Cape Town - Economic Development Minister Ebrahim Patel on Thursday announced a R1.5 billion steel industry competitiveness fund to be administered by the Industrial Development Corporation (IDC).
Speaking ahead of his budget vote, Patel said over the next three years the IDC would receive grant funding of R95 million from the National Revenue Fund through his department.
"The IDC will leverage the total R95 million allocation over three years, to create a substantial R1.5 billion fund in the form of an interest rate subsidy to normal IDC risk pricing, aimed at improving downstream competitiveness for qualifying firms in the metals and engineering sub-sectors," a note from Patel's department said. Last year AccelorMittal SA, South Africa's largest steel producer, agreed to pay a R1.5 billion fine for its role in cartel behaviour.
Patel said while the competitiveness fund equalled the fine to be paid, the penalty paid made it easier for his department to argue for funds from National Treasury. "The fact that AccelorMittal paid that money in, gave National Treasury a little bit more elbow room to the make the R95 million available over the next three years."
The money would be used to help qualifying firms to, among others, modernise and upgrade machinery and equipment, expand the capacity of existing plants, and develop and test prototypes. According to the department, 25 000 jobs had been lost in the last year after the closure of more than 500 small and medium companies in the downstream steel sector.
The fund would prioritise foundry industries, fabrication sectors, parts and component manufacturers of steel-intensive products, valve and pump manufacturers, and "other steel-intensive businesses". Those who won't be able to benefit from the fund are the larger multi-national original equipment manufacturers and assemblers, integrated steel mills and those qualifying for other incentives.
AFRICAN NEWS AGENCY