Scaw Metals June 2014 Coverage Report Documents/Releases/2014/Coverage Report 2014...Scaw Metals June 2014 Coverage Report Sunday Times 01 June ... South Africa produces about 3-million

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Scaw Metals June 2014 Coverage Report

Sunday Times

01 June 2014, p.5

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Business Day

02 June 2014, p.10

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Business Day

23 June 2014

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Online

Bdlive.co.za

Nothing’s leaner than a junkyard, where rusted scrap is gold

http://www.bdlive.co.za/business/industrials/2014/06/23/nothings-leaner-than-a-junkyard-where-

rusted-scrap-is-gold

SOUTH African steel and steel products manufacturer, Scaw Metals Group, will be taking part in wire

2014 in Düsseldorf, Germany from 7 to 11 April 2014.

THE army of people sifting through rubbish bins, scouring garbage tips and going door to door in the

hunt for scrap metal has created an efficient market for the feedstock of steel makers domestically

and abroad, while creating a critical source of money for those on the fringes of society.

Scaw Metals, which is 74% owned by the Industrial Development Corporation, is one of the main

beneficiaries of this constant stream of scrap steel to make a variety of products at its vast

production facilities to the southeast of Johannesburg.

Scaw produces at least 500,000 tonnes a year of liquid steel, using scrapped metal for about 80% of

its feedstock. South Africa produces about 3-million tonnes of ferrous scrap a year, with roughly half

of that exported. Of the remaining 1.5-million tonnes, Scaw needs about a third.

It owns two businesses that secure 250,000 tonnes for its plants a year and it buys the rest from

other scrap companies.

The scrap metal sector is an almost invisible economy to the bulk of South Africans, but to those

involved it is an intensely competitive, efficient and important business, benefiting those right at the

bottom, hauling their trolleys through the streets to the big steel makers that use this metal in their

furnaces.

It is a business that puts food on the table. "It’s street gold. Scrap metal is gold on the streets and

informal settlements, and an important part of people’s lives. Without it you would see much more

poverty in the areas people live in," says Jack Janse van Rensburg, the risk and commercial manager

of Scaw’s scrap-processing division.

Scrap collectors with bakkies can earn R2,000 a day while those with trolleys can earn up to R500 a

day, bringing in between 50kg and 200kg a visit, he says, adding that it is very difficult to trace illegal

ferrous scrap compared with nonferrous scrap like copper, which has stricter legal procedures

governing it.

"Any copper coming in without documents saying where it comes from is classified as illegal and we

would not buy it. We would have to report it to various agencies," he says.

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The dealership would not buy any identifiable municipal property. "Seeing illegal scrap is a rarity

because we’re a very well-known scrap buyer and dealer, and we have several processes in place to

prevent these kinds of dealings," he says.

One man, a regular client, collects enough cans in a week to raise the cash to feed his large family,

and he’s a regular client at Inyoni Metal in Vosloorus, says director and head of business Khensane

Mabange, himself a start-up entrepreneur in the scrap business.

Others use bakkies or small lorries to haul scrap to Inyoni’s dusty yard, where to the inexperienced

eye scrap metal is scattered in meaningless piles. To the trained eye, however, it has been carefully

sorted into different qualities of ferrous or iron-bearing scrap, fetching different prices in a volatile

market.

Inyoni is extremely strict about the metal coming through its gates and does not take any risks on

metal stolen from the state or the local community, he says. "I can’t risk paying R50 for a bit of metal

that will end in our business being closed down.

"We don’t buy any stolen scrap. If guys bring it to us we bar them. It’s just not allowed," Mr

Mabange says, adding that Inyoni, a registered scrap merchant, collects copies of identity

documents and cellphone numbers of sellers to closely monitor and track scrap deliveries.

The police regularly visit the yard, underpinning the need for integrity, he says, as three men arrive

separately, one with an old oil heater, another with a washing machine balanced precariously on a

wheelbarrow, and the third with a shopping trolley piled high with metal glinting in the highveld

winter sun.

Mr Mabange’s father, who worked in human resources at Scaw, made the introduction for Khensane

that led to him leaving his job as a sound engineer to start a scrap merchant business with just

R5,000 in 2004. Scaw has donated a couple of computer-linked weigh bridges to quickly process

scrap, and Inyoni is using its relationship with the steel maker to forge a collection business with

engineering companies around Johannesburg, Mr Mabange says.

"There’s an amazing amount of scrap that comes out of the townships. People are selling all kinds of

things, particularly at the end of the month to make money for rent and things," says Makhosini

Hlatshwayo, Inyoni’s financial director. "But you must know, if you can’t pay them immediately they

won’t come back. The want cash in hand and if you can’t give it to them they’ll go to the next guy

who can."

At Rand Scrap Iron, owned by Scaw, bakkies and lorries piled high with scrap from as far afield as

Bloemfontein and Limpopo queue at the gate, waiting to drive onto the weighbridge, dump their

metal, drive over a second weigh bridge and then queue again for payment. Phillip Khoza says he can

realise a profit of R1,000 a week for two loads. It means he can provide for his wife, child and

extended family.

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He rents a bakkie for R500 a load, which he and a friend collect from townships around

Johannesburg, buying old fridges, washing machines and corrugated iron. "It’s very competitive.

Scrap is becoming scarce. People are starting to demand a lot of money," he says. "There is some

fighting for scrap. People set their dogs on us, saying we are stealing scrap. That’s not true. We buy

it."

Quobekiye Sithole says he sometimes drives through the night after collecting scrap in the Free

State, Mpumalanga or Limpopo, with the need for a rapid turnaround between collecting and

securing payment a key aspect of his approach.

One observer says the reason many scrap collectors drive through the night is to avoid attention

from the police as their vehicles are dangerously overloaded and barely roadworthy.

The scrap is delivered to Scaw’s yards at Union Junction, a sprawling site where the metal is melted

and turned into a variety of products for the mining and construction sectors.

Piles of scrap are fed into an enormous shredder, the only one in South Africa, where 16 giant,

hardened-steel hammers pulverise the scrap, which is then magnetically sorted into ferrous and

nonferrous scrap. The end product is flakes of metals that are delivered to the furnaces. The

shredder is so powerful that it can shred within 10 seconds a minibus taxi that has been squashed

into a small block of metal. It processes up to 1,500 tonnes of scrap in an eight-hour day, with taxi

scrap making up about 300 tonnes a month, says Mr Janse van Rensburg.

The cost of scrap now is about R3,000 a tonne, roughly R300 a tonne more than the price for most of

last year and R1,000 more than five years ago, he says, adding that there is fierce competition for

scrap, with a tenfold increase in dealers in the past three years, high international prices and strong

outflows from South Africa. The informal sector contributes about 4,000 tonnes of the 40,000

tonnes a month of scrap that Scaw buys, he says. "The informal guys take out all the nonferrous

metals and plastics. The informal sector is a very efficient system."

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Online

Media Club South Africa

South Africa's economy: key sectors

http://www.mediaclubsouthafrica.com/economy/37-tmp/economy_bg/111-sa-economy-key-

sectors

South Africa's economy was traditionally rooted in the primary sectors - the result of a wealth of

mineral resources and favourable agricultural conditions. But recent decades have seen a structural

shift in output.

Since the early 1990s, economic growth has been driven mainly by the tertiary sector - which

includes wholesale and retail trade, tourism and communications. Now South Africa is moving

towards becoming a knowledge-based economy, with a greater focus on technology, e-commerce

and financial and other services.

Among the key sectors that contribute to the gross domestic product and keep the economic engine

running are manufacturing, retail, financial services, communications, mining, agriculture and

tourism.

Manufacturing

South Africa has developed an established, diversified manufacturing base that has shown its

resilience and potential to compete in the global economy.

The manufacturing sector provides a locus for stimulating the growth of other activities, such as

services, and achieving specific outcomes, such as employment creation and economic

empowerment. The sector contributed 15.2% to South Africa's GDP in 2013, making it the third-

largest contributor to the nation's economy.

Manufacturing is dominated by industries such as agro-processing, automotive, chemicals,

information and communication technology, electronics, metals, textiles, clothing and footwear.

Underpinning this sector is the Department of Trade and Industry’s (DTI) Industrial Policy Action Plan

(Ipap), which aims to achieve structural development and to increase competitiveness of South

African manufacturing.

Agro-processing

South Africa exhibits a wide range of climates - from semi-arid and dry, to sub-tropical. As a result, a

variety of crops, livestock and fish are to be found.

This industry spans the processing of freshwater aquaculture and mariculture, exotic and indigenous

meats, nuts, herbs and fruit. It also involves the production and export of deciduous fruit;

production of wines for the local and export market; confectionary manufacturing and export; and

the processing of natural fibres from cotton, hemp, sisal, kenaf and pineapple.

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World-class infrastructure, counter-seasonality to Europe, vast biodiversity and marine resources,

and competitive input costs make the country a major player on the world's markets.

In 2013, Trade and Industry minister Rob Davies said the agro-processing sector is worth R49-billion

and has created as many as 207 893 jobs in the third quarter of that year. It is also significant in

sustaining the environment and growing the economy. He added that since 2008, food processing

grew by over 2% more than the manufacturing sector as a whole.

The government's New Growth Path (NGP) and National Development Plan (NDP) had both

identified agro-processing as a sector with high growth potential, despite the challenges of imports

competition, loss of market and the unstable currency and exchange rate.

Automotive

The automotive industry is one of South Africa's most important sectors, with many of the major

multinationals using South Africa to source components and assemble vehicles for both the local and

international markets.

South Africa's automotive industry is a global, turbo-charged engine for the manufacture and export

of vehicles and components. The sector accounts for about 12% of South Africa's manufacturing

exports, making it a crucial cog in the economy.

The automotive and components industry is perfectly placed for investment opportunities. Vehicle

manufacturers such as BMW, Ford, Volkswagen, Daimler-Chrysler and Toyota have production

plants in the country, while component manufacturers (Arvin Exhaust, Bloxwitch, Corning, Senior

Flexonics) have established production bases here.

The industry is largely located in two provinces, the Eastern Cape (coastal) and Gauteng (inland).

Companies with production plants in South Africa are placed to take advantage of the low

production costs, coupled with access to new markets as a result of trade agreements with the

European Union and the Southern African Development Community free trade area. Opportunities

also lie in the production of materials (automotive steel and components).

