LionSteel puts the roar back into Capital Star Steel

28th June 2016

  

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Despite its war-torn past, Mozambique has long been viewed as a country that offers great commercial potential to companies which are prepared to invest and commit to its economic and social growth.

LionSteelís recent acquisition of Capital Star Steelís (CSS) steel pipe mill in Matola, Maputo, not only offers the company a multitude of local and international opportunities, but ensures the continuation of its Mozambique skills upliftment programmes coupled with meeting governmentís local content requirements for public infrastructure  and  forthcomming escalation in natural gas projects.

'We were pleased to have acquired the CSS steel pipe mill in Mozambique; it is a unique facility comprising two inline coating facilities in the production cycle, making it the only one of its kind in Africa. Although negotiations started in 2015, the financial acquisition package, in excess of R500-million, required strict financial, legal and governmental registration processes to be adhered to, which we completed on April 22, with the full support of the Mozambique government,' says LionSteel CFO Pierre Willemse.

'The mill is the largest [electrical resistance welded] ERW [high frequency induction] HFI welded steel pipe mill in Africa. There are huge opportunities in Mozambique within the infrastructure, water and oil and gas sectors that make CSS a natural strategic partner.

Currently, there are planned pipeline projects for gas infrastructure development in the area exceeding 3 500 km. Our mill is the second-biggest industrial plant in the country offering 4 MW of stable power and it is the only plant in Africa that has an inline slitting line and accumulator enabling the plant to competitively produce long runs of pipe. We manufacture 8-inch- to 24-inch-diameter steel ERW HFI welded pipes.' notes LionSteel CEO David Scheepers.

CSS aims to provide more than just pipe manufacturing capability. The companyís added value exists in the supply of coatings and linings, as well as supplying complimentary products and services which make it a key player in the Mozambique market. All multinational oil companies have embraced the Mozambique governmentís initiative for increased local content and, where possible, buy, manufacture and source from companies that can meet the content criteria. CSS being Mozambique registered is proud of its 100% local content compliance.

Investing in Mozambique
The necessary maintenance of plant equipment was conducted in a responsible manner during the CSS steel pipe millís period of nonproduction to ensure that upon reinstatement it was in pristine condition to resume production.

'We are currently testing all the equipment and machinery to be completely operational by the end of 2016,' comments Scheepers.
CSS recognises the considerable skills base that is available locally and has used this source as a matter of priority. 'We recognise that we are a significant employer of local labour. Where we need to implement skills development programmes, we will do so. Our employees share our hard work and professionalism ethic,' adds Willemse.

International Partner Sought
Scheepers points out that LionSteel is  looking to establish a high- quality international partnership where ethics, vision and commitment are aligned. 'We believe that various trade agreements, such as the African Growth and Opportunity Act Treaty, will open up the US and other international and African markets to CSS. The numerous regional projects planned, in addition to major Mozambiquan expansion plans, by players in industries, such as chemicals, synthetic fuels, oil and gas and feedstock production, is a clear indication to CSS, that the demand for our solutions and products will substantially increase our market share and international footprint'.

LionSteel is currently in talks with high-profile international players that are keen to participate in Mozambique ñ a critical component of our future partnership will be in accessing price levels of our base steel requirements at globally competitive levels.
'The global player that we are seeking should be able to contribute technical expertise as well as buying power for steel coil. The demand for steel pipe is high. It would make strategic sense to partner with CSS to reap the benefits that come with local manufacture (where we have a capacity of 200 000 t/y), content and pricing advantages,' says Willemse.

The Future
'We are not here to reinvent the wheel. CSS has a good reputation of producing high-quality pipes at competitive levels ñ it is well established in the industry with a solid history.  We will look to increase CSSís value proposition by offering a complete range of pipeline components, such as fittings, flanges and valves, to complete our product offering.

'Mozambique offers a great future to investors. We are innovative, solid and expect to see growth. Being based in Mozambique, we believe we offer a better service, solution and product supported by a team of innovative professionals that you will wish to partner with,' concludes Willemse.

Edited by Creamer Media Reporter

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