For the South African steel industry to survive, the cost structures must improve across the value chain to position South African primary steelmaking in the lowest quartile of the global steel cost curve, downstream value-addition must be increased to claw back local market share and value-added exports must be increased.

The de-industrialisation trajectory that has been observed in the sector can be attributed to the absence of an all-encompassing, holistic metals or steel and engineering sector policy that balances the needs of up and downstream.

While any vision and outcomes for the future of the sector must be co-created by industry and the Department of Trade, Industry and Competition (dtic), for the steel sector to survive, government must take the lead, said industry organisation Steel and Engineering Industries Federation of Southern Africa CEO Lucio Trentini.

The dtic has requested industry to make submissions on defining the problem and growth areas, what interventions should be taken immediately and over the short-term to bring stability to the industry, and defining long-term growth targets for the industry, as well as what the measures of success would be.

"Industry is in the process of drafting further inputs for consideration in framing the immediate, medium and long-term interventions to directly address the challenges raised in the problem areas.

"However, in the immediate term, we propose that there are interventions the government and, in turn, the dtic can enact to arrest the decline faced by the sector," he said.

For example, government can intervene to help reduce logistics costs for the industry and can leverage Operation Vulindlela to coordinate and consolidate national demand of steel-related projects, he pointed out.

The lack of demand from both the State and the private sector is a key challenge for the industry, and the most immediate challenge facing the sector, and government, as the policy maker, is how to manage pedestrian demand and consumption in an environment of over-capacity, Trentini highlighted.

Additionally, the industry's competitiveness in export markets is being eroded and there is inadequate support for increased export efforts in the context of a small and shrinking domestic market.

To improve its cost structures, the industry must adopt a strategic approach and balanced approach to investment between blast furnace and mini-mill capacity, while government should ensure that there are incentives and support for foundries, and that different incentives, such as for scrap metal or iron-ore, are considered holistically.

"Government must collaborate with the sector to craft a balanced, forward-looking steel strategy that protects all players in the sector, while ensuring a competitive industry that aligns with global trends," Trentini said.

For example, government procurement practices can emphasise and prefer local steel where competitive capacity exists, and there must be alignment between policy instruments for strategic procurement, financing and public-private partnerships, he added.

The South African steel industry is eager to collaborate with government to ensure that policy decisions are made in the best interests of the industry and the nation.

A holistic approach that protects the diversity and sustainability of the entire steel value chain is essential for the future success of the South African steel industry, he said.