Transnet and ESKOM Chief Executive Officers Siyabonga Gama and Phakamani Hadebe will discuss administered prices such as logistics costs, electricity prices and port tariffs, which are negatively affecting South Africa’s international competitiveness on the second day of the fourth Southern African Metals and Engineering Indaba taking place this week.
Participating alongside Gama and Hadebe on the plenary session will be PriceWaterhouseCoppers Director Andrew Shaw and Democratic Alliance Member of Parliament and Shadow Minister of Mining James Lorimer.
Speaking ahead of the Indaba, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger said many companies in the primary, secondary and tertiary sectors rely on electricity for their productive processes. She said electricity was also a critical component of the metals and engineering (M&E) sector, and production processes in some of the high energy-intensive sub-components were very much dependent on it.
“Electricity costs represent on average three percent of intermediary inputs for the entire M&E sector and for some basic metals companies such as smelters and foundries, this can be a significant portion of their input costs, thereby restricting future production capacity,” Ms Kruger said.
Furthermore, for some large companies in the steel industry, coal and energy costs represent up to 42 percent of the production costs. According to Ms Kruger, the contributory impact of high electricity cost on the sector includes a slowdown in production and growth, an increase in product prices and a decline in exports and export competitiveness.
Commenting on logistics costs, also an important cost component of the M&E sector, SEIFSA CEO Kaizer Nyatsumba said the use of third-party logistics to assist in the handling of a product adds to logistics costs. Thus, he said, there was a need to improve on logistics efficiencies to improve on productivity and competitiveness.
“There is also a need to consider re-instating rail subsidies for containers destined for export as well as improving efficiencies relating to on-time delivery and turnaround time. This is the reason we decided to have a session specifically dedicated to addressing the challenges that hinder our sector from being internationally competitive,” said Mr Nyatsumba.
He said that other topics that will feature prominently during the 2018 Indaba include:
- The Continental Free Trade Area: How Much Progress Has Been Made to Date?
- How much of the National Development Plan has been implemented – and is it still relevant?
- Exploring and Leveraging the Link Between the Metals and Engineering Sector and the Mining, Construction and Auto Manufacturing Industries
- Constraints to investing in the Metals and Engineering Sector and improving trade on the African continent
- Innovation and Excellence as Strategic Levers for Global Competitiveness
Among the high-profile speakers expected to address the conference are:
- Cabinet Ministers Dr Nkosazana Dlamini-Zuma, Dr Zweli Mkhize and Pravin Gordhan;
- Business leaders like Black Business Council CEO Kganki Matabane, ArcelorMittal General Manager: Africa Overland Alph Ngapo, Hazleton Pump International Managing Director Mathys Wehmer, Atlantis Foundries CEO Mervyn Moodley, Eskom CEO
- Phakamani Hadebe, Transnet CEO Siyabonga Gama, PWC Africa Director Andrew Shaw, National Association of Automobile Manufacturers of SA Director Nico Vermeulen and Master Builders Executive Director Roy Mnisi
- Policy makers and civil service representatives like Department of Trade and Industry (Dti) Director-General Lionel October, and Dti Chief Director for Africa Multilateral Economic Relations Wamkele Mene;
- Representatives of global organisations like World Bank Group Lead Economist John Gabriel and International Finance Corporation Senior Investment Officer Paul Mukasa;
- Civil society leaders like Council for Scientific and Industrial Research CEO Dr Thulani Dlamini; Organisation Undoing Tax Abuse Executive Director Wayne Duvenage and Council for the Advancement of the South African Constitution Executive Secretary Lawson Naidoo; and
- Politicians like ANC Economic Transformation Head Enoch Godongwana, Democratic Alliance Shadow Minister for Trade and Industry Geordin Hill-Lewis and DA Shadow Minister for Public Enterprises Natasha Mazzone.
The Indaba will take place on 20-21 September at the IDC Conference Centre, in Sandton.