South Africa’s steel and metal fabrication industry, often referred to as the real economy and the backbone of industrialisation, faces severe challenges that threaten its long-term stability and employment levels. The sector is highly significant, constituting 26.15% of the manufacturing sector’s output, encompassing metal production, fabrication, and heavy engineering value chains.

Despite the implementation of the Steel and Metal Fabrication Master Plan (officially launched in June 2021), recent reports warn that government failures, particularly concerning energy and logistics, are forcing retrenchments across energy-intensive industries. Trade union Solidarity stated in November 2025 that some employers would be forced to finalise retrenchment processes within weeks, potentially affecting thousands of workers by early 2026.

Industry Closures and Job Losses

The crisis is evident in key operations across the country. Assmang Proprietary Limited confirmed the permanent closure of its Cato Ridge Works Ferromanganese Smelter in KwaZulu-Natal, effective 31 August 2025, due to prolonged weaknesses in global manganese alloy prices and dramatically escalating input costs. This action affected approximately 310 permanent and 290 contract workers. Similarly, Glencore-Merafe Chrome Venture temporarily suspended ferrochrome smelting operations at its Boshoek, Lion, and Wonderkop Smelters in May 2025, highlighting the threat to the sustainability of the ferrochrome sector. The downsizing or closure of the ferroalloy industry will have a huge impact on downstream industries in the steel industry and manufacturing sector.

The broader steel sector has also suffered, with ArcelorMittal cutting approximately 4,000 direct and indirect jobs. The Master Plan monitoring data showed a loss of 2,290 jobs between September and December 2024 across sectors, including -939 jobs in basic iron and steel.

The High Cost of Doing Business

The primary drivers cited for this decline are escalating input costs, particularly for electricity and transport. Since 2007, electricity tariffs for smelters have increased by 900%. Electricity can account for 40% to 60% of the ferroalloy industry’s operating costs. This spiralling cost, alongside supply shortages and blackouts, has severely compromised mineral beneficiation, forcing the industrial economy to return to exporting primary commodity ores.

The collapse of the rail and ports network operated by the state-owned enterprise Transnet further erodes competitiveness. Logistics costs alone account for 50% to 80% of local production costs for stainless steel exported to the USA. Transnet’s struggles mean only about 20% of transport to and from smelters uses rail. The railway system’s inefficiency, driven by a monopoly mandate to operate profitably, has led to rising rail tariffs which, in many instances, have exceeded road transport rate increases.

Global and Regional Competitive Pressures

The South African market also faces global overcapacity, which is expected to increase to 721 million metric tonnes by 2027, placing further downward pressure on steel prices. Furthermore, trade diversions and illicit trade, including mis-declarations and undervaluation, threaten the sector’s competitiveness.

A significant regional threat has emerged with the new Dinson Iron and Steel Company (DISCO) mill in Zimbabwe, which started production in July 2024. DISCO aims to become one of the world’s lowest-cost steel producers, benefiting from its own iron ore and coal mines, a dedicated 50MW power plant, and a five-year tax exemption from the Zimbabwean government. South African steelmakers expressed concern that DISCO’s highly competitive output, particularly long steel products, will upset a local market already characterised by overcapacity.

Master Plan Interventions and Trade Measures

The Department of Trade, Industry and Competition (dtic) is addressing these structural issues through the Master Plan, with a 2030 vision of achieving a competitive, sustainable, and resilient sector. The Industrial Development Corporation (IDC) has provided substantial support, approving R20 billion in total investment and facilitating R45 billion up to March 2024, resulting in the creation of 10,632 new jobs and saving 7,812 existing jobs. This support included a total of R3.063 billion in loan facilities provided to ArcelorMittal South Africa (AMSA) between June 2024 and March 2025 to delay the cessation of its Longs Business operations.

The dtic has implemented more than 20 trade interventions and measures to support local industry and promote localisation. These include raising tariffs on several imported steel products, such as plate-type heat exchange elements and certain bars and rods. Additionally, anti-dumping duties and safeguard duties have been imposed or extended against imports from countries like China and India to protect the local market from unfair competition.

Boosting Demand Through Infrastructure

A core function of the Master Plan is to stimulate demand, particularly through government infrastructure spending. The Minister of Finance announced in the 2025 Budget Speech that R1 trillion would be spent over the Medium-Term Expenditure Framework (MTEF) period on infrastructure projects.

Major opportunities for local steel are concentrated in rail, water, and energy sectors. For instance, the National Transmission Company South Africa (NTCSA) is undertaking a massive Transmission Development Plan (TDP) which involves building approximately 14,000 km of transmission lines over the next decade. This project alone will require around 452,175 tonnes of tower steel, well within the capacity of local manufacturers. Local manufacturers are also benefiting from significant contracts awarded by Transnet Freight Rail and PRASA to rebuild rail infrastructure, supplying components like railway sleepers, fastening systems, and bolts and nuts.

Simultaneously, transformation and skills development are key focus areas. Programmes run through the SEIFSA Training Centre and the dtic-partnered TDM Powered Toolmaking Programme are training thousands of learners in trades such as welding, fitting, and turning. The TDM programme has achieved a 95% company absorption rate for graduates, contributing to lowering the average age of toolmakers from about 70 years to 40 years over a decade.

The future of the steel and metal fabrication value chain hinges on the government’s ability to decisively address the major binding constraints, especially the administered prices and reliability of energy and logistics services, to achieve policy certainty needed for long-term investment and planning.