In 2013, the DTI introduced the Automotive Production Development Programme (APDP) with the

intention of increasing the volume of cars manufactured in South Africa to 1.2-million annually by

2020 as well as to diversify the automotive components chain. The APDP is a migration from the

Motor Industry Development Programme, which has affected second and third tier suppliers, and

original equipment manufacturers.

The National Association of Automobile Manufacturers (NAAM) said production, particularly those

of light motor vehicles, will rise from 2014 onward because of the APDP.

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According to NAAM, average industry employment figures rose by 441 jobs in the third quarter of

2013, therefore bringing the total to 30 344 positions within the industry. New car sales also rose to

125 189 units, more than 6.4% more than in the corresponding quarter in 2012.

The local industry’s largest export market remains Europe, despite the effects the recession is having

on the Euro zone. In 2012, 66 929 vehicles were sold to Europe, 6 000 more than is sold in Africa.

However, the recession resulted in a 12.7% drop to 58 403 vehicles.

Chemicals

The chemicals industry has been shaped by the political and regulatory environment that created a

philosophy of isolationism and protectionism during the apartheid years. This tended to foster an

inward approach and a focus on import replacement in the local market. It also encouraged the

building of small-scale plants with capacities geared to local demand, which tended to be

uneconomic.

Through isolation of the industry from international competition and high raw material prices as a

result of import tariffs, locally processed goods have generally been less than competitive in export

markets. Now that South Africa is once more fully part of the global community, South African

chemical companies are focusing on the need to be internationally competitive and the industry is

reshaping itself accordingly.

The South African chemicals sector has two noticeable characteristics. Firstly, while its upstream

sector is concentrated and well developed, the downstream sector - although diverse - remains

underdeveloped. Secondly, the synthetic coal and natural gas-based liquid fuels and petrochemicals

industry is prominent, with South Africa being the world leader in coal-based synthesis and gas-to-

liquids technologies.

The industry is the largest of its kind in Africa. It is highly complex and widely diversified, with end

products often being composed of a number of chemicals that have been combined in some way.

The primary and secondary sectors are dominated by Sasol (through Sasol Chemical Industries and

Sasol Polymers), AECI and Dow Sentrachem. These companies have recently diversified and

expanded their interests in tertiary products, especially those with export potential.

In 2013, the sector was South Africa’s fourth-largest employer with 200 000 jobs and contributed

about 5% to the country’s GDP.

The Global Business Report says Africa is quickly becoming a significant chemical consumer and that

if South Africa increases trade with its neighbours, the industry could be ignited.

Information and communications technology

The South African information and communication technologies (ICT) sector is the largest and most

advanced in Africa, and is characterised by technology leadership, particularly in the field of mobile

software and electronic banking services.

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With a network that is 99.9% digital and includes the latest in wireless and satellite communication,

the country has the most developed telecoms network in Africa.

South African companies are global leaders in pre-payment, revenue management and fraud

prevention systems, and in the manufacture of set-top boxes, all of which are exported successfully

to the rest of the world.

Export growth and internationalisation of South African companies is supported by the Department

of Trade and Industry via the South African Electrotechnical Export Council (SAEEC).

According to the SAECC, the South African ICT market is estimated at US$ 42.6-billion (R468.4-billion)

in 2013 with IT accounting for US$ 15.08-billion (R164-billion) and communications US$ 27.18-billion

(R297.4-billion). The sector contributes approximately 8.2% to South Africa’s GDP.

Several international corporates, recognised as leaders in the IT sector, operate subsidiaries from

South Africa, including IBM, Unisys, Microsoft, Intel, Systems Application Protocol (SAP), Dell, Novell

and Compaq.

Testing and piloting systems and applications are growing businesses in South Africa, with the

diversity of the local market, first world know-how in business and a developing country

environment making it an ideal test lab for new innovations.

Export growth and internationalisation of South African companies is supported by the Department

of Trade and Industry via the Electrotechnical Export Council (SAEEC).

The electronics industry has repeatedly demonstrated world-class innovation and production. The

industry is characterised by a handful of generalist companies with strong capabilities in professional

electronics, while small to medium companies specialise in security systems and electricity pre-

payment meters.

Investment opportunities lie in the development of access control systems and security equipment,

automotive electronic subsystems, systems and software development in the banking and financial

services sector, silicon processing for fibre optics, integrated circuits and solar cells. There are also

significant opportunities for the export of hardware and associated services, as well as software and

peripherals.

Metals

South Africa's large, well-developed metals industry, with vast natural resources and a supportive

infrastructure, represents roughly a third of all South Africa's manufacturing.

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It comprises basic iron ore and steel, basic non-ferrous metals and metal products. The basic

industries involve the manufacture of primary iron and steel products from smelting to semi-finished

stages.

Primary steel products and semi-finished products include billets, blooms, slabs, forgings, reinforcing

bars, railway track material, wire rod, seamless tubes and plates.

The primary steel industry is a significant contributor to the economy and earns considerable

amounts of valuable foreign exchange.

ArcelorMittal SA, formerly Iscor and now part of global steel company ArcelorMittal, is South Africa's

largest steel producer. Other industry players are Scaw Metals, Cape Gate, Columbus Stainless Steel,

Highveld Steel and Vanadium and Cisco.

South Africa ranks 21st among the crude-steel producing countries in the world - producing in the

region of 1% of the world's crude steel. South Africa is also the largest steel producer in Africa: it is

responsible for more than half of the total crude steel production of the continent. South Africa’s

steel production bucked the global trend in 2013, increasing by 4.1%, from 6.9-millioon tonnes a

year to 7.2-million tonnes. Of that amount, the South African Iron and Steel Institute stated that

1.74-million tonnes of primary steel products were exported.

The international and local steel industry has changed dramatically over the past two years. Several

steel companies have fallen away and protectionism has increased.

To survive in these harsh conditions, the South African primary steel industry has taken major steps

to become more efficient and competitive. Many local steelworks have engaged in restructuring and

productivity improvements.

South Africa's non-ferrous metal industries comprise aluminium and other metals (including copper,

brass, lead, zinc and tin). Aluminium is the largest sector but, as South Africa has no commercially

exploitable deposits, feedstock is imported. South Africa is ranked eighth in world production of

aluminium. Key players include Billiton (with smelters in Richards Bay) and Hulett Aluminium.

Other non-ferrous metals have a lesser role, but are still important for exports and foreign exchange

earnings. Although the country's copper, brass and bronze industries have declined, it is hoped that

new mining and reclamation technologies will allow the exploitation of previously unviable deposits.

Textiles, clothing and footwear

The South African textile and clothing industry aims to use all the natural, human and technological

resources at its disposal to make it the preferred international supplier. Though the textile and

apparel industry is small, it is well placed to make this vision a reality.

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In 2013, textiles and clothing accounted for about 14% of manufacturing employment and

represented South Africa's second largest source of tax revenue. The textile industry is the most

cost-effective way of creating jobs.

Owing to technological developments, local textile production has evolved into a capital-intensive

industry, producing synthetic fibres in ever-increasing proportions. The apparel industry has also

undergone significant technological change and has benefited from the country's sophisticated

transport and communications infrastructure.

The South African market demand increasingly reflects the sophistication of First World markets and

the local clothing and textile industry has grown accordingly to offer the full range of services - from

natural and synthetic fibre production to non-wovens, spinning, weaving, tufting, knitting, dyeing

and finishing.

With the US’ African Growth and Opportunity Act (Agoa) set to be renewed in 2015, the textile

industry is set to benefit even more than before. When US Congress first approved Agoa in 2000,

textile manufacturers were expected to benefit the most. Though it is not the case 14 years on – the

motor industry is the greatest beneficiary – textile exports to the US increased by 62%.

In spite of this, the industry remains vulnerable to cheap imports. China’s inclusion in the World

Trade Organisation in 2001 rocked local manufacturers as South African businesses began importing

cheaper textiles and clothing from the Asian country. Additionally, a relatively strong rand from 2003

onwards led to the industry’s decline.

As a result, the number of jobs decreased. According to Enrique Crouse, chief executive of Prilla

2000, a textile mill in Pietermaritzburg, 181 000 people were employed in the local textile industry in

2002. In 2013 there were only 80 000. However, he said the government’s rescue plan for the textile

and clothing industry, which was outlined in 2009, has done exceptionally well to recover the

industry in recent years and is in the best position it has been in a last decade.

Despite this setback, Paul Geldenhuys, general manager of Mozimax, a textile company in Tongaat,

is certain the local industry is on the mend. He said that though many economists say the weaker

rand negatively affects the economy, it can also make imports more expensive, which would

inevitably force suppliers to buy from local manufacturers.

Mining

The country is renowned for an abundance of mineral resources, accounting for a significant

proportion of both world production and reserves, and South African mining companies dominate

many sectors in the global industry. Mining and quarrying contributed 4.9% to GDP in 2013.

South Africa is the world's biggest producer of gold and platinum and one of the leading producers

of base metals and coal.

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The country's diamond industry is the fourth-largest in the world, with only Botswana, Canada and

Russia producing more diamonds each year.

Although well over a century old, South Africa's mining industry is far from fully tapped. The country

is a treasure trove, with mineral deposits only matched by some countries of the former Soviet

Union.

South Africa - while holding the world's largest reserves of gold, platinum-group metals and

manganese ore - has considerable potential for the discovery of other world-class deposits in areas

yet to be exhaustively explored.

The country produces 10% of the world's gold, and has 40% of the world's known resources. It is

estimated that 36 000 tons of undeveloped resources – about one third of the world's unmined gold

– still remains.

The sector spans the full spectrum of the five major mineral categories - namely precious metals and

minerals, energy minerals, non-ferrous metals and minerals, ferrous minerals and industrial

minerals.

Apart from its prolific mineral reserves, South Africa's strengths include a high level of technical and

production expertise, and comprehensive research and development activities.

The country has world-scale primary processing facilities covering carbon steel, stainless steel and

aluminium - in addition to gold and platinum.

With the growth of South Africa's secondary and tertiary industries, as well as a decline in gold

production, mining's contribution to South Africa's gross domestic product (GDP) has declined over

the past few decades. However, this may be offset by an increase in the downstream or beneficiated

minerals industry, which the government has targeted as a growth sector.

Lucrative opportunities exist for downstream processing and adding value locally to iron, carbon

steel, stainless steel, aluminium, platinum group metals and gold.

A wide range of materials is available for jewellery - including gold, platinum, diamonds, tiger's eye

and a variety of other semi-precious stones.

