June Website Report

PRINTSA Mechanical Engineer,01 June 2016, p.37

Engineering News/Mining Weekly,01 June 2016, p.30

Business Report (Cape Times), 01 June 2016, p.16Business Report (Mercury),01 June 2016,p.16Business Report (Pretoria News),01 June 2016, p.16Business Report (Star),01 June 2016,p.16

The Event, , 1 June 2016, p.21

Castings SA, 01 June 2016, p.26

Business Report (Cape Times), 09 June 2016, p.13 Business Report (Mercury), 09 June 2016, p.15

Business Report (Pretoria News), 09 June 2016, p.15 Business Report (Star), 09 June 2016, p.17

Germiston City News, 10 Jun 16, p.8

Engineering News, 10 June 2016, p.12

Business Report (Cape Times), 21 June 2016, p.13Business Report (Mercury), 21 June 2016, p.13

Business Report (Pretoria News), 21 June 2016, p.13Business Report (Star), 21 June 2016, p.13

Sowetan, Business, 21 June 2016, p.14

Citizen (Johannesburg Edition), Business, 22 June 2016,p. 21

Citizen (Johannesburg Edition), 22 Jun 16, p.1

City Press (First Edition), Business and Tenders, 26 June 2016, p.3

ONLINEIol.co.za/business - Iol Business ReportDesignate steel stock for local content’A.V.E: R44,92601 June 2016Article link: http://www.iol.co.za/business/companies/designate-steel-stock-for-local-content-2028821

The government should designate all steel products for local content unless the products could not be produced in South Africa, Scaw Metals chief executive Markus Hanneman said yesterday in an interview with Business Report.The designation of steel products could be a lifeline for struggling local steel players given the government’s multibillion-rand public infrastructure investment programme.Since 2011, the Department of Trade and Industry can designate industries, sectors and sub-sectors for local production with minimum local content thresholds.This year the National Treasury said it had a public sector capital expenditure of R865.4 billion over the next three years. State-owned companies would spend R337bn of that amount. R291.6bn would be spent in the steel-intensive transport and logistics sectors.The government identified public procurement as one of the levers in the Industrial Policy Action Plan. The public sector infrastructure expenditure as a share of gross domestic product increased from an average 5 percent between 1998/99 and 2004/05 to an average 6.6 percent between 2005/06 and 2014/15, according to the Treasury.Hanneman said: “Why not designate everything? Surely that will create opportunities for South African businesses.”Market conditionsHe said Scaw Metals had worked hard to meet criteria required by state-owned firms. The steel product manufacturer has a level 2 broad-based black economic empowerment rating. “It is easy to blame unfavourable market conditions. But sometimes you have to look inward. Ask yourself – what will it take for a (state-owned companies) to buy products from you?”Hanneman said the general state of the manufacturing sector was a concern. Some of Scaw Metals’ rolled products were sold to customers in the construction and manufacturing industries.South African manufacturers were battling falling sales, rising unsold inventory levels and increasing costs, according to a survey of manufacturing sector advocacy group, the Manufacturing Circle.The Steel and Engineering Industries Federation of SA chief economist Henk Langenhoven said yesterday that theoretically the potential benefit of successfully recapturing lost domestic market to imports was enormous.The total domestic market for metals and engineering sector products grew to a peak in 2013 and had contracted by 2 percent, said Langenhoven.Higher production“South African producers’ share of this market peaked in 2002 at 68 percent and has since declined by 13 percent to only 48 percent. If South African producers were able to maintain their market share – all things being equal – production would have been R114bn higher in 2015, which translates into roughly 80 000 more people employed, as against the 45 000 jobs lost since 2007,” he said.

