Trends in Steel: Algerian and South African Steel

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Algeria is an upper middle-income country that is confidently emerging from a few decades of political instability and relative economic isolation. It is rich in oil and gas and happens to be the largest country in Africa. The Institute attended the African Business and Investment Forum in Algiers in December of 2016 in order to witness this emergence first hand. The representatives of South African business who travelled to Algeria all came back with a great deal of enthusiasm to pursue opportunities in every conceivable sector.

While mining, energy, agriculture and tourism dominated discussions I found the opportunities in the steel industry to be most intriguing. Algeria is in the process of revamping its steel industry. In some ways, Algeria is like South Africa. It has large iron ore deposits and mature primary steel producers. Moreover, it has manufacturing and beneficiation capacity but increasingly relies on Asian and European imports.

More recently, however, the country is investing heavily in modern steel mills and downstream manufacturers. For instance, the Bellara Steel complex, a new joint venture between government owned Sider and Qatar Steel will soon start producing over 3 million tonnes of steel with an investment of R26 Billion. Since the collapse of commodity prices in 2015 Algeria is essentially attempting to diversify its economy away from oil and gas.

This is where South Africa’s expertise can be best utilised. South African industry, along with intelligent government policy, has navigated a tricky road away from over-reliance on commodities. Much has been achieved in terms of creating employment, especially in the service sector. Seeing that it sits in a region of youth upheavals such employment is of paramount importance to Algeria.

Ma, more importantly, ly South African companies, from our steel marketers and fabricators to those who make cars, agricultural pivots and windmills, are internationally competitive. This is the kind of experience that Algeria will seek to emulate in order to develop the downstream industry for Bellara. Algeria has cheap energy, a relatively large population, and sits in close proximity to a large EU market to the north and an exploding West African market to its south. Thus collaboration with South African companies involved in manufacturing can yield significant returns.

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Tied to this there is the issue of developing technical competence to maintain internationally acceptable product and design standards while pursuing new markets for steel. Such capacity is typically housed in a few steel institutes such as SAISC.

Over the past decade our Institute has created entirely new markets for steel in housing construction and continues to explore high-rise construction. Collaboration between the Institute and Algerian counterparts could form the basis for emergence of an entire generation of African steel designers, products and standards.

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The reinvigorated Algerian steel industry will form the basis for the country’s attempt to replace imported capital goods with African manufactured versions. South Africa has much knowledge and experience to share in this arena. It was encouraging to see that the Algerian government and businesses are keen to work with us. Now we have to accept the invitation and find creative ways to link the two ends of our continent.