The Mineral and Petroleum Resources Development Act of 2002 has opened the doors to

meaningful participation of black people in the exploration and exploitation of mineral resources.

The Act enshrines equal access to mineral resources, irrespective of race, gender or creed. When the

Act was passed, there was only one junior mining company. By mid-2008, there were 21.

South Africa's mining industry is continually expanding and adapting to changing local and

international world conditions, and remains a cornerstone of the economy, making a significant

contribution to economic activity, job creation and foreign exchange earnings.

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Agriculture

Agriculture as a percentage of GDP has decreased over past four decades. This implies that the

economy has gradually become more advanced. In 1960, agriculture constituted 9,1% of the total

economy; this has decreased to only 2,2% in 2013. Though this decrease would seem to be a

negative trend from a farmer's perspective, it signals that the South African economy is reaching

maturity as the secondary and tertiary sectors become more important.

Maize is most widely grown - followed by wheat, oats, sugar cane and sunflowers. The government

has been developing programmes to promote small-scale farming and to boost job creation. Citrus

and deciduous fruits are exported, as are locally produced wines and flowers.

South Africa has both well-developed commercial farming and more subsistence-based production

in the deep rural areas.

Covering 1.2-million square kilometres of land, South Africa is one-eighth the size of the United

States and has seven climatic regions, from Mediterranean to subtropical to semi-desert.

This biodiversity, together with a coastline 3 000 kilometres long and served by seven commercial

ports, favours the cultivation of a wide range of marine and agricultural products - from deciduous,

citrus and subtropical fruit, to grain, wool, cut flowers, livestock and game.

Agricultural activities range from intensive crop production and mixed farming in winter rainfall and

high summer rainfall areas, to cattle ranching in the bushveld and sheep farming in the arid regions.

While 13% of South Africa's land can be used for crop production, only 22% of this is high-potential

arable land. The greatest limitation is the availability of water. Rainfall is distributed unevenly across

the country, with some areas prone to drought. Almost 50% of water is used for agriculture, with

about 1.3-million hectares under irrigation.

South Africa is not only self-sufficient in virtually all major agricultural products, but is also a net food

exporter. Farming remains vitally important to the economy and the development of the southern

African region.

Communications

The communications sector - which, together with transport and storage, accounted for almost 10%

of GDP in 2006 - has been one of the fastest growing of the South African economy, reflecting the

rapid expansion of mobile telephony across the country.

Fixed line penetration is estimated at 10%, while mobile penetration is significantly higher at around

93%, according to figures from the Department of Trade and Industry.

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The estimated revenue generated in the telecommunications sector during 2007 was R126-billion,

and telecommunications (hardware and software) contributed an estimated additional R27-billion.

Telkom, a listed company in which the government is the biggest shareholder, was until recently the

only licensed provider of public fixed-line telecommunications services. Telkom is also a key player in

an optical fibre undersea cable project that will cater for Africa's growing telecommunications needs

for the next 25 years.

In late 2006, the government awarded Neotel a licence to become the second fixed-line operator.

The new company, which is expected to challenge Telkom with competitive prices, has been

gradually rolling out its services during 2007.

A court ruling in 2009 had added impetus, allowing value added network service providers - of which

there are about 300 in South Africa - to build their own networks. A second transatlantic cable,

Seacom, is expected to land in mid-2009.

South Africa's cellular phone market has grown phenomenally since its inception in 1994. It is also

the fourth fastest growing Groupe Speciale Mobile (GSM) market in the world.

Cellular services are provided by three licensed operators: Vodacom, MTN and Cell C. In June 2006 a

virtual cellular service provider, Virgin Mobile, was brought to life in partnership with Cell C.

The country has more than 33 million mobile phones. The introduction of number portability in

November 2006 has increased the flexibility of the mobile service industry and is expected to bolster

competition between various providers.

South Africa is also the largest Internet market in South Africa, with an estimated 4.6- to 5.4-million

users. There are still around 700 000 dial-up users, while there were 1.35-million broadband

connections at the end of 2008. Research firm World Wide Worx predicts that South Africa will show

steady Internet user growth over the next few years, reaching 8.5-million Internet users in 2013 and

9-million users in 2014.

According to the Economist Intelligence Unit's Information Industry Competitiveness Index 2008,

South Africa ranks 37th out of 66 countries reviewed, owing to well-established business and legal

sectors.

Tourism

Tourism is regarded as a modern-day engine of growth and is one of the largest industries globally.

One of the advantages of tourism as an export earner is that it is less volatile than the commodity

sector.

Tourism has been earmarked as a growth industry in South Africa, as the industry is ideally suited to

adding value to the country's many natural, cultural and other resources.

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According to the World Travel and Tourism Council, tourism directly and indirectly constitutes

approximately 7% of GDP and employment in South Africa.

Some 74% of all visitors in 2006 were from mainland Africa and about 26% from overseas. About 7.9

million of the 8.5 million foreign travellers (92%) visited the country for a holiday and approximately

196 951 (2.3%) for business in 2006.

According to the World Tourism Organisation, sub-Saharan Africa attracted 2.9% of the world's

tourists in 2005. Of this percentage, South Africa has about 20.5% of market share. South Africa's

international tourism receipts amounted to $7.3-billion in 2005. Its share of total African tourist

arrivals and tourism receipts was over 34% in 2005.

The outlook for the future of the industry is positive, especially considering the 2010 Fifa World Cup.

The build-up to the event, as well as the exposure that South Africa will receive before and after the

event, will no doubt result in aggressive growth in foreign tourism. This has been a proven fact in

every country where the event has been held.

It is projected that in 2010 the South African tourism industry will employ more than 1.2 million

people either directly or indirectly.

Wholesale and retail trade

Statistics SA produces a monthly survey of the retail trade industry, covering various retail trade

enterprises.

The survey generally covers retailers in specialised food, beverages, tobacco, pharmaceutical and

medical goods, cosmetics and toiletries, general dealers, textiles, clothing, footwear, leather goods,

household furniture, appliances and equipment, hardware, paint and glass, as well as various other

dealers in miscellaneous goods.

Retail trade sales at constant (2000) prices, for the year 2006, showed an increase of 9.7% from

2005. According to Statistics SA, this is the largest increase, together with the 2004 increase, which

was also 9.7%, for any year since 2000.

According to the survey, general dealers, other retailers and retailers in textiles, clothing, footwear

and leather goods were the major contributors to the increase in retail trade sales.

Real retail sales' growth decreased in the fourth quarter from the third quarter of 2006 from 10.7%

to 9.1% year-on-year. The deceleration follows from the 200 basis point hike in interest rates during

the second part of 2006, making overall economic conditions somewhat tougher.

Among the major retailing groups are Edcon, Massmart, Pick 'n Pay, Shoprite Checkers, Mr Price

Group, Foschini Group, JD Group and Ellerines Holdings.

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Finance and business services

South Africa, despite its "emerging market" status, has a sophisticated financial sector. With the

country's re-integration into the global sphere in 1994, corporate governance rules, disclosure,

transparency and accountability have become an integral part of doing business in South Africa.

Consequently, regulations governing the financial sector, and particularly risk management, have

undergone considerable refinement to align them to internationally recognised standards and best

practice.

The financial, real estate and business service sector accounted for 22% of the country's real value

added (value of total production) in 2006 and, together with other services sectors, has proved to be

a pillar of the country's economic growth over the years.

The sector boasts dozens of domestic and foreign institutions providing a full range of services -

commercial, retail and merchant banking, mortgage lending, insurance and investment.

South Africa's banking sector compares favourably with those of industrialised countries. Foreign

banks are well represented and electronic banking facilities are extensive, with a nationwide

network of automatic teller machines (ATMs). Internet banking is also available.

The Financial Services Board oversees the regulation of financial markets and institutions - including

insurers, fund managers and broking operations, but excluding banks, which fall under the South

African Reserve Bank.

The South African banking system is well developed and effectively regulated, comprising a central

bank, a few large, financially strong banks and investment institutions, and a number of smaller

banks.

Many foreign banks and investment institutions have set up operations in South Africa over the past

decade. The Banks Act is based on similar legislation in the United Kingdom, Australia and Canada.

Although no formal agreements have established a consistent international position in the area of

banking regulation, there have been amendments to exchange controls as well as financial market

legislation, making South Africa an attractive investment prospect.

The National Payment System Act of 1998 was introduced to bring the South African financial

settlement system in line with international practice. The Act confers greater powers and duties on

the SA Reserve Bank in respect of providing clearing and settlement facilities.

The Payment Association of South Africa, under the supervision of the Reserve Bank, has facilitated

the introduction of payment clearing house agreements. It has also introduced agreements

pertaining to settlement, clearing and netting agreements, and rules to create certainty and reduce

27 | P a g e

systemic and other risks in inter-bank settlement. These developments have brought South Africa in

line with international inter-bank settlement practice.

Investment and merchant banking remains the most competitive front in the industry, while the

country's "big four" banks - Absa, Standard Bank, Nedbank and FNB - continue to consolidate their

grip on the retail market.

Reserve Bank

An office headed by the Registrar of Banks, operating as part of the Reserve Bank, is responsible for

registering institutions as banks or mutual banks, and for enforcing the legislation.

The registrar acts with relative autonomy in executing his duties, but has to report annually on his

activities to the Minister of Finance, who in turn has to table this report in Parliament. The extent of

supervision entails the establishment of certain capital and liquidity requirements and the

continuous monitoring of institutions' adherence to legal requirements and other guidelines.

The performance of an individual institution is also monitored against developments in the relevant

sector as a whole. If deemed necessary, inspectors can be appointed to inspect the affairs of any

bank, or any institution or person not registered as a bank if there is reason to suspect that such an

institution or person is carrying on the business of banking.

Financial Services Board

The Financial Services Board is an independent institution established by statute to oversee South

Africa's non-banking financial services industry.

The board's mission is to promote sound and efficient financial institutions and services, together

with mechanisms for investor protection.

Major financial institutions regulated by the board include the country's exchanges and insurers,

both short term-and long-term.

Investment incentives

South Africa offers various attractive investment incentives, targeted at specific sectors or types of

business activities.

These are:

The Enterprise Investment Programme manufacturing programme

The EIP (manufacturing) is a cash grant for locally based manufacturers who wish to establish a new

production facility, expand an existing facility, or upgrade an existing facility in manufacturing

industries.

The Enterprise Investment Programme tourism support programme

28 | P a g e

The EIP (tourism) is an investment incentive grant, payable over a period of two to three years, to

support the development of tourism enterprises, and in so doing, stimulate job creation and

encourage the geographical spread of tourism investment throughout South Africa.

