Local and foreign steel fabricators are pursuing business potential in sub- Saharan Africa, with many focusing on opportunities in Mozambique, says International Steel Fabricators (ISF) director Neels van Niekerk.
He tells Engineering News that the number of South African and international companies that attended this year’s Mozambique Mining and Energy Conference (MMEC), in April, was significant.
“The MMEC is the premier event that focuses on the Mozambique mining, energy and oil and gas sectors, as well as their sustainable development,” he says. “This year, it attracted a plethora of international investors, mining experts and, of course, steel fabricators, includ- ing many South African companies, whose proven expertise in these areas is sought after.”
Local steel fabricator and construction company Cosira Group is one of the many companies showing interest in opportunities in Mozambique. Cosira Mozambique MD Francis Braz says the company is making significant progress, despite the presence of Chinese companies – Mozambique’s usual partners in infrastructure development.
While China’s trade with Mozambique has reportedly increased by 800% over the last decade, Braz states that Cosira delivered more than 10 000 t of steel to the Moatize coal project, in Mozambique, in 2011 alone.
Braz credits the ISF with the company’s success in Mozambique, as the industry body helped to establish opportunities for Cosira and other South African companies, not only in Mozambique but also worldwide.
Specialist steel fabricator Tass Engineering MD Tim Tasioulas agrees, saying that the ISF’s contribution has been significant, attributing its success in the South African steel fabricators industry to good networking.
“This has been especially helpful in Mozambique, where [Tass Engineering] benefited from the MMEC – facilitated by the ISF – by meeting a host of potential clients,” he says, adding that he is impressed by potential opportunities in Mozambique. Further, he notes that Tass Engineering is pursuing some interesting business leads in the country.
A Secure Investment
Southern African Institute of Steel Construc- tion (Saisc) executive director Dr Hennie de Clercq believes that establishing business in Mozambique is a more secure investment for companies in Southern Africa than for international companies, partly owing to geographical proximity.
“[South Africa] has a long tradition of doing work in Mozambique. We have a better under- standing of the country’s legal system, and relationships are more clear cut,” he says.
De Clercq cites the newly discovered abundance of coking coal and other resources as the sources of investment interest in the Southern Africa country. He points out that the subsequent need to build infrastructure around these resource sites is one of the major attractions for the steel construction industry.
“It must be understood, however, that structural steel is just an element [of infrastructure]. As a steel industry, we have an even greater interest in industrial development than in infrastructural development – not that there isn’t a significant interest there as well,” he notes.
De Clercq adds that the current infrastructure in Mozambique is quite weak, and until it has been developed and the capacity has been increased, inadequate infrastructure will hamper the development of mining operations in the country.
This bodes well for the steel construction industry because initial construction has to take place before mining projects can be developed.
De Clercq points out, however, that steel construction is not the only industry with an interest in Mozambique, or any other country in sub-Saharan Africa.
The economic downturn and subsequent slowdown have forced European companies to consider opportunities outside Europe, with Africa designated as the target area, he says.
“Thanks to subsidies from home, these companies tend to come into the market quite competitively and then, of course, there is China.”
Owing to this increased competition, De Clercq emphasises the necessity of simply being present in Mozambique and the importance of increasing competitiveness through active marketing.
He also highlights the importance of encouraging South African civil engineering companies to establish a greater presence in the rest of Africa and to be more dynamic.
“If this happens, the steel construction industry, including capital equipment suppliers, among others, can come into those projects on the coat tails of the civil engineering contractors,” he says.
One of the many challenges facing the South African steel construction industry is that the combined capacity of the industry exceeds current demand.
De Clercq highlights the industry boom in 2007 and 2008, when there was a tremendous demand for steel construction and the industry was fully occupied.
“Since then, demand has shrunk signifi- cantly because of the global and local economic slowdown, and the industry’s capacity is not even nearly fully used,” he says.
“Even under normal conditions, our industry needs to expand its markets and exports constitute the obvious opportunity. Exporting fabricated steelwork is a strategic imperative for the industry.
“Our industry needs to be active in exports on a consistent basis and certainly not just during those times when local demand is down.”
Van Niekerk agrees and says that the African situation is enticing for South African exporters. “New coal mining opportunities in countries like Mozambique are booming and the discovery, as well as capacity confirmation of new offshore gasfields around all the other Southern African countries, signal the start of a great new Southern African industry.”