Coated Steel Plant Part of Multibillion-Dollar Boost to South Africa's Manufacturing Sector

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Opening the new Safal Steel coating plant in Cato Ridge near Durban, South Africa's Minister of Trade and Industry, Rob Davies, said that the $135 million foreign investment by Safal Steel in the project would support the government's infrastructure development program with locally produced material.

"It's a remarkable investment by a company (Safal Group) headquartered in Mauritius and with operations in 16 African countries," said the minister. "It contributes to regional economic integration." Japan's Marubeni Itochi and Nippon Steel Holding each have a 7% stake in the project, and 26% has been earmarked for a black economic empowerment deal.

In its first year of operation, the 30,000-square-meter plant is nearing its full annual operating capacity of 150,000 tons of coated steel. The plant has the capacity to double that tonnage in a second phase.

The minister said the product output went beyond the steel roofing industry and presented a huge opportunity to support the development of the automotive and white goods manufacturing sectors. The department of trade and industry has allocated more than $5 million in tax incentives for the project. The Safal Steel project has created 370 direct jobs.

Ronnie Graham, the chief executive officer of Safal Steel, said that the state-of-the-art metal coating plant was one of the largest foreign direct investments in Kwazulu Natal province in recent years. Safal Steel was the only manufacturer of aluminum zinc coated steel in South Africa, and up to 60% of the product was for the domestic market.

At the plant opening, the minister announced that projects with a value of $2.9 billion had been approved in the past 15 months as part of the government's major tax incentive schemes for business. The tax incentives are aimed at boosting major investments in manufacturing in South Africa. The 13 projects are in greenfield and expansion manufacturing projects. Six will commence commercial production between March and August this year, and all will be in operation in 2014. A further $600 million in additional tax allowances has been granted to the approved projects, the minister said.

The projects are in priority sectors identified in a national industrial policy action plan. There are eight in the chemical sector, one in agro processing, two in paper and pulp, and two in the biofuel sector.

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