Zimbabwe’s Dinson Iron and Steel Company (DISCO) has made headlines this year by bringing its steel production plant online, a significant milestone for the nation’s industrial sector.
DISCO, owned by a Chinese parent company renowned as one of the world’s largest stainless steel producers, plans to ramp up production to 600,000 tons annually, with an ambitious target of reaching 3.5 million tons in the future. This development has sent ripples across the Southern African Development Community (SADC), including South Africa, where the steel industry faces challenges.
South Africa’s steel sector, represented by major players like ArcelorMittal, is grappling with policy uncertainty, subdued demand, and stiff competition from cheaper imports. These challenges have stymied efforts to stabilise and grow the local industry, leaving stakeholders concerned about the long-term sustainability of the sector.
Challenges in South Africa’s Steel Industry
In an interview with Jimmy Moyaha, Charles Dednam, Secretary General of the South African Iron and Steel Institute, highlighted the sector’s struggles. “Policy uncertainty is one of the primary issues hampering the steel industry,” Dednam explained. He noted a 13% drop in demand compared to last year, coupled with a reliance on imports, which account for over 30% of total steel consumption in South Africa.
Despite protective measures like tariffs and duties, local manufacturers find it difficult to compete with imported steel’s lower prices. “The perception is that the primary steel industry is well-protected, but the numbers show that imports continue to flood the market,” Dednam added.
The Impact of DISCO’s Entry
DISCO’s growing capacity poses a potential threat to South African producers. The company’s production fills a significant gap in regional demand, estimated at around eight million tons annually in the SADC region. With South Africa’s production capacity already exceeding demand, DISCO’s output could exacerbate the surplus, putting additional pressure on local manufacturers.
“DISCO’s entry adds to the surplus capacity in the region,” Dednam remarked. “The only way to safeguard the local industry is to focus on value-added products and move further downstream in the steel production process.”
The Case for Beneficiation
Beneficiation—processing raw materials domestically to add value before export—has long been championed as a solution to South Africa’s industrial woes. Dednam stressed the importance of developing downstream markets to sustain local production. “You can produce as much as you like, but without a downstream market, there’s no demand,” he said.
The conversation also touched on lessons from countries like China and Taiwan, which have successfully aligned policy and industry goals to prioritise value-added production. Dednam argued that South Africa needs a clear vision for its steel sector, with policies tailored to support local manufacturers and foster industrial growth.
The Way Forward
As South Africa seeks to position itself as an infrastructure powerhouse, with ambitious plans for industrialisation, the steel sector’s role is critical. However, without policy certainty and strategic alignment, the industry risks further decline. “We need to beneficiate as much as we can, not just for South Africa but for the whole of Africa,” Dednam concluded.
DISCO’s rise in Zimbabwe serves as a reminder of the competitive challenges South Africa faces. The steel sector must adapt and innovate to survive in a rapidly changing regional landscape. For now, stakeholders await decisive government action to protect and revitalise one of the nation’s most critical industries.