Tourism-related activities supported by the grant include the following:

Accommodation services

Passenger transport services

Tour operators

Cultural services

Recreational and entertainment services

Foreign investment grant

This grant seeks to compensate qualifying foreign investors for the cost of moving qualifying new

machinery and equipment from abroad to South Africa.

Critical infrastructure

The critical infrastructure fund is a cash grant for projects designed to improve critical infrastructure

in South Africa, including the following:

Transport systems - road and rail systems

Electricity transmission and distribution systems - power flow and regulation systems

Telecommunications networks - cabling and signal transmission systems

Sewage systems - network and purification

Waste storage, disposal and treatment systems

Fuel supply systems - piping for liquid, gas, and solid fuel conveyer transportation

Industrial development zones

IDZs are purpose-built industrial estates linked to international ports that leverage fixed direct

investments in value-added and export-oriented manufacturing industries.

These zones provide the following benefits:

Quality infrastructure

Expedited customs procedures

Duty-free operating environments

The location film and television production incentive

This incentive programme consists of a Large Budget Film and Television Production Rebate Scheme,

whereby foreign-owned qualifying producers are rebated a maximum of R10-million for the

production of large budget films and television productions.

The South African Film and Television Production and Co-Production Incentive Financial assistance to

South African feature films, tele-movies, television drama series, documentaries andanimation. The

29 | P a g e

objective is to contribute to the local film industry. Production budgets are required to be more than

R10-million, with the rebate being 35%, capped at R10-million.

Export marketing and investment assistance

The EMIA scheme partially compensates exporters in respect of activities aimed at developing

export markets for South African products and services, and to recruit new FDI into South Africa.

The scheme provides assistance in the form of:

Air travel expenses

Subsistence allowances

Freight-forwarding of display materials

Exhibition space and booth rental costs

The business process outsourcing and offshoring investment incentive

The BPO&O investment incentive comprises an investment grant, and a training support grant,

towards costs of company-specific training.

The incentive is offered to local and foreign investors establishing projects that aim primarily to

serve offshore clients.

Automotive production and development programme

This programme has four key elements:

Tariff reduction freeze from 2013 until 2020

Local assembly allowance

Production incentives

Automotive investment allowance

30 | P a g e

Online

Volksblad.com

Medupi wéér onder skoot

http://www.volksblad.com/sake/2014-06-30-medupi-wr-onder-skoot

Bouwerk aan Medupi en Kusile, die land se mees strategiese projekte, kom môre vir die soveelste

keer tot stilstand wanneer 220 000 staal- en ingenieurswerkers van Numsa begin staak.

Numsa het egter afgesien van sy planne om ’n onbeskermde staking by Eskom te hou – hy gaan

bloot Woensdag ’n protesoptog teen die kragreus hou omdat hy verhogings van net 5,7% aanbied.

Die vakbond eis 12%.

Seifsa, die werkgewersorganisasie in die staal- en ingenieursbedryf waartoe sowat 10 200

maatskappye behoort wat sowat 440 000 werkers in diens het, sluit van môre af alle werkers uit.

Nie-stakende werkers verloor dus ook hul lone.

Neasa, die alternatiewe werkgewersorganisasie wat die laaste jare die uitbreiding van

loonooreenkomste met Seifsa probeer nietig verklaar, gaan egter net Numsa-lede uit sy aanlegte

uitsluit, het Gideon du Plessis, hoofsekretaris van Solidariteit, die naweek gesê.

Irvin Jim, hoofsekretaris van Numsa, het gister op ’n mediakonferensie in die vakbond se

hoofkantoor in Johannesburg gesê Mildred Oliphant, minister van arbeid, wil glo met die vakbond

vergader om die staking te keer.

“Ek weet nie watter magte sy het om die staking te keer nie, maar ons sal met haar vergader as sy

wil. Ons saboteer nie die ekonomie nie – ons voer ’n veldtog vir ’n bestaansloon en die instelling van

die nasionale minimum loon – iets wat die ANC-regering veronderstel is om te doen,” het Jim gesê.

Die vergadering sal ook gebruik word om ’n verduideliking van Oliphant te vra oor lidmaatskapgeld

in die bedingingsraad wat aan die vakbond verskuldig is, maar wat teruggehou word omdat die

vakbond se lidmaatskaptalle vir die bedingingsraad nie op datum is nie.

Die staking sluit alle groot ingenieursmaatskappye in, waaronder Esor, Murray & Roberts, Alstom en

Hitachi – almal groot kontrakteurs vir werk aan die Medupi-kragstasie, wat einde vanjaar sy eerste

elektrisiteit aan die netwerk moet lewer.

31 | P a g e

Staalvervaardigers soos ArcelorMittal, Scaw Metals, Highveld Steel en Columbus Steel sal tot

stilstand kom.

Die staking sal ook ’n uitkringende uitwerking hê op onder meer onderdele-vervaardigers vir die

motorbedryf, motorvervaardigers self en die verskaffing van versterkingstaal vir die mynbedryf en

die boubedryf, veral as dit lank duur.

Werkgewers het verhogings van 8% vir werkers in onderste posvlakke aangebied en 7% vir werkers

in hoër posvlakke, maar Numsa eis 12%.

Die intreeloon van H-posvlakke vir algemene werkers is op die oomblik R5 295,53 per maand. Seifsa

se 8%-aanbod vir dié werkers sal hul loon op R5 719,38 te staan bring.

Numsa eis R5 930, R211,61 meer.

Vir D-klas werkers, wat normaalweg sweisers en masjienoperateurs insluit, is die huidige intreeloon

R7 392,29 per maand. Seifsa bied verhogings van 8% aan wat die loon op R7 983,67 per maand te

staan sal bring, maar Numsa eis R8 279,36.

32 | P a g e

Online

Beeld.com

Medupi wéér onder skoot

http://www.beeld.com/sake/2014-06-30-medupi-wr-onder-skoot

Bouwerk aan Medupi en Kusile, die land se mees strategiese projekte, kom môre vir die soveelste

keer tot stilstand wanneer 220 000 staal- en ingenieurswerkers van Numsa begin staak.

Numsa het egter afgesien van sy planne om ’n onbeskermde staking by Eskom te hou – hy gaan

bloot Woensdag ’n protesoptog teen die kragreus hou omdat hy verhogings van net 5,7% aanbied.

Die vakbond eis 12%.

Seifsa, die werkgewersorganisasie in die staal- en ingenieursbedryf waartoe sowat 10 200

maatskappye behoort wat sowat 440 000 werkers in diens het, sluit van môre af alle werkers uit.

Nie-stakende werkers verloor dus ook hul lone.

Neasa, die alternatiewe werkgewersorganisasie wat die laaste jare die uitbreiding van

loonooreenkomste met Seifsa probeer nietig verklaar, gaan egter net Numsa-lede uit sy aanlegte

uitsluit, het Gideon du Plessis, hoofsekretaris van Solidariteit, die naweek gesê.

Irvin Jim, hoofsekretaris van Numsa, het gister op ’n mediakonferensie in die vakbond se

hoofkantoor in Johannesburg gesê Mildred Oliphant, minister van arbeid, wil glo met die vakbond

vergader om die staking te keer.

“Ek weet nie watter magte sy het om die staking te keer nie, maar ons sal met haar vergader as sy

wil. Ons saboteer nie die ekonomie nie – ons voer ’n veldtog vir ’n bestaansloon en die instelling van

die nasionale minimum loon – iets wat die ANC-regering veronderstel is om te doen,” het Jim gesê.

Die vergadering sal ook gebruik word om ’n verduideliking van Oliphant te vra oor lidmaatskapgeld

in die bedingingsraad wat aan die vakbond verskuldig is, maar wat teruggehou word omdat die

vakbond se lidmaatskaptalle vir die bedingingsraad nie op datum is nie.

Die staking sluit alle groot ingenieursmaatskappye in, waaronder Esor, Murray & Roberts, Alstom en

Hitachi – almal groot kontrakteurs vir werk aan die Medupi-kragstasie, wat einde vanjaar sy eerste

elektrisiteit aan die netwerk moet lewer.

33 | P a g e

Staalvervaardigers soos ArcelorMittal, Scaw Metals, Highveld Steel en Columbus Steel sal tot

stilstand kom.

Die staking sal ook ’n uitkringende uitwerking hê op onder meer onderdele-vervaardigers vir die

motorbedryf, motorvervaardigers self en die verskaffing van versterkingstaal vir die mynbedryf en

die boubedryf, veral as dit lank duur.

Werkgewers het verhogings van 8% vir werkers in onderste posvlakke aangebied en 7% vir werkers

in hoër posvlakke, maar Numsa eis 12%.

Die intreeloon van H-posvlakke vir algemene werkers is op die oomblik R5 295,53 per maand. Seifsa

se 8%-aanbod vir dié werkers sal hul loon op R5 719,38 te staan bring.

Numsa eis R5 930, R211,61 meer.

Vir D-klas werkers, wat normaalweg sweisers en masjienoperateurs insluit, is die huidige intreeloon

R7 392,29 per maand. Seifsa bied verhogings van 8% aan wat die loon op R7 983,67 per maand te

staan sal bring, maar Numsa eis R8 279,36.

34 | P a g e

Online

Thedailymaverick.co.za

Strike of the month: Welcome to metals & engineering

http://www.dailymaverick.co.za/article/2014-06-29-strike-of-the-month-welcome-to-metals-

engineering/

On Tuesday, only a week after the resolution of the platinum strike, the National Union of

Metalworkers SA (Numsa) will embark on a strike in the metals and engineering sector. As the

factories grind to a halt, GREG NICOLSON unpacks the issues.

Negotiations that have taken place through the Metal and Engineering Industries Bargaining Council

(MEIBC) are complex, with six unions and multiple industry bodies involved. However, most of the

unions have both wage-related and non-wage related demands that have fluctuated in recent

months.

Wage demands have lowered from 20% to 15% and finally 12% recently as the 2011-2014

agreement expires on 1 July. The unions want a one-year deal. Speaking on Sunday, Numsa Deputy

General Secretary, Karl Cloete, said the union, which has 220,000 members in the metal and

engineering industries, is looking for a double-digit increase.

The previous three-year agreement, which helped secure industry stability, came after a two-week

strike in 2011. It featured 8-10% increases in the first year followed by 7-8% increases. This time, the

unions are also calling for the scrapping of labour brokers, and, in some cases, are demanding

companies don’t hire workers on the Employment Tax Incentive scheme.