The National Union of Metalwokers of SA has also called for the designation of all steel products. Acting spokesman Patrick Craven said yesterday that state-owned and private companies should buy local products instead of importing.“This is particularly relevant to the steel industry which is facing a major crisis and potential loss of thousands of jobs, partly as a result of the world decline in demand for steel and also the widespread purchasing of imported steel by South African manufacturing industry and state-owned companies such as Eskom, as a result of National Treasury’s delay in issuing notices to these entities instructing them to use designated products,” said Crave

Germistoncitynews.co.za - Germiston City NewsGirls learn there’s more to Scaw than steel manufacturingA.V.E: R8,85203 June 2016Article link: http://germistoncitynews.co.za/123782/girls-learn-theres-more-to-scaw-than-steel-manufacturing/

Grade 11 and 12 girls from Eksetsang Secondary School enjoyed spending the day at Scaw Metals in Germiston and learning from Jackie Jansen van Vuuren (back, second from left). The Scaw Metals Group, based in Germiston, recently hosted 20 young female pupils from Eksetsang Secondary School, in Katlehong, for the Cell C Take a Girl Child to Work Day initiative.The girls were shown the various careers they could explore and discovered that the Scaw Metals Group was more than just a steel manufacturer.The Steel Wire Rope facility, situated in Heriotdale, hosted the Grade 11 and 12 pupils showcasing the opportunities that Scaw Metals has to offer.The business unit plays a significant role in the overall company and is a leading manufacturer and distributor of specialised steel ropes, wire, strand and chains for key industries.The girls go on a tour of Scaw Metals with Eddie Botes (front).The Steel Wire Rope operations comprises three key divisions: steel wire rope, chain products and wire and strand, which are hubs of a diverse set of skills and expertise.As the high school is located in the surrounding community from where Scaw Metals operates, it demonstrates that the organisation is committed to not only empowering their female employees but also the students who want to potentially add tremendous value to the company and industry at large. Take a Girl Child to Work Day is a remarkable annual platform, however, Scaw Metals sees their role with the school as a partnership which contributes hugely to Scaw’s long-term objective to attract aspiring females to the organisation.The day was captured by the extraordinary female employees working at the Steel Wire Rope facilities; from the sales team, nurses in the clinic, and engineers to the metallurgists who each shared their journey.What was most fascinating to the students was the many years of service the employees had, which further demonstrated how much Scaw had invested in their female employees.Nokuthula Sephapo, one of the pupils said, “I was not aware of the amazing jobs Scaw had to offer which were far from the ordinary.

“The employees were insightful in sharing the courses they had studied, the duration of the courses and what the job entailed within the organisation.”Scaw Metals Group CEO Markus Hannemann said, “Over the years the Take a Girl Child to Work Day has evolved and further highlights our commitment to the empowerment of our community.”

Iol Business Report-Iol.co.za/businessNumsa to strike in defence of collective bargainingA.V.E: R40,07109 June 2016Article link: http://www.iol.co.za/business/news/numsa-to-strike-in-defence-of-collective-bargaining-2032338

Scrap metal dealer, Ton Scrap, has been fined R3.5 million after admitting to contravening the Competition Act by agreeing with its competitors to fix purchasing prices of certain ferrous scrap metals and to allocate suppliers among the large scrap metal merchants.The Competition Tribunal yesterday confirmed a settlement agreement reached between Ton Scrap, which now trades as Nieuwco, and the Competition Commission in terms of which the firm would pay the fine, which amounts to 5 percent of its annual turnover for ferrous scrap metal for the financial year to February 2005.The commission’s Korkoi Ayayee told the tribunal hearing that the commission had initiated a complaint in August 2006 against the Reclamation Group, SA Metal & Machinery Company (SAM), National Scrap Metal and Cape Town Iron and Steel Works.Ayayee said the scope of this investigation was expanded and the commission conducted search and seizure operations at the premises of the Reclamation Group in Johannesburg, Port Elizabeth and Durban in July 2007.The commission subsequently received information that the Reclamation Group, Abeddac Metals, Amalgamated Metals, Ben Jacobs Metals, Power Metals, SAM and Universal Recycling (URC) were engaged in price-fixing and collusive tendering in regard to various types of non-ferrous scrap metals.It then initiated a second complaint in August 2007 after it established certain firms were likely to be involved in specific contraventions of the Competition Act that were not identified at the time of the initiation of the first complaint.InvestigationAyayee said the investigation revealed there were other arrangements between scrap merchants, including the Reclamation Group, Ton Scrap, URC, Ben Jacobs Iron and Steel and Rand Scrap, and steel mills, such as ArcelorMittal SA, Scaw SA, Columbus Stainless, Highveld Steel & Vanadium and Cape Gate, that could be in contravention of the act.The commission’s investigation found that prior to the Competition Act coming into effect until early 2008, Ton Scrap, together with other large scrap merchants and large scrap consumers in the inland area, were involved in discussions, meetings and arrangements. During these events they decided the setting of a standard pricing formula to determine the selling price of scrap metal, the premium charged by the large scrap merchants for scrap metal and the collective sourcing or supply of scrap metal by the large scrap consumers and the allocation of scrap metal among them.Ayayee added that in these meetings, the large scrap merchants would reach an understanding that their market shares and margins would be kept constant, the specific scrap generators were

allocated to specific large scrap merchants, and the large scrap merchants also agreed not to poach one another’s suppliers and scrap generators.

