Sep 28, 2012
Aluminium industry growth slowly recoveringBack
London|Education|Eskom|Europe|China|India|South Africa|United States|International Aluminium Institute|Southern African Institute Of Welding|Energy|Energy Intensive|Gross Domestic Product|Manufacturing Country|Scrap Metal|Steel|Steel Weighs|Mark Krieg
© Reuse this
He states that certain industries that are supplied by the aluminium sector, such as packaging and consumer durables, continue to grow steadily, in line with the country’s gross domestic product.
However, growth in the automotive industry is worrying.
“The international automotive industry is showing signs of slowing, following several good years. The aluminium casting industry, which supplies the automotive sector, is also under pressure, as aluminium scrap is the main feedstock of the industry. It is losing volume owing to the cost of scrap. Scrap metal is exported by South Africa at an export parity price,” he says.
Krieg adds that the local automotive industry is important for the aluminium sector and that the industry and government have ambitious plans to double output in the next few years.
“The aluminium content in automobiles is increasing because aluminium weighs one-third of what steel weighs, so there is a clear weight advantage, which saves costs, fuel and carbon emissions,” he notes.
Further, Krieg states that the building industry is recovering slowly after building projects came to a halt, following the eco- nomic downturn in 2008/9. The recovery of this industry will impact positively on South Africa’s aluminium industry, as it is a key player in the building sector.
Meanwhile, he notes that administrative costs and stealth taxes for industry will increase, keeping pressure on the remaining manufacturers to be competitive with respect to imports.
“The effect is to turn South Africa from a manufacturing country into a consuming country, as it is already more of a consumer than a manufacturer,” he explains.
Krieg adds that global developments play a significant role in influencing South Africa’s aluminium industry.
“It is not anticipated that Europe will soon emerge from the current economic difficulties it is facing, but there is optimism in the US. The slowdown in China is likely to impact on countries that are reliant on commodity exports; however, as has previously been found, a reduced scrap aluminium price could offer opportunities for local producers to develop and pursue new markets,” he states.
Afsa works with the relevant government departments, such as the Department of Trade and Industry, to keep the interests of aluminium high on the agenda.
“We continue to profile and benchmark Afsa members and bring business opportunities to their attention. We will also pursue the designated product route to secure market opportunity for local suppliers and oppose lobbies that seek a moratorium on local content,” he says.
Krieg says the production of primary aluminium is energy intensive. However, 50% of the total aluminium used in manufacture, on average, is recycled aluminium, which halves the energy used in its production. Remelting secondary aluminium takes 5% of the energy used to produce primary aluminium,” he notes.
He adds that different processes have been developed over the years to combat aluminium’s carbon footprint, such as building new plants that are equipped with new technology to reduce energy use.
“A lot of work has been done by organisations like the International Aluminium Institute, in London, which has put initiatives in place to promote the recycling of everyday aluminium products, such as aluminium cans,” says Krieg.
He states that the recycling of aluminium is one way of reducing the manufacturing process’s impact on the environment.
“Imports are a big challenge facing the industry. The proposed export duty on metal scrap has not been implemented, with various parties having [identified] numerous obstacles and raised concerns,” Krieg points out.
Further research on the scrap-metal value chain and the industries that depend on scrap metal has been proposed.
He adds that aluminium scrap-metal exports to countries such as India and China have increased by 26% to 41 000 t. The consequence of exporting aluminium scrap is that local foundries and smelters are closing down.
Education and Skills
Krieg says a large skills gap is emerging in the industry, as it is in others, as older people are retiring and the knowledge they have is not disseminated widely enough among the next generation of welders, apprentices and artisans.
The sector education and training authorities are doing a lot by developing the necessary curricula and training material through the Quality Council for Trades and Occupations processes, especially with regard to apprentices and tradesmen.
“Welding courses are offered by the Southern African Institute of Welding, which is where we refer welders to learn welding skills pertaining to aluminium and to develop their practical and theoretical skills,” he says.
Krieg says there are many opportunities for the aluminium sector in State-owned Transnet’s and Eskom’s infrastructure development programmes.
“Transnet wants to expand and revitalise its railway system. This is good news for the aluminium industry, as aluminium is a key product in the production of railway rolling stock.
“There is also strong growth in the electricity industry. Eskom plans to build more power stations, including nuclear power stations, and 5 000 km of overhead transmission lines, which can be supplied by the South African aluminium industry,” explains Krieg.
He states that government is developing various large infrastructure projects to create jobs for South African companies.
“My concern is that many of these job opportunities may not be realised and that South Africa will not benefit from these projects. All the products in the aluminium industry can be imported, so if we don’t work together with State-owned companies and business to build and develop skills and capabilities, the industry will not benefit.
“Many of these government infrastructure projects have deadlines regarding their completion. If South African labour and services are not up to the task, State-owned companies will import what they need because there won’t be another option, and I see that as a concern,” Krieg says.
He adds that a major challenge facing role-players in the industry is to stay in business and continue investing.
“We encourage our members to take part in programmes such as the Manufacturers Competitiveness Enhancement Programme, which is a new grant scheme that was put in place by government in July.
“It is focused not only on acquiring new equipment for factories, but also on assisting companies in clean-up initiatives and ways to streamline factories to make them more environment friendly.
“There is a lot of opportunity – industry players have to make use of it,” he concludes.
Edited by: Chanel de Bruyn© Reuse this Comment Guidelines
Other Metals News
Engineering components distributor Bearing Man Group (BMG) has recently completed the installation of a new steel cable carrier system, of undisclosed value, at a straightening mill of one of the largest steel producers in Africa. “This project in Newcastle,...
Recent Research Reports
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
This Week's Magazine
A structured approach, wherein managers personally engage at each level of the project, is necessary to mitigate delays to the workflow on mega construction projects, says State-owned Eskom Kusile power station projects GM Abram Masango. The 4 800 MW Kusile power...
Construction of transmission lines to evacuate power from a regional hydroelectric project in East Africa, which was hanging on the balance following the withdrawal of financing by key partners, is now back on track. After six months of uncertainty, the African...
Three Memorandums of Understanding (MoUs) were signed between South African and Malaysian companies at the Malaysian High Commission in Pretoria on Friday. These MoUs are part of the indirect offsets programme South Africa is providing in return for Malaysia’s...
The South African new vehicle market may well dip to 640 000 units in 2014, says Toyota South Africa Motors (TSAM) sales and marketing senior VP Calvyn Hamman. This is the first prediction that anticipates a drop in the market. To date economists and industry bodies...
Nissan will re-enter the South African minibus taxi industry in March, when the new NV350 Impendulo goes on sale. The 16-seater has been specifically tailored to meet the terms of government’s Taxi Recapitalisation Programme, which aims to replace South Africa’s...