop an industry report on retaining and growing jobs in the short, medium and long term • These issues are linked and will take into account for instance the work on price and cost competitiveness • The reports should be in first draft within 6 months and completed within 12 months

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Expected Deliverables: Supply-side Workgroup Priority

Deliverable • Analyse and develop a proposal on iron ore and coking coal pricing • Industry to collaborate on a load-shedding schedule to reduce disruptions and provide inputs to Eskom • Implementation of the scrap metal export tax, retention of export permit system to support the tax

Supply-side

Interventions to improve input costs and supply across • Develop a SOE developmental method to dispose and localise the usage of scrap the value chain • Flat Steel basket pricing review and transparency • Prioritize steel applications for negotiated pricing frameworks, work with Eskom to fast-track the approval processes • Develop mechanisms to achieve a competitive pricing structure across the value chain • Consider temporary rebates for products where there are consistent shortages • Create awareness and run campaigns on the current rebates and duty drawbacks administered

by ITAC and SARS (e.g. for products not manufactured in SA and for value-added exports)

Supply-side

Supply-side

Timeline 0-6 months

6-12 months

0-6 months

Improve steel supply • Develop a supply / demand matrix on Long and Flat steel products across the value 6-12 • Primary producers to bring back confidence through interaction with customers and providing chain months transparency towards anticipated supply shortages • Industry to identify reciprocal commitments on additional trade support and meet commitments • Investigate debtor insurance Technology Competitiveness, efficiencies and conversion costs

• • • •

Investigate new emerging technologies in primary steel production Benchmark with international best practice Proposal for improvements in rail and port services and efficiencies DSI alignment of KPAs with industry needs, technology transfer and development for the industry including SMMEs.

12-36 months 5

Expected Deliverables: Demand Working Groups

Objective

Deliverable

• Infrastructure SA and SOE engagement (Charter) - develop a steel demand schedule/map for short and long term projects (1-5 years). This will prioritise Renewables/IPP, rail and water projects Infrastructure: Stimulate steel • Implement Nedlac localisation commitments for steel products with private demand through infrastructure sector partners (CEO Champions) Demand-side development programme, SOEs, • Review the automotive steel localisation opportunities report and identify Mining and Buy Local Programme quick wins • Steel designation enforcement and compliance • Initiate Phase 1 digitisation and localisation of mining industry supply chain with mining industry

• Review current ECIC offerings • Develop an AfCFTA export readiness Version 1 (0- 3 months) • Develop an AfCFTA export readiness Revised Version after comments from industry Demand-side Export-oriented growth strategy for • Design focused export campaign for SADC and sub-Saharan Africa focusing on & AfCFTA the steel value chain short and long term opportunities • Review existing value-added export rebate mechanisms to improve access and implementation • Inclusion of SMMEs in export drive as part of supply chain for larger contractors

Timeline

6-12 months

0-6 months

6-12 months

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Expected Deliverables: Demand

Pillar

Objective

Deliverable

Timeline

• Industry to second experts and provide funding to support customs enforcement and reference pricing • Pilot study & benchmarking on prior-surveillance system utilised by EU and India SARS Inter agency working group Demand/ Stem illegal imports, under-invoicing and • Resource 0-6 months • Increase level of intelligence to increase confiscations, mis-declaration of steel products Mobilisation targeting cases for investigation • Support an effective Reference Pricing System • Quarterly Reporting on outcome and status • Develop a mechanism to fast-track the reclaiming processes of withholding taxes for exports

Demand

Localisation: Stimulate steel demand specific infrastructure development programmes, Buy Local and enhance export competiveness

• Rail track localisation- availability of specialised steel and commitment from SOEs • Initiate Phase 2 of the digitisation and localisation of the mining supply chain with the mining industry • Develop an export facilitation package (e.g. performance bonds; credit insurance options; country and political risks; pre and post finance)

12-36 months

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Expected Deliverables: Resource Mobilisation Pillar

Resource Mobilisation

Objective

Deliverable • •

Develop a Directory of incentives and funds available Consolidate and review steel funds (needs of industry, lessons learnt)

0-6 months

•

Green Funds –pilot testing water and energy efficiency projects (Phase 1) Engage with global donors on funding possibilities

6-12 months

•

Fast-track unblocking and investment facilitation from Investment SA to support further investments in the value chain

0-6 months

• • •

Investigate options to implement a levy on sales and imported primary steel Determine priority initiatives to be funded Explore sponsorship funding options for priority initiatives

0-6 months

• •

Design Industry Development Fund Support downstream SMMEs

• •

Proposal on Carbon Tax on imports Phase 2 Green Funding support (availability, modes etc.)

