Mini mills are private companies that receive ‘billions in bailouts each year’ and do not produce all the products SA needs, which will now have to be imported. Picture: iStock
That was just weeks before Amsa announced the closure of its long-steel operations in Newcastle and Vereeniging, as well as its rail and structural subsidiary Amras.“The broader economic effect on induced jobs is expected to be significantly higher, especially in the Newcastle region,” it stated. Xagta estimates that approximately R8.5 billion per year is transferred in value from the steel scrap generators to the steel scrap metal consumers .
“It doesn’t matter how well they negotiate for better prices on iron ore or electricity or get the unions to agree to no increase , it doesn’t overcome the enormous wave of cash washing over the other side of the industry.” According to Xagta, a significant portion of the IDC’s scrap metal book is currently under business rescue despite the heavy support – and the market distortion is massive due to the over-investment in mini mills: