Treasury designates Fabricated Structural Steel

Treasury designates Fabricated Structural Steel

In a long awaited move, the National Treasury has now designated Fabricated Structural Steel, effective from 1 February 2017.

This is according to an announcement by the Southern African Institute of Steel Construction (SAISC).

“This is an important break-through for our industry as it recognises the major role the steel construction industry plays in developing the country as well as achieving job preservation and job creation,” says Kobus De Beer, industry development executive, SAISC and Powerline Association of South Africa POLASA Secretariat. “This crucial achievement has been realised through the close collaboration of many associations and the Dti Metals Desk in particular.”

Kobus De Beer, industry development executive, SAISC

Kobus De Beer, industry development executive, SAISC

The following structural steel categories are incorporated in the designation announcement: joining components; frames; roof cladding; vertical cladding; wire products; fasteners; ducting and structural pipework; gutters, downpipes and launders;
primary steel products.

The move will, through the Preferential Procurement Policy Framework Act (PPPFA), effectively require that 100% local content of these products be specified by all government departments, municipalities, provinces and state-owned companies (SoCs) such as Eskom and Transnet.

Paolo Trinchero, CEO of SAISC, notes that: “Although the SAISC welcomes this news, we need to be aware that the Minister of Trade and Industry, Dr Rob Davies, acknowledges that the designation instrument is only as strong as the level of compliance by departments and SoCs, which is currently weak. Manufacturing companies have generally supported the designation concept, but have repeatedly questioned whether it is being implemented and enforced, with many even arguing that they continue to lose public-sector contracts to cheap imports.

“Government buyers will not beat a path to now insist on buying South African” continued Trinchero. “And we as an industry will have to make every effort to hasten compliance. Any suspected import of fabricated structural steel has to be reported and investigated.

“Our industry dare not now relax its vigilance as the underlying assumption is that we will improve competitiveness and maintain the high levels of engineering excellence and quality. Our members must redouble their export efforts as this is the best proof of competitiveness and good productivity.

“We are still very concerned about the high levels of imports of fabricated structural steel as part of major projects for mines and for the new power stations – particularly as methods have been found to import these without paying the 15% import duties levied. This development will now enable us to address this issue with renewed vigour to assist SARS Customs to close these loops and to gain the full benefit of the limited protection our industry does enjoy.”

The Dti insists that measures will be taken to ensure higher levels of compliance across all government departments and agencies.

The Minister of Trade and Industry, Dr Rob Davies has outlined a three-pronged strategy to improve adherence to the designations:

1. Making compliance an audit requirement – detailed compliance guidelines are to be produced in collaboration with the National Treasury, which will guide the auditing and reporting frameworks.
2. Training and capacity building will be undertaken with institutions that lead public procurement and strategic sourcing.
3. A monitoring and evaluation tool is to be developed for designated sectors. Besides the infrastructure programme, where the aim is to leverage the 18 so-called Strategic Integrated Projects (SIPs), being overseen by the Presidential Infrastructure Coordinating Commission (PICC) to accelerate industrialisation, the DTI is also turning its attention to privatesector supply chains. The department is particularly keen that the “linkages and multipliers that exist between mining and manufacturing” are further developed.

3-SKYRIDERS-Medupi Pics (89)

Structural steel installations in progress, Medupi Power Station (Photo: Skyriders)