Botswana moves to export steel

> Mpho Tebele

Gaborone- The establishment of the Pula Steel Manufacturing and Casting Plant is expected to reduce Botswana’s steel import bill which currently stands at P775 million annually.

According to international trade statistics, the Southern African Development Community (SADC) country imported P36 billion worth of steel in 2014 and the local demand amounted to P775 million.

The local demand was met primarily by South Africa and China which supplied 50 percent and 40 percent respectively.

Officially opening the first ever steel manufacturing plant in Botswana that will see the country start exporting the commodity, Vice President Mokgweetsi Masisi on October 20, said Pula Steel is strategically located to serve both local and SADC markets.

Masisi said the steel plant in Selibe Phikwe, in northern Botswana is the first company in the country that processes scrap metal into intermediate product called billet.

The plant will further process billet into different types of steel products such as rebar and other products.

“Today we officially open the first phase of this production process which will produce the billet that will be 100 percent for export. I am reliably informed that in eight months the production process will add a second phase which will produce re-bar and other products; a considerable part of which will be for the local market and some for export,” he said.

He said steel is a basic commodity, which is required by any developing economy, for infrastructural developments, mines and construction. State owned copper mine – the Bamangwato Concessions Ltd (BCL) is one of the major shareholders in Pula Steel Manufacturing and Casting Plant.

“At the beginning of this year, His Excellency the President (Ian Khama) assigned me to coordinate all efforts to create employment opportunities and to eradicate poverty.

This exercise has culminated in the formulation of the recently launched Economic Stimulus Programme which seeks to stimulate economic diversification and growth, generate substantial accelerated employment opportunities (especially for the younger population), and contribute significantly to poverty eradication,” said the VP.

According to Masisi, the programme has five components, and one of them aims to boost the manufacturing sector through EDD (Economic Diversification Drive). The EDD is a national strategy aimed at accelerating diversification of the Botswana economy through the development of globally competitive enterprises.

Masisi said the aim of the initiative in the short term is to promote competitiveness through a preference margin provided to resident firms in public procurement, so as to encourage local production of goods and services that were previously imported.

“This project (Pula Steel Manufacturing and Casting Plant) has all the hallmarks of what I consider to be a model Economic Stimulus Package (ESP) project, which is: government facilitation; private sector driven; export oriented; import substitution; sustainable job creation; and has potential for downstream economic activity,” he said.

Masisi said the establishment of Pula Steel has created an opportunity for other investors to consider investing in potential downstream projects such as production of nuts and bolts and screws.

The Managing Director of BCL, Dan Mahupela said due to the increased economic activity and development projects in the SADC Region, demand surpasses supply. He said Africa is the next continent to drive the world economy and demand for steel in the continent will continue to rise.

“According to the initial plan, this plant would have been constructed with an opening production capacity of 80 tonnes of billet per day.

However there was change of scope during project implementation which included variation in the intended output of 80 tonnes of billet to 240 tonnes of billet per day,” he said.

As a result some elements were brought forward and affected a number of components and processes of the plant such as a major modification in the power configuration.

Mahupela said as a company they were fully aware of the abundance of scrap metal in Botswana which has been exported out of the country at high volumes but low value to Botswana.

“We are also aware that Botswana has abundant iron ore deposits and coal reserves covering more than half of the country,” said Mahupela.

Mahupela said steel is a basic commodity which is required by any developing economy, mainly for infrastructure developments.

He also added that bringing forward some elements stretched the initial target commercial date from December 2014 to October 2015.

He said the change in the approach to deliver the project led to an increased capital requirement of P130 million against the P40 million initially planned.

Mahupela also revealed that the BCL Board of Directors approved an additional investment of up to P53 million early this year as a result of the change in the scope to ensure that this project is delivered.

The plant will employ 250 workers in its first phase and it is expected to increases this to 1000 employees in the second phase.

November 2015
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