Owing to the global economic downturn, and tough and volatile trading conditions, steel distributor Building System Integration (BSi) Steel has continually adapted and modified its handling of the supply of steel products, to meet the demand in the sub-Saharan African markets.
“As steel distributors and merchants, BSi Steel, cannot control the price of steel. This is why we had to look at the fluctuating steel markets and adapt . . . accordingly,” says BSi Steel chief executive Paul Arnott.
The closure in February of steel producer Evraz Highveld Steel and Vanadium (Evraz Highveld) in Elandsfontein, in Gauteng, has forced BSi Steel to import the structural steel range, including beams which are required to build multistorey buildings, from international sources. The company then exports them to African countries. Arnott says Evraz Highveld was the only manufacturer of this range in Africa.
Evraz Highveld was forced to close its doors because of the flood of steel from international suppliers that has entered the South African market. The National Union of Mineworkers states that, as a result, 1 800 Evraz Highveld employees have lost their jobs.
The closure has created a shortage of this high-quality steel range in the African and South African markets. It has also resulted in the Evraz Highveld share price dropping from R93 per share in 2008 to 165c per share in early 2015. Evraz Highveld was the only steel producer that the Evraz group had in South Africa.
African Expansion
BSi Steel operates in all the Southern African markets, including Namibia, Botswana, Zimbabwe, Zambia, Malawi, Mozambique, the Democratic Republic of Congo (DRC) and Tanzania, and has plans to expand into other African markets.
The company has a dual export strategy which allows for selling steel directly to customers or using its branch operations in Zimbabwe, Zambia and the DRC to service the local and neighbouring African countries. The target market sectors include mines, manufacturers, fabricators, agriculture projects and merchants.
Arnott notes that clients benefit from improved turnaround times where BSi branches are located. Bulk orders are sent from the distribution centre based in Gauteng, South Africa to the export markets throughout sub-Saharan Africa.
He adds that bulk orders supplied direct from South Africa can be cost effective, as a few BSi customers working on projects in Africa have been granted import duty exemption for materials such as steel and other building materials. This service is further enhanced where BSi has branches where customers can get quick access to the full range of steel products. The BSi branch network includes Harare, Lusaka, Kitwe, Lubumbashi and Kolwezi.