SAIL, Afripalm plan $2.95-bn steel plant in South Africa

To have capacity of 3-5 million metric tonnes a year.

Steel Authority of India Ltd, the nation’s second-largest producer, agreed with Afripalm Resources Ltd to build a 21-billion rand ($2.95-billion) South African steel plant to rival ArcelorMittal South Africa Ltd.

The mill will have a capacity of three million to five million metric tonnes a year and may take four to six years to build, Afripalm Chairman Lazarus Zim said in a phone interview today. As part of the agreement, Afripalm will begin distributing Steel Authority’s products in Africa’s largest economy, he said.

The South African steel market is dominated by ArcelorMittal South Africa, or AMSA, accounting for 73 per cent of local steel dispatches. Afripalm is “delighted” at the prospect of introducing “healthy competition into the local market,” Zim said in an emailed statement. The country’s government has for years tried to force the price of steel produced locally lower to benefit local manufacturing, with little success.

There is a need for more steel manufacturing capacity in South Africa, a study found, Zim said. A more “comprehensive” investigation will be done over the next six months to determine the costs and full scope of the project, he said. He declined to say what type of steel would be produced.

Steel products manufactured in the country by the partners will be for both the domestic and export markets, he said. “We are not looking at putting up a plant solely for the domestic market, there is an export component too,” he said.