The agreement will affect over 10,000 businesses and the industry has a turnover of R335 billion,

according to an employer representative, the Steel and Engineering Industries Federation of South

Africa (Seifsa). Organisations like Scaw Metals, Bell Equipment, Aveng Trident Steel, CBI African

Cables, Murray & Roberts, and Aberdare Cables are just a few of those that will be affected.

“This was not an easy decision,” said Numsa’s leadership on the decision to strike, “but a painful

one, since the principle of ‘no work no pay’ will be applied by the intransigent bosses. It has never

been in our agenda to call a strike; this strike has been imposed on us. Ours is to use the strike, as

35 | P a g e

part of a tactic to exert organisational pressure to the bosses, to return to the table and present an

offer acceptable to our members.”

While not all unions are embarking on a strike, most employees in the sector won’t be going to work

on Tuesday. Seifsa, which claims 51% of the industry’s organisations as members, issued a lockout

notice to all unions involved. That means over 200,000 workers won’t be allowed to go to work,

whether they’re on strike or not. Numsa General Secretary, Irvin Jim, said the lockout would unify

workers, as “scabs” can’t replace them. “We always smile when the bosses lock us out,” he said on

Sunday.

The decision outraged trade union Solidarity, which represents 22,000 workers in the industry, as

their members who aren’t on strike can’t work. Solidarity General Secretary, Gideon du Plessis,

praised the National Employers Association of South Africa (Neasa), which will only lock out striking

workers.

Employer bodies say their offers are generous and the unions must consider the economy. Seifsa

CEO, Kaizer Nyatsumba, recently said employers had made two “good wage offers”, but they now

think the unions were always intent on striking.

Seifsa raised its original 6.1% inflation-tied offer and has put a three-year deal on the table. Lower

paid workers would get an 8% increase in 2014, then inflation +1% in the following two years. Higher

paid employees would get 7% this year with inflation-based increases for the next two years. During

bargaining council discussions, the employers have spoken about addressing non-cost demands.

They may promise jobs created through the Employment Tax Incentive scheme will not result in a

corresponding job losses. They could also assure unions they will adhere to the new regulations on

labour broking and give all workers under labour brokers the same deal.

Mirroring positions taken in the recent platinum strike, the employer associations say double-digit

wage increases are unaffordable in the current economy. Before negotiations began, Seifsa said it

costs at least R7,000 a month to employ an entry-level worker. “Our approach to the negotiations

has been informed by the need to maintain existing jobs and to create new ones. We are concerned

that our economy has not performed well in recent years, with the metals and engineering industry

being among the sectors most threatened by cheap imports,” Nyatsumba said during negotiations in

May.

After Numsa declared its strike, the Seifsa CEO stated, “It is deeply regrettable that, at a time when

our economy is under a considerable strain, our partners in labour would fail to appreciate the

potential consequences of their actions. All of us need to accept that the world does not owe South

Africa anything. Instead, we, like all other countries, have to compete for investments and to

compete against manufacturers based in other parts of the world, who get their products here at a

cheaper price than we produce them.”

Neasa CEO, Gerhard Papenfus, continued the attack, accusing the union of not being serious about

wanting to create jobs. The strike will lead to loss of production, disrupt employee income and harm

potential investment in the country, he added.

36 | P a g e

The state is also weary of another protracted strike. Communications Minister, Faith Muthambi,

appealed to stakeholders after a cabinet meeting last week to find a resolution and help grow the

economy. The Department of Labour has contacted Numsa and the union may meet the minister

soon to discuss what can be done. The metals and engineering sectors are crucial for other

industries such as manufacturing, which has already seen a fall in output this year.

Numsa has rejected accusations that it’s sabotaging the economy. “We reject with contempt the

notion that Numsa is responsible [for the struggling economy],” said Cloete. On Sunday, the union

said it’s pushing for a living wage, as the Freedom Charter prescribes, and it’s doing so using legal

and non-violent means. “This strike is about rejecting the race to the bottom,” said Jim, claiming that

while executives continue to profit in both good and bad times, workers aren’t benefitting.

For the economy, there could be worse times ahead. Numsa can’t reach a wage agreement with

Eskom and will stage a picket this week, which could be followed by an unprotected strike. It has

accused the parastatal’s bosses of failing to address the plight of workers and if they don’t an

agreement isn’t reached soon the electricity supply could be threatened. “We will not take

responsibility for the lights being off,” said Jim, accusing Eskom of allowing the tense situation to

fester while hiding behind essential services laws, which the union is likely to challenge.

While the factories and perhaps the economy grind to a halt, negotiations continue.

37 | P a g e

Online

Bdlive.co.za Arcelor looks for a better deal

http://www.bdlive.co.za/businesstimes/2014/06/01/arcelor-looks-for-a-better-deal

ARCELORMITTAL South Africa (Amsa) is lobbying government to include steel as a designated sector

to benefit from state procurement in a bid to boost that ailing sector.

This is one of the many challenges new CEO Paul O’Flaherty will be tackling when he joins the group

in July.

In terms of preferential procurement laws, the Department of Trade and Industry can designate

specific industries in which tenders should prescribe that only locally manufactured products with a

prescribed minimum threshold for local content will be considered.

The aim is to leverage public expenditure to support economic growth, create jobs and lower the

country’s trade deficit.

The steel sector has been excluded to date, largely due to its history of colluding on prices. The

department has been at loggerheads with ArcelorMittal for years over steel pricing and has been

looking at ways to regulate “developmental” prices.

However, the current state of the sector makes it clear that the industry’s heyday of the 2000s are

over, and that more should be done to help local producers.

South Africa has steadily lost global market share over the past two decades, and significant steel-

making capacity has been lost over the past four years.

Since the global financial crisis in 2008, Cisco Steel has shut operations, Scaw Metals is being kept

alive by funding from the state-owned Industrial Development Corporation, and Amsa has shut its

electric-arc furnaces in Vanderbijl Park.

38 | P a g e

This week, Evraz Highveld Steel & Vanadium, the country’s second-biggest steel maker, posted a

R105m loss for the first quarter after its loss of R379m in 2013.

The company’s financials also raised red flags about its future as a going concern, with management

warning that the company continued to use credit lines that were committed only until year-end and

which were already fully drawn.

Amsa’s first quarter was more successful, with the steel maker posting a net profit of R322m,

compared with a loss of R276m in the corresponding period last year.

“The current business environment in South Africa is quite difficult,” said ArcelorMittal acting CEO

Hans Ludwig Rosenstock.

Demand was affected by the mining strike, a weak manufacturing sector, high imports and

customers not stocking up on product, he said.

Rising electricity tariffs, low demand growth and an increase in cheap imports had all contributed to

the sector’s woes.

ArcelorMittal was also arguing strongly against government’s proposed carbon tax, which it

estimates could cost over R600m a year. “What we can’t afford in the steel industry is an additional

load on the back,” Mr Rosenstock said.

Steel is a crucial part of the industrial sector of any economy, and retaining capacity and building a

globally competitive sector is crucial if government wants its industrialisation policies to succeed.

Countries such as South Korea, Japan and China have had government support for their steel

industries — combined with close collaboration with, for example, their automotive industries and,

in the case of China, its urbanisation drive — as a key driver of economic growth.

South Africa’s government spends billions in the form of state support for the automotive sector,

although less than 6% of the steel it uses is locally produced.

Similarly, no collaboration has taken place with steel makers and the renewable energy sector,

where better planning could have ensured using local steel for windmills, for example. It is

understood that hardly any local steel is being used in building Medupi.

By designating steel as a sector for preferential procurement, local producers would benefit from

major infrastructure expenditure by state-owned enterprises like Eskom and Transnet, said Themba

Nkosi, head of corporate affairs at ArcelorMittal.

39 | P a g e

Online

Bdlive.co.za

Mining doldrums force Scaw to look abroad

http://www.bdlive.co.za/business/mining/2014/06/02/mining-doldrums-force-scaw-to-look-abroad

THE MINING industry needs some slack as it battles a sluggish economy and strikes. But when it

comes to the rope itself, mines have little to give, as they have cut back on orders for the kilometres-

long steel ropes as thick as tree trunks.

Now Scaw Metals, one of only three large makers of the rope in the world, is being forced to drive

export sales hard to offset this and similar weaknesses in the mining and construction sectors that

make up the bulk of its local business.

CEO Markus Hannemann says there has been a distinct slowdown in demand for grinding media —

the balls used to crush ore in rotating mills and specialised wire ropes in mine shafts — with offshore

sales overshadowing local sales. But business is strong in the rest of Africa and it is an important

sales destination.

Scaw’s strategy is now in part to set up a new plant in Ghana to make grinding media. It is to import

50,000 tonnes of steel bars a year from Scaw to make them. The grinding media division, which

makes two types of balls for use in the gold, copper and platinum industries, and power plants to

grind coal to a fine powder to be injected into furnaces, is the largest in the southern hemisphere.

The company holds 90% of the Ghana project. Guma Group, a South African company, and Ghana’s

Jospong Group own the balance with an option to buy a bigger stake.

Scaw produces at least 500,000 tonnes a year of liquid steel, using scrapped metal for about 80% of

its feedstock for its plants. It intends to move away from being a supplier of primary steel products

and get more involved with secondary products such as grinding media, wire ropes, chains, cast

products and rolled products.

40 | P a g e

About a third of its liquid steel production is converted into secondary products. "We’d certainly like

to grow that number. There are other products we’d like to grow into but the dilemma we’re facing

is that we are really in such a sluggish market that even trying to consider other products is difficult,"

Mr Hannemann says.

Scaw supplies 54% of its products to the mining industry, 35% to construction, and the rail sector is

the third key source of business.

"Given the crisis in our own mining industry, we’ve become a lot more reliant on exports to keep our

business busy." Some wire divisions are now exporting 60% of product, up from 40% just a few years

ago.

"The mining groups are far more cost conscious and cautious in the way they order ropes, wanting

longer lives of ropes.

"In the last two years, everyone has been tucking their heads in. There are not as many spare ropes

in the industry as we believe there should be," Mr Hannemann says. Mine winding ropes are only

made on order to mine specifications.

The Ghana plant’s capacity would be about half that of South Africa’s, which has a hi-tech roll-

former machine to churn out perfect spheres at up to 60 a minute. It is the only such plant in South

Africa, he says.