She confirmed that with the exception of Ben Jacobs Iron and Steel, the 12 other firms had engaged in this conduct, and had concluded settlement agreements with the commission and were fined between 5 percent and 6 percent of their annual turnover.

Legalbrief.co.za - Legalbrief TodayNumsa to strike in defence of collective bargainingA.V.E: R1,79915 June 2016 Article link:http://legalbrief.co.za/diary/legalbrief-workplace/story/numsa-to-strike-in-defence-of-collective-bargaining/

The National Union of Metalworkers of SA (Numsa) is planning to strike in defence of collective bargaining that could signal a blow to the troubled steel industry. Numsa’s plan of rolling out mass action is against the backdrop of the closure of the country’s second-biggest producer, Evraz Highveld Steel and Vanadium, and job cuts across the board, including at Scaw Metals, reports Business Report. Even the government’s introduction of tariffs to protect mainly SA’s biggest steel producer ArcelorMittal SA posed the risk of destroying the downstream manufacturing sector, according to the smaller players. Job losses in the metals and engineering industries between the first quarter and fourth quarter of last year amounted to more than 11 000, according to Statistics SA. According to the report, Numsa’s general secretary, Irvin Jim, indicated that once the union got a certificate of non-resolution it would announce a date for the strike.

Mineweb.com - Mineweb Scrap metal shortage adds to steel sector woesA.V.E: R25,04020 June 2016Article link:http://www.mineweb.com/news/iron-and-steel/scrap-metal-shortage-adds-steel-sector-woes/

Steel producer Scaw Metals has called for swift action to address the shortage of scrap metal, which recently brought its operations to a standstill in South Africa.“We are strong advocates for trying to introduce a Price Preference System that works or overall some type of tariff on scrap [exports] or an outright ban on scrap [exports]…It will not only benefit us, Scaw Metals, it will actually benefit the industry at large…it will also benefit some of our competitors…and benefit the foundry industry at large,” said Scaw CEO Markus Hannemann.The company – which operates the largest scrap shredder in Africa – said it was forced to halt operations for three days in late-March/early-April 2016, after failing to source scrap metal.According to Steve van Wyk, executive head of operations at Scaw, the shortage is being driven by substantial scrap metal exports as well as the decline in manufacturing activity. The slump in manufacturing has seen scrap metal generated in South Africa fall to between 2 million to 2.5 million

tonnes per year – down from traditional levels of around 3 million tonnes per year – of which about 1.5 million tonnes is exported to the likes India and Pakistan, he said.

Scaw is particularly vulnerable to the shortage as its operations – unlike those of competitor ArcelorMittal South Africa, which are designed to use iron ore – are scrap based. Despite the steep decline in the price of iron ore, down to $51 per tonne from their 2011 highs in excess of $190 per tonne, the nature of Scaw’s operations means it is not economically viable to substitute scrap metal with directly reduced iron in order to produce steel. The company mothballed it’s directly reduced iron plant in June 2015.As electricity prices increased over the past decade, Scaw designed its operations to be more energy efficient. “In its very nature scrap requires less energy to melt than iron ore based products. So we’ve configured our operations to become more reliant on scrap and that has made us more dependent on the availability of scrap,” said van Wyk.

The price at which Scaw procures scrap metals varies depending on quality. Data from Cowen and Company shows the Turkish import scrap price, a key benchmark in the scrap trade, is currently $229 per tonne compared with $275 per tonne exactly one year ago.According to Hannemann, the Price Preference System – introduced by the International Trade Administration Commission (ITAC) of South Africa in August 2013 – which requires certain types of scrap metal to be offered to domestic buyers at discounts of up to 30% off international prices, has had little effect on bringing down domestic scrap prices. “Many of our scrap dealer colleagues have found ways of working around that system and to the effect that scrap prices have not really come down to the level that one would expect them to,” he said.