Incentives

• Resource Mobilisation

Resource Mobilisation

Resource Mobilisation

Investment support and facilitation

Steel Fund

Greening the industry – just transition

Timeline

6-12 months

12-36 months 8

Expected Deliverables

Pillar

Objective

Deliverable

AfCFTA

Dialogue with major steel consuming countries in Africa

• Consider mechanisms to promote greater use of “Made in Africa” inputs for major infrastructure/industrial projects across the 6-12 continent months • SA/ SACU tariff offers and acceptances to be made against clear Rules of Origin (industry to be actively consulted)

AfCFTA & Supply

Trade policy and administration to support competitiveness and market access

• Import Analysis for localisation opportunities • Strategic use of the rebates and duty drawbacks to promote value-added export products (key principles already captured under supply-side measures)

6-12 months

Customs alignment

• Report on possibilities for common tariffs for semi and finished products • Engage Chambers of Business and Customs Authorities across the continent to develop a common approach when dealing with the production, importation and in-transit movement of steel products

12-36 months

AfCFTA

Timeline

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Expected Deliverables: Transformation Pillar

Objective

Transformation Determine status quo in the industry and develop support options

Deliverable • • •

Survey and analysis of transformation levels across industry Analysis and awareness of funding options to support and build Black Industrialists and entrepreneurs 0-6 months Address middle-man issue with a focus on local manufacturing to achieve broad-based empowerment

•

Promote Employee Share Ownership Plans (ESOP) and encourage greater use of such schemes as a key tool to promote empowerment and explore worker inclusion in company governance

6-12 months

•

Negotiate an improved BBBEE level with upstream suppliers as key suppliers to the value chain Agree on BBBEE Level 4 attainment Develop a coherent transformation plan Develop funding support options (private/public/global) to improve access and cost of funding to support emerging black industrialists Develop a programme to prioritise transformation that includes skills transfer and training to SMMEs. This needs incubation, mentoring, technology and skills transfer.

12-36 months

Transformation Worker empowerment

Transformation BBBEE Level Targets and Skills transfer to SMME’s

Timeline

• • • •

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Expected Deliverables: HR Pillar

Objective

Deliverable •

HR and industry Improve industrial relations in the sector • stability •

• •

HR development Optimise training and skills development

• • •

Management development

Improve development of HDSA’s

Develop a set of proposals for productivity improvements and wage stability Report on options for collaboration to retain and create jobs Provide assistance and guidance to the MEIBC to enable meaningful relationship building

Timeline

0-6 months

Review the impact of the MERSETA to ensure output reflects the large financial inputs Convene discussions with the training institutions including MERSETA, FET colleges and universities to align training with the needs of modern industry and 4IR. Industry to take responsibility for keeping the SETAs and FET 6-12 months colleges up to date with industry needs and technology for training Skills retention - analyse the loss and retention of skills, including retirement, prioritising scarce skills such as toolmakers and fitters Agree and sign off on measures to create a conducive labour environment for a successful industry taking into account the contribution by workers

• Understand decline of existing worker training into junior management and artisan positions. Develop a programme to support internal training by companies 12-36 months • Programme to increase the representation of African people and women in management and highly-skilled jobs. The programme to include management training and mentoring 11

1st Six Months Implementation Programme April to September 2021

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Programme of Action: 1st Six Months: April to September 2021

Pillar

Objective

Supply-side

• Interventions to improve input costs and supply • across the value chain •

Supply-side

Improve steel supply across the value chain

Demand-side & Export-oriented growth strategy for the steel AfCFTA value chain

Deliverable

Analyse and develop a proposal on iron ore and coking coal pricing Industry to collaborate on a load-shedding schedule to reduce disruptions and provide inputs to Eskom Implementation of the scrap metal export tax, retention of export permit system to support the tax

• Consider temporary rebates for products where there are consistent shortages • Create awareness and run campaigns on the current rebates and duty drawbacks administered by ITAC and SARS (e.g. for products not manufactured in SA and for value-added exports)

• Review current ECIC offerings • Develop an AfCFTA export readiness Version 1 (0- 3 months) • Develop an AfCFTA export readiness Revised Version

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Programme of Action: 1st Six Months: April to September 2021 Pillar

Objective

Deliverable

Demand/ Resource Mobilisation

Stem illegal imports, under-invoicing and misdeclaration of steel products

• Industry to second experts and provide funding to support customs enforcement and reference pricing • Pilot study & benchmarking on prior-surveillance system utilised by EU and India • SARS Inter agency working group • Increase level of intelligence to increase confiscations, targeting cases for investigation • Support an effective Reference Pricing System • Quarterly Reporting on outcome and status • Develop a mechanism to fast-track the reclaiming processes of withholding taxes for exports

Resource Mobilisation

Incentives

• •

Develop a Directory of incentives and funds available Consolidate and review steel funds (needs of industry, lessons learnt)

Resource Mobilisation

Steel Fund

• • •

Explore options to implement levy on imported primary steel Determine priority initiatives to be funded Explore sponsorship funding options for priority initiatives

Resource Mobilisation

Investment support and facilitation

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Fast-track unblocking and investment facilitation from Investment SA to support further investments in the value chain 14

Programme of Action: 1st Six Months: April to September 2021

Pillar

Objective

Transformation

Determine status quo in the industry and develop support options

Deliverable

• • •

• HR and industry stability

Improve industrial relations in the sector

• •

Survey and analysis of transformation levels across industry Analysis and awareness of funding options to support and build Black Industrialists and entrepreneurs Address middle-man issue with a focus on local manufacturing to achieve broad-based empowerment Develop a set of proposals for productivity improvements and wage stability Report on options for greater collaboration to retain and create jobs Provide assistance and guidance to the MEIBC to enable meaningful relationship building

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