The Ghana gold mining industry is regarded as similar in size to South Africa’s and Scaw has a "very

low market share at the moment. We see other opportunities with Jospong to grow in Ghana,

beyond just grinding media. They see a lot of Scaw’s products as a benefit to Ghana’s economy

because most of those products are imported from China, Russia, etc," Mr Hannemann says.

These include construction-type products such as rebar. "It’s not only about mining products and we

see the marketing in West Africa as an opportunity for the other engineering consumables we make.

There’s an opportunity to set up a distribution network."

The mine winding rope, used to convey people, ore and material down shafts, is a highly specialised

business, with ultrahigh-tensile ropes in demand as mining around the globe moves ever deeper.

"Other than us and two players in Europe, I don’t think there’s anyone else really producing these

ropes," Mr Hannemann says. The division has been in business for 93 years and the longest rope it

produces is 15km long. It can make ropes up to 150mm in diameter. "We are the largest integrated

steel wire and rope maker in the world."

However, there is a curious anomaly at its plants, with different power tariffs applied to its wire

plant, which straddles the Johannesburg and Germiston municipal boundary. Scaw is looking at

shifting the energy-intensive part of the plant to another facility with cheaper electricity and

supplying the plant from there to avoid the very high Johannesburg tariffs.

41 | P a g e

The wire rope business also deals with the offshore oil and gas sector, for rig moorings.

"The competitive advantages we may have had as South Africa have disappeared," Mr Hannemann

says. Electricity costs are just one challenge. The other is sourcing scrap, a problem for all firms that

use scrap, with supply and prices a concern. South Africa produces about 3-million tonnes of ferrous

scrap a year, about half of that exported. Of the remaining 1.5-million tonnes, Scaw needs about a

third a year.

Scaw owns two businesses that secure 250,000 tonnes for its plants a year and it buys the rest from

other scrap companies.

Users of scrap have approached the Department of Trade and Industry to keep as much of it in the

country as possible, but loopholes in a preferential pricing scheme have meant scrap dealers have

been able to continue selling it abroad. These loopholes are under scrutiny by the department.

"If we could just limit the export of scrap, or even go to the extreme of banning the export of scrap,

it would lead to a surplus here which would drive down scrap price," Mr Hannemann says.

"Once that happens you have a form of competitive advantage in South Africa where little foundries

can start up again and we can limit the flood of small castings from China."

A recent report said the number of foundries fell to slightly more than 200 from 450 in the 1980s.

Between 2007 and 2011, 13% of foundries closed.

Transnet has yet to award tenders for its vast recapitalisation programme. Scaw makes rail products

such as wheels, couplers and wagon sides. In its tender it has committed to investing R200m in its

business to supply Transnet and create hundreds of jobs.

The decision has taken longer than Scaw had expected. "We are a major supplier to them, with the

only facility to make cast railway wheels ... but the adjudication of these tenders seem to take

forever," Mr Hannemann says. It expects the outcome within weeks.

The construction sector has slowed remarkably since the boom ahead of the 2010 World Cup.

"Compared to 10 years ago, the demand that is coming now from mining, construction or parastatals

seems to be so fickle and sluggish, where in the past there was a consistent level of demand, even in

tough times."

The Industrial Development Corporation (IDC) owns 74% of Scaw. But the IDC is adamant Scaw is an

independent business and it has not enforced any alignment with development agendas, Mr

Hannemann says.

42 | P a g e

Online

Bdlive.co.za

VIDEO: Strike inevitable, says Numsa

http://www.bdlive.co.za/national/labour/2014/06/05/video-strike-inevitable-says-numsa

NATIONAL Union of Metalworkers of South Africa (Numsa) secretary-general Irvin Jim says the union

has reached a deadlock with employers and that, drawing from past experiences, a strike is

inevitable.

Numsa is demanding, among other things, a 15% wage increase from the Metal and Engineering

Bargaining Council (MEIBC), as well as a one-year bargaining agreement and the scrapping of labour

brokers.

While acknowledging that the 'inevitable' strike might have a severe impact on the economy, Numsa

says employers will have to take repercussions as a result of their intransigence.

Many entities, including Scaw Metals and Bell Equipment, could be affected but worst threatened is

Eskom, as electricity supply could be halted and construction delayed at Medupi, Kusile and

Inguqurha.

43 | P a g e

Online

cbn.co.za

Craig International Supplies continues African growth

http://www.cbn.co.za/manufacturing/petrochemicals-oil-and-gas/item/113-craig-international-

supplies-continues-african-growth

OIL, gas and mining companies throughout Africa benefit from the extensive experience and buying

power of global oilfield procurement company, Craig International Supplies (CIS) Pty.

“The company is now recognised as the gateway to oilfield procurement for South and West Africa

following major expansion to its network of bases and an impressive, growing client list across the

entire continent,” says Thinus von Waltsleben, Country Manager CIS Pty. Customers such as

Halliburton, Dolphin Drilling and Subsea 7, are being supplied to wherever they are from:

Angola

Nigeria

Namibia

Equatorial Guinea

DR Congo

Sierra Leone

Tanzania

Kenya

Named as the Best Supplier of the Year in the Africa Oil & Gas Awards 2013, CIS is highly proficient in

sourcing the right products and supplying them on time and on budget. Established over ten years

ago, the business also supports all major ports including Durban, Port Elizabeth, Cape Town,

Saldanha Bay and those in Namibia.

44 | P a g e

CIS has a team of specialised buyers in place to meet customers’ requirements and add value to their

supply chain. Located in the heart of Cape Town, the office and significant warehouse space enables

CIS to securely pack cargo to international standards, arrange third party inspections and organise

shipment by sea or air through global logistics partner GAC.

CIS holds around US$1m worth of stock to enable client demand to be met at short notice. The

official distributor of JetLube products in Southern Africa, CIS is also a distributor for Scaw Metals,

allowing the supply of different types of lifting equipment.

Von Waltsleben said: “With a depth of experience and a global network of bases holding substantial

stock, CIS is a market leader in its field in Africa. Our commitment to adding value and reducing costs

in the supply chain has seen us supply everything from low value consumables to high value items

including mooring and earth moving equipment, whilst also helping customers with travel

arrangements, and asseting up remote camps, which include portable offices, water supply, catering

and vehicles. Essentially, we are the go to company for procurement.”

In addition to robust processes and procedures to ensure that every order is managed effectively,

whatever the size and timescale, CIS holds a B-BBBEE rating of 6, is fully compliant with ISO. DNV

and is a member of the South African Oil and Gas Alliance (SAOGA.)

Earlier this year, the company opened a base in Ghana to serve as a hub for procurement services to

clients in-country and in neighbouring Nigeria, Cameroon and the Ivory Coast. With an office in Accra

and a warehouse in Takoradi, CIS is able to offer a vast array of on -the-ground stock ranging from

PPE, tools and lubricants to welding, consumables and lifting equipment including high usage MRO

products.

CIS also launched ebuy, the online procurement catalogue for the energy industry that gives

customers access to over 50,000 products across 1,000 categories anytime, anywhere. A fully

integrated system, ebuy has been designed to streamline the whole purchasing process and allow

customers to quickly build and track orders.

In addition, the company will be opening a base in Mozambique to further extend its service reach.

Steven Craig, Business Development Manager CIS Pty, said: “Mozambique is an important market for

CIS to expand into. It would effectively become a hub for us to widen our services into East Africa

including Tanzania and Kenya.”

CIS Pty is a division of Aberdeen headquartered Craig International Supplies Ltd, which has bases in

Houston, Ghana and Poland with another new base planned for Australia in addition to

Mozambique.

45 | P a g e

Online

miningweekly.com

Numsa says metalworker strike ''inevitable'', platinum strikers resolute

http://www.miningweekly.com/article/numsa-warns-of-metal-and-engineering-industries-strike-

2014-06-05

South Africa's main manufacturing union said on Thursday a strike was "inevitable" and the leader of

a five-month platinum walkout said his wage demands were "non-negotiable", piling more pressure

on an economy battered by labour unrest.

More than 200 000 workers led by the National Union of Metalworkers of South Africa (Numsa)

could down tools over higher pay from the beginning of July, union leaders told reporters.

"Drawing from our past experiences, a strike is inevitable," said Numsa General Secretary Irvin Jim.

"As a worker-controlled union, we will afford our members an opportunity to determine out next

course of action."

The union is demanding a one-year 15% wage increase from companies that include Bell Equipment

and Scaw Metals.

Separately, the president of the main platinum union rejected a government-brokered wage offer,

dashing hopes for an end to a strike that has cut global platinum output by 40%.

"The R12 500 rand is still non-negotiable. AMCU members are steadfast and we are not turning

back," Joseph Mathunjwa, the president of the Association of Mineworkers and Construction Union,

told Reuters, referring to the union's monthly wage demands.

46 | P a g e

About 70 000 AMCU members downed tools in January at Anglo American Platinum, Impala

Platinum, and Lonmin in a strike that has heavily affected economic output in Africa's most

advanced economy.

The walkout in the platinum belt caused South Africa's economy to contract in the first quarter and

has raised fears it could lead the country into its second recession in five years.

STRIKE SEASON

South Africa is nearing the beginning of its annual "strike season", in which unions negotiate with

employers and sometimes strike when talks go sour.

A Numsa walkout would weigh on key sectors such as auto parts supply and steel production, and

could halt work on building projects that include power utility Eskom's Kusile and Medupi power

stations.

The rand has shed about 6.5% since June last year, weighed down by sluggish economic growth and

high inflation.

Numsa said it was in separate wage negotiations talks with ArcelorMittal South Africa, a unit of the

world's top steel maker, and was "very close" to sealing an agreement.

Numsa brought auto production last year - which represents around 6% of economic output - to a

standstill with a four-week walkout at parts manufacturers

47 | P a g e

Online

newshub.org

South Africa's metalworkers union says strike ''inevitable'', platinum strikers resolute

http://za.newshub.org/south_africa_s_metalworkers_union_says_strike_inevitable_platinum_strike

rs_resolute_1126394.html

JOHANNESBURG (Reuters) - South Africa's main manufacturing union said on Thursday a strike was

"inevitable" and the leader of a five-month platinum walkout said his wage demands were "non-

negotiable", piling more pressure on an economy battered by labour unrest.

More than 200,000 workers led by the National Union of Metalworkers of South Africa (NUMSA)

could down tools over higher pay from the beginning of July, union leaders told reporters.

"Drawing from our past experiences, a strike is inevitable," said NUMSA General Secretary Irvin Jim.