Meanwhile, Hanneman said import duties recently imposed on some steel products have helped to stem the flow of cheap imports into South Africa. He said domestic sales have also improved, following an improvement in market conditions, particularly in the second quarter of 2016.An influx of cheap steel imports – largely from the oversupplied Chinese market – has pushed the domestic producers to breaking point, with Evraz Highveld Steel and Vanadium, once the country’s second-largest steel producer, shutting down in February 2016. Rising electricity and labour costs, falling steel prices and weak economic growth have also added to the industry’s woes.

Moneyweb.co.za - Moneyweb Scrap metal shortage adds to steel sectorA.V.E: R48,118

21 June 2016Article link:http://www.moneyweb.co.za/news/companies-and-deals/watch-scrap-metal-shortage-adds-steel-sector-woes/

Steel producer Scaw Metals has called for swift action to address the shortage of scrap metal, which recently brought its operations to a standstill in South Africa.“We are strong advocates for trying to introduce a Price Preference System that works or overall some type of tariff on scrap [exports] or an outright ban on scrap [exports]…It will not only benefit us, Scaw Metals, it will actually benefit the industry at large…it will also benefit some of our competitors…and benefit the foundry industry at large,” said Scaw CEO Markus Hannemann.The company – which operates the largest scrap shredder in Africa – said it was forced to halt operations for three days in late-March/early-April 2016, after failing to source scrap metal.

According to Steve van Wyk, executive head of operations at Scaw, the shortage is being driven by substantial scrap metal exports as well as the decline in manufacturing activity. The slump in manufacturing has seen scrap metal generated in South Africa fall to between 2 million to 2.5 million tonnes per year – down from traditional levels of around 3 million tonnes per year – of which about 1.5 million tonnes is exported to the likes India and Pakistan, he said.Scaw is particularly vulnerable to the shortage as its operations – unlike those of competitor ArcelorMittal South Africa, which are designed to use iron ore – are scrap based. Despite the steep decline in the price of iron ore, down to $51 per tonne from their 2011 highs in excess of $190 per tonne, the nature of Scaw’s operations means it is not economically viable to substitute scrap metal with directly reduced iron in order to produce steel. The company mothballed it’s directly reduced iron plant in June 2015.

As electricity prices increased over the past decade, Scaw designed its operations to be more energy efficient. “In its very nature scrap requires less energy to melt than iron ore based products. So we’ve configured our operations to become more reliant on scrap and that has made us more dependent on the availability of scrap,” said van Wyk.

The price at which Scaw procures scrap metals varies depending on quality. Data from Cowen and Company shows the Turkish import scrap price, a key benchmark in the scrap trade, is currently $229 per tonne compared with $275 per tonne exactly one year ago.According to Hannemann, the Price Preference System – introduced by the International Trade Administration Commission (ITAC) of South Africa in August 2013 – which requires certain types of scrap metal to be offered to domestic buyers at discounts of up to 30% off international prices, has had little effect on bringing down domestic scrap prices. “Many of our scrap dealer colleagues have found ways of working around that system and to the effect that scrap prices have not really come down to the level that one would expect them to,” he said.Meanwhile, Hanneman said import duties recently imposed on some steel products have helped to stem the flow of cheap imports into South Africa. He said domestic sales have also improved, following an improvement in market conditions, particularly in the second quarter of 2016.

An influx of cheap steel imports – largely from the oversupplied Chinese market – has pushed the domestic producers to breaking point, with Evraz Highveld Steel and Vanadium, once the country’s

second-largest steel producer, shutting down in February 2016. Rising electricity and labour costs, falling steel prices and weak economic growth have also added to the industry’s woes.

Sowetanlive.co.za - Sowetan Live Zuma''s firing of Nene has benefited local steel firmA.V.E: R25,38821 June 2016Article link: http://www.sowetanlive.co.za/news/2016/06/21/zuma-s-firing-of-nene-has-benefited-local-steel-firm

Scaw Metals chief executive Markus Hannemann yesterday told Sowetan the axing of Nene, which saw the rand in December plummet from R14.50 to close to R18, "helped the company" which exports 20% of its product."It helped. It also happened at the time the markets were quiet because in December essentially our plant shuts down. Certainly the [weaker rand to dollar] exchange rate does help. But we have always exported irrespective of where the rand has been, but [the weaker rand] is just more helpful right now," said Hannemann during a media tour of the company's plant in Germiston.

