Dineo Faku

THE GOVERNMENT had taken a step to rebuild South Africa’s industrial base and would invest in manufacturing over the next five years, Abel Malinga, the divisional executive of mining and manufacturing at the Industrial Development Corporation (IDC), said yesterday.

The government would look at investing in metal fabrication, chemical production, textiles and forestry.

He said: “We are trying to protect the textile industry, which is faced with stiff competition from China. We have also identified the forestry industry, which is concentrated in rural areas. The idea is to create jobs and provide community development in those areas.”

In a move to support metal fabrication, the IDC finalised its R3.4 billion acquisition, on a debt free basis, of a majority stake in Scaw Metals from resources giant Anglo American yesterday.

Empowerment partners in Scaw, namely Izingwe Holdings, Southern Palace and Shanduka Resources, will jointly hold 21 percent in the company and workers will hold the remaining 5 percent.

The acquisition, first announced in April, not only deepens the country’s industrial capacity, but its production of steel products at competitive prices for local consumption and overseas markets.

Malinga said a board would be appointed and it, together with management, would be tasked with establishing a business strategy.

“We need to give the board a brush so as to paint where it wants to go with the company… The balance sheet needs to be restructured, and you need to do that in a manner that will not diminish the value,” Malinga said.

Scaw said its strategy was to invest and expand its exposure to mining consumables, rail, power and construction, and provide a platform for its new owners to play a role in the steel industry.

Even so, the IDC’s acquisition of Anglo’s 74 percent interest in Scaw, a beneficiator of raw materials into high value steel products, underscores Anglo’s strategy to turn its back on non-core assets. Anglo is focusing on the production of iron ore, copper, nickel and platinum.

Christopher Davis, Scaw’s chief executive, said yesterday that the acquisition would boost the steel beneficiator.

He added that the company would expand its divisions.

“The IDC will, through its capital, improve the capacity to meet demand for South African and African rail expansion,” Davis said.

“The acquisition is a way to preserve skills and grow.”

Scaw operates in South Africa, South America and Australia. It has distribution networks in Zimbabwe, Zambia, Namibia and Ghana.

Scaw has four divisions, namely grinding media, rolled products, wire rod products and cast products. The company produces 500 000 tons of long steel a year.

Davis said the introduction of new capital and the lowering of its cost base would make it more competitive. He said a number of parties locally and internationally had expressed interest in the acquisition.

Scaw is part of the multibillion-rand project to improve infrastructure for the Passenger Railway Agency of SA and Transnet. The company does not depend on the cyclical nature of the construction sector.