"As a worker-controlled union, we will afford our members an opportunity to determine out next

course of action."

The union is demanding a one-year 15 percent wage increase from companies that include Bell

Equipment and Scaw Metals.

Separately, the president of the main platinum union rejected a government-brokered wage offer,

dashing hopes for an end to a strike that has cut global platinum output by 40 percent.

48 | P a g e

"The 12,500 rand (694.7 pounds) is still non-negotiable. AMCU members are steadfast and we are

not turning back," Joseph Mathunjwa, the president of the Association of Mineworkers and

Construction Union (AMCU), told Reuters, referring to the union's monthly wage demands.

About 70,000 AMCU members downed tools in January at Anglo American Platinum, Impala

Platinum, and Lonmin in a strike that has heavily affected economic output in Africa's most

advanced economy.

The walkout in the platinum belt caused South Africa's economy to contract in the first quarter and

has raised fears it could lead the country into its second recession in five years.

South Africa is nearing the beginning of its annual "strike season", in which unions negotiate with

employers and sometimes strike when talks go sour.

A NUMSA walkout would weigh on key sectors such as auto parts supply and steel production, and

could halt work on building projects that include power utility Eskom's Kusile and Medupi power

stations.

The rand has shed about 6.5 percent since June last year, weighed down by sluggish economic

growth and high inflation.

NUMSA said it was in separate wage negotiations talks with ArcelorMittal South Africa, a unit of the

world's top steel maker, and was "very close" to sealing an agreement.

NUMSA brought auto production last year - which represents around 6 percent of economic output -

to a standstill with a four-week walkout at parts manufacturers.

49 | P a g e

Online

politicsweb.co.za

We'll go on strike on July 1 if our demands our not met - NUMSA

http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page71619?oid=630347&sn=Marke

tingweb%20detail

The National Union of Metalworkers of South Africa (Numsa) representing more than 220 000 super-

exploited workers in the strategic layer of our economy - the Engineering/Metals sector, might

embark on a full-blown strike, as from the beginning of July 01, 2014.

The anticipated strike action is due to the fact that the employers in the industry have arrogantly

failed to meet our demands.

Already the Spokespersons of capital have punted our anticipated strike as a deliberate attempt by

Numsa elected leadership to flex its political muscle in order to undermine the governing party - the

African National Congress (ANC).

False alarm bells are being raised that if Numsa goes on strike as anticipated, our country, which is

bleeding and shedding jobs, might suffer a second bug of the recession.

Interestingly, none of these Spokespersons of capital are condemning the bosses' continued

onslaught against our hard-fought collective bargaining dispensation.

50 | P a g e

The negotiations were held at the backdrop of a soaring crisis at the main center of global capitalism

and imperialism - the United States (US) and Europe, where there is massive shrinking of

manufacturing, and a shift into insecure services, especially finance, retail, security and so-called

"knowledge production" tertiary sectors. Despite the slowdown in the global economy, capital

continues to make huge profits by increasing the suffering of the working class.

In our own South African context, the negotiations took place amidst the ideological fog being

spread by the politicians of "a good story to tell", whilst our people, especially the working class and

the poor, are confronted with the crisis of poverty, unemployment and inequality.

This crisis is a result of the failures by the African National Congress (ANC)-led government to

radically transform the ownership and control patterns of the South African economy, as expressed

in the Freedom Charter.

We have long maintained this position. Therefore it is not about flexing of political muscles to

undermine the new administration, as spokespersons of white monopoly capital are saying.

On a daily basis, we are being fed lies that the neoliberal National Development Plan (NDP) is a good

story vision, and that our country has become a better place to live since the negotiated settlement

of 1994. However we know that there has already been a failure to achieve Vision 2014, which was

presented to us in 2004.

Overall, the 20 years of democracy has been a disastrous to the working class of our country. It has

been 20 years of:

higher rates of racialised poverty and unemployment;

higher levels of inequality,

inferior education system;

collapsed public health-care;

dehumanizing living conditions;

In fact, this has been a bad story to tell for the majority of our people, and a good story to tell by

White monopoly capital, which has benefited immensely since the dawn of democracy. The past 20

years have been white monopoly capitalist democracy.

Most of our members organised in this sector live in shacks and informal settlements, their wages

are insufficient to afford decent housing and other important basic necessities.

The bosses use the squalid conditions of our members as the basis to refuse them decent wages in

order for them to afford a decent life. The bosses are only interested in extracting huge profits from

our labour and exporting them to the capitalist centers in London, Germany, New York and Sandton.

Our lowest paid members, those who work in gate and fencing and contract workers for capital built

projects such as Medupi and Kusile earn a paltry R3050 per month while it is common cause that

these contracting companies are reaping millions of rands from their contracts with Eskom. The 15%

51 | P a g e

increase we are demanding will only improve their salaries by R450 a month. How can this be

construed as an outrageous demand? General engineering scheduled employees earn poverty

wages of R5300 per month while the CEOs in this industry continue to earn millions.

We doubt that these overpaid representatives of the capitalist class spend less than R5300 on just

their cellphone costs for the month while workers are supposed to carve out an existence on this

pittance of a salary. Gary Bell, the CEO of Bell Equipment took home R3.1 million in 2011, nearly 50

times more than his own workers who he expects to be productive and enthusiastic on a daily basis.

Over 20% of workers' disposable income is spent on the cost of transport because of the persisting

legacy of apartheid social engineering, and its settlement patterns, which has ensured that Africans

in particular and Blacks in general, live far from workplaces.

The bargaining negotiations have spectacularly failed to produce the desired outcomes as expected

by the thousands of our members in the sector.

The employer bodies, particularly Steel and Engineering Industries Federation of South Africa

(SEIFSA), National Employers Association of South Africa (NEASA) and Boarder Industry Association

(BIA) are hell-bent on retaining and perpetuating the colonial apartheid wage income disparities.

The first phase of the negotiations took place on the week of March 26-27, 2014; the second phase

on the week of April 16, 2014; third phase on the week of May 8-9, 2014; fourth phase on the week

of May 21-23, 2014; fifth phase on week of May 28-29.

On May 30, 2014 we declared a dispute with the employer bodies under the auspices of Metal and

Engineering Bargaining Council (MEIBC).

We declared the dispute purely because we strongly believe that we have exhausted all possible

avenues for employers to concede to our demands, as mandated by our members.

We went to these Engineering and Metals sector wage negotiations guided by the following

principles, which underpinned our Collective Bargaining Strategy:

Closing the colonial apartheid wage gap, fighting for equity in the workplace and demanding

a Living Wage;

No to down variation to the worker's conditions of employment;

The democratization of the workplace;

Reduce excessive pay for the Bosses;

Developing the skills of the workforce that was deprived of that development during

colonial-apartheid past; AND

Use the collective bargaining to organise the unorganised and thereby growing Numsa into a

formidable fighting force.

52 | P a g e

We are currently busy consulting our members across the length and breadth of our country as part

of our "Ear to the Ground Campaign", to renew our mandates since the negotiations have reached a

dead-end.

It is quite evident that the employers are imposing a strike onto us; and the strike has never been on

our agenda, purely because our core demands are affordable.

But as a worker-controlled union, we will afford our members an opportunity to determine our next

course of action, as part of exploring other strategies to be applied to exert pressure on the bosses

to concede to our demands.

Drawing from our past experiences, a strike is inevitable.

We are fully aware of the huge burden the strike can have on our members, since the bourgeois

principle of No Work! No Pay will be applied by the bosses.

However, reading from the mood of our members, it is a sacrifice they are ready to make, conscious

of the fact that their united power can shake the bosses and halt production.

In the event the strike takes place, the following key sectors will be heavily affected, namely

foundries, electronics and telecommunications, plastic, fabrication industries, machinery and

equipment, automotive components sector, electrical engineering, basic metals, heavy and light

engineering, gate and fence, and construction engineering.

Major companies that will be affected include Scaw Metals, Bell Equipment, CBI, Union Carriage and

Wagon, Dorbyl, Marley Pipe Stystem and Dana Spicer Axle amongst others. Some of these

companies supply critical parts to the auto industry and could have a disastrous impact on their

already strained supply obligations. We currently have a crisis of security of supply of electricity and

if the strike commences, ongoing work at Medupi, Kusile and Ingqurha will be delayed. Employers in

the metals and engineering industry will have to take full responsibility for the repercussions this

strike will have on the economy as a result of their intransigence. Workers have nothing to offer to

themselves.

These are our core demands;

(1) 15% wage increase;

(2) 1 year bargaining agreement;

(3) Scrapping of Labour Brokers;

(4) Wage negotiations must benefit all workers irrespective of salaried or wage earners;

(5) Extension of the scope of the Main Agreement; AND

(5) Remove the short and layoff from the Main Agreement.

Our demands should be located and understood within the context of rising cost of living, excessive

executive pay and high inequality, grinding poverty and crisis of unemployment in our country.

53 | P a g e

Once again, Eskom is offering workers a pathetic 4.3% increase in salaries, far below the inflation

rate and which therefore translates into a wage cut. This takes place at a time when Eskom is

requesting R500 million for renovations at their head office. The former CEO of Eskom took home

R8.64 million last year while the total remuneration to directors last year amounted to over R52

million.

This is daylight robbery of state resources that should be directed to ensuring security of supply and

offering workers a living wage. Numsa is finally ready to take to the streets and withdraw its labour

at an unprecedented level, we will not be held hostage by essential service designations and the

union will not be responsible for any consequences that arise from workers being forced to strike.

Lastly, the National Union of Metalworkers of South Africa sends our militant solidarity to the

courageous workers who are currently on strike on the Platinum Belt. Their ongoing battle exposes

the fact that the South African working class rejects the continued super exploitation of black and

African labour. Metalworkers join the voices of these workers in demanding the end of colonial wage

patterns. Numsa calls on the employers in the platinum mining industry to meet the demands of

these workers.

We call on all employers in the industry to use this period between now and 30 June to come to the

table and make an offer that meets the fair and just demands of our members failing which we will

strike as our last resort.

Online

Sharenet.co.za

South Africa's metalworkers union says strike ''inevitable'', platinum strikers resolute

http://www.sharenet.co.za/news/South_Africas_metalworkers_union_says_strike_inevitable_platin

um_strikers_resolute/fd1c5146df06d9894c099b05e418f3f0

JOHANNESBURG (Reuters) - South Africa's main manufacturing union said on Thursday a strike was

"inevitable" and the leader of a five-month platinum walkout said his wage demands were "non-

negotiable", piling more pressure on an economy battered by labour unrest.