Scaw Metals has 4200 employees and its two largest export destinations are the US and UK.The company is 74% owned by the government's Industrial Development Corporation, 21% is in the hands of a consortium made up of Shanduka Resources, Izingwe Holdings and Southern Palace Group, and the remaining 5% stake is owned by its employees."Last year was a difficult year for everybody. We just had to adapt as our results were not great. We used the opportunity to cut costs wherever we could; rethought things through our business; and we are in a much better position," Hannemann said, adding that the company was forced to retrench 70 employees.He said while the market conditions have been tough, the company has been focusing on strengthening its beneficiation capacity to add more value to its products with the aim to protect the company from cheaper Chinese imports while making it competitive in export markets.Scaw mainly uses scrapmetal to produce steel that is used for construction and rail projects, among other things. The scrapmetal is first separated from waste by using a magnet. The material is then sent through a shredding machine and then to the plant where it is melted at 1 600 degrees temperature and turned into a steel product.

City-press.news24.com - City PressWhat happens when the IDC becomes ‘black’?A.V.E: R59,538

29 June 2016 Article link: http://www.miningweekly.com/article/steel-committee-to-be-set-up-to-monitor-amsas-fair-pricing-pledge-2016-05-26

The committee was being formed against growing criticism – led by some steel-intensive firms, but also voiced by the opposition Democratic Alliance (DA) – about several recent steel price hikes, which had followed in the wake of the institution of protection on steel products. AMSA had applied for, and received, protection across ten product categories, with 10% duties already applying on eight of those categories. In addition, it had applied to the International Trade Administration Commission of South Africa for safeguard duties on several products, including hot-rolled coil, which made up a large portion of current imports. It had subsequently announced four price increases since the start of the year, which had led DA deputy shadow minister for trade and industry Dean Macpherson to argued that government was allowing AMSA to renege on its deal with government regarding pricing. Speaking at the Metals and Engineering Indaba in Johannesburg on Thursday, Macpherson argued that AMSA had received the protection on the basis of a commitment that it would not raise domestic steel prices – a promise it had since broken. Strachan said he was unaware of any agreement, noting that government and AMSA were yet to conclude their negotiations on the pricing formula. “Part of the function of the steel committee is to ensure that, with AMSA, we reach agreement on pricing . . . [and] that we don’t return to import parity pricing. That is, in a nutshell, the deal that we have to strike.” AMSA acting CEO Dean Subramanian added that the company had never promised not to raise prices, but had instead committed not to factor in protection when making price adjustments. He indicated that, under the proposed regulated model, domestic prices would be based on selling prices in a range of other countries with the basket comprising countries in Europe (50%), Asia (30%) and North America (20%). AMSA was already pricing its flat steel using the model, despite having not formally reached agreement with government on the basket. The company was also keen for locally produced steel to be “designated” for procurement by State-owned companies and departments, and for the current deeming of foreign steel and “local” to be reversed. Strachan said government was ready to remove the current “deeming” of foreign steel, a strategy that was pursued as a result of government unhappiness with AMSA’s persistent use of import parity pricing to set domestic prices. “In future, all designations will stipulate that only steel produced in South Africa will be considered to be local.” The DTI was also preparing to designate further steel-intensive products for local procurement in addition to the 15 that had already been designated under the Preferential Procurement Policy Framework Act. “We’ve got to raise aggregate demand for steel,” Strachan said, noting that many other countries were pursuing ‘buy local’ strategies to protect their steel industries in the face of the global glut. AMSA estimated global overcapacity to be 240-million tons and warned that it would take time before China reduced its capacity, despite large losses by that country’s steelmakers. However, Scaw Metals CEO Markus Hannemann urged government to go even further and designate all products to local procurement, unless it could be shown that such products cannot be produced locally. He added that the private sector should also embrace local procurement, lamenting the rising levels of importation, with companies seemingly “oblivious” to what is available locally.

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