The de-industrialisation trend plaguing South Africa’s metals and engineering sector stems from the absence of a well-considered and all-encompassing metals sector industrial policy, says Steel and Engineering Industries Federation of Southern Africa (SEIFSA) CEO Lucio Trentini.

In a new year’s message to stakeholders, he says that translating improved business sentiment into tangible economic growth, job creation and a better quality of life will require greater collaboration between policymakers, the private sector and key government entities.

Trentini says the steel industry is eager to collaborate with government to ensure that policy decisions are in the best interest of the industry and the nation.

South African business sentiment rose to its highest level during 2024, buoyed by constant electricity supply and political stability. The suspension of load-shedding has provided much-needed relief to businesses and citizens alike.

"We hope the relief felt by the whole country from the suspension of load-shedding in 2024 will flow into 2025. Eskom's generation operational recovery plan appears to have delivered on its promise, and we hope this will be seen in robust economic growth," says Trentini.

The improved electricity supply, coupled with falling interest rates, prompted the International Monetary Fund (IMF) to raise its gross domestic product forecast for South Africa. The IMF now predicts 1.1% growth for 2024, increasing to 1.5% in 2025 and reaching 1.8% by 2030. Similarly, the South African Reserve Bank expects growth to be 2% by 2027.

Trentini stresses the need for a unified, long-term strategy for the steel industry, involving all stakeholders in the value chain.

"SEIFSA and the broader metals, engineering and steel industry, representing both the up and downstream value chain, reiterates the call for government to prioritise a long-term, inclusive strategy for the steel industry. A collaborative approach that considers all stakeholders is essential to securing the future of South Africa’s steel industry and its critical role in economic development," he says.

However, unemployment remains a major obstacle. While the unemployment rate decreased by 1.4 percentage points to 32.1% in the third quarter of 2024, according to the Quarterly Labour Force Survey, with 294 000 more employed people to 16.9-million and a decrease of 373 000 unemployed people to 8-million is moving in the right direction, the rate is still cripplingly high.

"Until strong growth is achieved and sustained, joblessness will continue to plague the economy. This is one of the many challenges that can be best addressed through private-public partnerships," he avers.

Looking ahead, Trentini highlights the European Union's Carbon Border Adjustment Mechanism (CBAM), set to take full effect in 2026, meaning that 2025 will be the final year of the transitional phase.

He says SEIFSA will ensure the metals and engineering sector is kept informed of any developments and encourage the industry to adopt a proactive approach to the initiative.