More than 200,000 workers led by the National Union of Metalworkers of South Africa (NUMSA)

could down tools over higher pay from the beginning of July, union leaders told reporters.

"Drawing from our past experiences, a strike is inevitable," said NUMSA General Secretary Irvin Jim.

"As a worker-controlled union, we will afford our members an opportunity to determine out next

course of action."

The union is demanding a one-year 15 percent wage increase from companies that include Bell

Equipment and Scaw Metals.

54 | P a g e

Separately, the president of the main platinum union rejected a government-brokered wage offer,

dashing hopes for an end to a strike that has cut global platinum output by 40 percent.

"The 12,500 rand (694.7 pounds) is still non-negotiable. AMCU members are steadfast and we are

not turning back," Joseph Mathunjwa, the president of the Association of Mineworkers and

Construction Union (AMCU), told Reuters, referring to the union's monthly wage demands.

About 70,000 AMCU members downed tools in January at Anglo American Platinum, Impala

Platinum, and Lonmin in a strike that has heavily affected economic output in Africa's most

advanced economy.

The walkout in the platinum belt caused South Africa's economy to contract in the first quarter and

has raised fears it could lead the country into its second recession in five years.

South Africa is nearing the beginning of its annual "strike season", in which unions negotiate with

employers and sometimes strike when talks go sour.

A NUMSA walkout would weigh on key sectors such as auto parts supply and steel production, and

could halt work on building projects that include power utility Eskom's Kusile and Medupi power

stations.

The rand has shed about 6.5 percent since June last year, weighed down by sluggish economic

growth and high inflation.

NUMSA said it was in separate wage negotiations talks with ArcelorMittal South Africa, a unit of the

world's top steel maker, and was "very close" to sealing an agreement.

NUMSA brought auto production last year - which represents around 6 percent of economic output -

to a standstill with a four-week walkout at parts manufacturers.

55 | P a g e

Online

Trulegalmedia.com

We’ll go on strike on July 1 if our demands our not met – NUMSA

http://trulegalmedia.com/well-go-on-strike-on-july-1-if-our-demands-our-not-met-numsa/

The National Union of Metalworkers of South Africa (Numsa) representing more than 220 000 super-

exploited workers in the strategic layer of our economy - the Engineering/Metals sector, might

embark on a full-blown strike, as from the beginning of July 01, 2014.

The anticipated strike action is due to the fact that the employers in the industry have arrogantly

failed to meet our demands.

Already the Spokespersons of capital have punted our anticipated strike as a deliberate attempt by

Numsa elected leadership to flex its political muscle in order to undermine the governing party - the

African National Congress (ANC).

False alarm bells are being raised that if Numsa goes on strike as anticipated, our country, which is

bleeding and shedding jobs, might suffer a second bug of the recession.

56 | P a g e

Interestingly, none of these Spokespersons of capital are condemning the bosses' continued

onslaught against our hard-fought collective bargaining dispensation.

The negotiations were held at the backdrop of a soaring crisis at the main center of global capitalism

and imperialism - the United States (US) and Europe, where there is massive shrinking of

manufacturing, and a shift into insecure services, especially finance, retail, security and so-called

"knowledge production" tertiary sectors. Despite the slowdown in the global economy, capital

continues to make huge profits by increasing the suffering of the working class.

In our own South African context, the negotiations took place amidst the ideological fog being

spread by the politicians of "a good story to tell", whilst our people, especially the working class and

the poor, are confronted with the crisis of poverty, unemployment and inequality.

This crisis is a result of the failures by the African National Congress (ANC)-led government to

radically transform the ownership and control patterns of the South African economy, as expressed

in the Freedom Charter.

We have long maintained this position. Therefore it is not about flexing of political muscles to

undermine the new administration, as spokespersons of white monopoly capital are saying.

On a daily basis, we are being fed lies that the neoliberal National Development Plan (NDP) is a good

story vision, and that our country has become a better place to live since the negotiated settlement

of 1994. However we know that there has already been a failure to achieve Vision 2014, which was

presented to us in 2004.

Overall, the 20 years of democracy has been a disastrous to the working class of our country. It has

been 20 years of:

higher rates of racialised poverty and unemployment;

higher levels of inequality,

inferior education system;

collapsed public health-care;

dehumanizing living conditions;

In fact, this has been a bad story to tell for the majority of our people, and a good story to tell by

White monopoly capital, which has benefited immensely since the dawn of democracy. The past 20

years have been white monopoly capitalist democracy.

Most of our members organised in this sector live in shacks and informal settlements, their wages

are insufficient to afford decent housing and other important basic necessities.

The bosses use the squalid conditions of our members as the basis to refuse them decent wages in

order for them to afford a decent life. The bosses are only interested in extracting huge profits from

our labour and exporting them to the capitalist centers in London, Germany, New York and Sandton.

57 | P a g e

Our lowest paid members, those who work in gate and fencing and contract workers for capital built

projects such as Medupi and Kusile earn a paltry R3050 per month while it is common cause that

these contracting companies are reaping millions of rands from their contracts with Eskom. The 15%

increase we are demanding will only improve their salaries by R450 a month. How can this be

construed as an outrageous demand? General engineering scheduled employees earn poverty

wages of R5300 per month while the CEOs in this industry continue to earn millions.

We doubt that these overpaid representatives of the capitalist class spend less than R5300 on just

their cellphone costs for the month while workers are supposed to carve out an existence on this

pittance of a salary. Gary Bell, the CEO of Bell Equipment took home R3.1 million in 2011, nearly 50

times more than his own workers who he expects to be productive and enthusiastic on a daily basis.

Over 20% of workers' disposable income is spent on the cost of transport because of the persisting

legacy of apartheid social engineering, and its settlement patterns, which has ensured that Africans

in particular and Blacks in general, live far from workplaces.

The bargaining negotiations have spectacularly failed to produce the desired outcomes as expected

by the thousands of our members in the sector.

The employer bodies, particularly Steel and Engineering Industries Federation of South Africa

(SEIFSA), National Employers Association of South Africa (NEASA) and Boarder Industry Association

(BIA) are hell-bent on retaining and perpetuating the colonial apartheid wage income disparities.

The first phase of the negotiations took place on the week of March 26-27, 2014; the second phase

on the week of April 16, 2014; third phase on the week of May 8-9, 2014; fourth phase on the week

of May 21-23, 2014; fifth phase on week of May 28-29.

On May 30, 2014 we declared a dispute with the employer bodies under the auspices of Metal and

Engineering Bargaining Council (MEIBC).

We declared the dispute purely because we strongly believe that we have exhausted all possible

avenues for employers to concede to our demands, as mandated by our members.

We went to these Engineering and Metals sector wage negotiations guided by the following

principles, which underpinned our Collective Bargaining Strategy:

Closing the colonial apartheid wage gap, fighting for equity in the workplace and demanding

a Living Wage;

No to down variation to the worker's conditions of employment;

The democratization of the workplace;

Reduce excessive pay for the Bosses;

Developing the skills of the workforce that was deprived of that development during

colonial-apartheid past; AND

Use the collective bargaining to organise the unorganised and thereby growing Numsa into a

formidable fighting force.

58 | P a g e

We are currently busy consulting our members across the length and breadth of our country as part

of our "Ear to the Ground Campaign", to renew our mandates since the negotiations have reached a

dead-end.

It is quite evident that the employers are imposing a strike onto us; and the strike has never been on

our agenda, purely because our core demands are affordable.

But as a worker-controlled union, we will afford our members an opportunity to determine our next

course of action, as part of exploring other strategies to be applied to exert pressure on the bosses

to concede to our demands.

Drawing from our past experiences, a strike is inevitable.

We are fully aware of the huge burden the strike can have on our members, since the bourgeois

principle of No Work! No Pay will be applied by the bosses.

However, reading from the mood of our members, it is a sacrifice they are ready to make, conscious

of the fact that their united power can shake the bosses and halt production.

In the event the strike takes place, the following key sectors will be heavily affected, namely

foundries, electronics and telecommunications, plastic, fabrication industries, machinery and

equipment, automotive components sector, electrical engineering, basic metals, heavy and light

engineering, gate and fence, and construction engineering.

Major companies that will be affected include Scaw Metals, Bell Equipment, CBI, Union Carriage and

Wagon, Dorbyl, Marley Pipe Stystem and Dana Spicer Axle amongst others. Some of these

companies supply critical parts to the auto industry and could have a disastrous impact on their

already strained supply obligations. We currently have a crisis of security of supply of electricity and

if the strike commences, ongoing work at Medupi, Kusile and Ingqurha will be delayed. Employers in

the metals and engineering industry will have to take full responsibility for the repercussions this

strike will have on the economy as a result of their intransigence. Workers have nothing to offer to

themselves.

These are our core demands;

(1) 15% wage increase;

(2) 1 year bargaining agreement;

(3) Scrapping of Labour Brokers;

(4) Wage negotiations must benefit all workers irrespective of salaried or wage earners;

(5) Extension of the scope of the Main Agreement; AND

(5) Remove the short and layoff from the Main Agreement.

Our demands should be located and understood within the context of rising cost of living, excessive

executive pay and high inequality, grinding poverty and crisis of unemployment in our country.

59 | P a g e

Once again, Eskom is offering workers a pathetic 4.3% increase in salaries, far below the inflation

rate and which therefore translates into a wage cut. This takes place at a time when Eskom is

requesting R500 million for renovations at their head office. The former CEO of Eskom took home

R8.64 million last year while the total remuneration to directors last year amounted to over R52

million.

This is daylight robbery of state resources that should be directed to ensuring security of supply and

offering workers a living wage. Numsa is finally ready to take to the streets and withdraw its labour

at an unprecedented level, we will not be held hostage by essential service designations and the

union will not be responsible for any consequences that arise from workers being forced to strike.

Lastly, the National Union of Metalworkers of South Africa sends our militant solidarity to the

courageous workers who are currently on strike on the Platinum Belt. Their ongoing battle exposes

the fact that the South African working class rejects the continued super exploitation of black and

African labour. Metalworkers join the voices of these workers in demanding the end of colonial wage

patterns. Numsa calls on the employers in the platinum mining industry to meet the demands of

these workers.

We call on all employers in the industry to use this period between now and 30 June to come to the

table and make an offer that meets the fair and just demands of our members failing which we will

strike as our last resort.