The South African Stainless Steel market and Sassda

1. The South African Stainless Steel Market
and the Role of Sassda for Development
John Tarboton
Executive Director
Southern Africa Stainless Steel Development Association
Thursday, 9th November, 2017
CHROMIUM 2017

2. 0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
0
50,000
100,000
150,000
200,000
250,000
1960 1970 1980 1990 2000 2010 2020
GlobalProduction(t)
SAApparentConsumption(t) South African Apparent Consumption vs Global Production
SA Apparent Consumption
World Production

3. SA Consumption by Sector
Automotive
28%
Industrial
18%
Transport
16%
Mining
15%
Manufacturing
13%
Rail
10%

4. South African Stainless Steel Industry
Primary production 500 kt, consumption 140 kt
 Approximately US$1.1bn
o at US$2 230/t primary production
 Approximately US$620m
o at conversion = twice primary
 Approximately 35 000 direct jobs
o at 3 to 5 tonnes per worker per year
 Multiplier Effect*
o 70 000 additional jobs
o US$1bn extra support industries and services
*Advanced Manufacturing and Jobs in South Africa: An example of Perceptions and Trends
Garth Williams, Director: Advanced Manufacturing Technologies, Department of Science and Technology
In Total
About US$3 billion
Over 100 000 jobs

5. Statistics 2016 vs 2017
January to September
Primary Products (e.g. sheet, bar, etc.)
2016 2017 %
110 064 106 231-3.5%
Primary Product
Apparent Consumption
Production
2016 2017 %
366 189 376 515 2.8%
minus
equals
minus
equals
Imports
2016 2017 %
34 370 30433 -11%
Exports
2016 2017 %
290 495 300 717 3.5%
Net Exports
2016 2017 %
256 125 270 284 5.5%

6. Statistics 2016 vs 2017
January to September
Finished Products (e.g. pots, tanks, etc.)
2016 2017 %
85 287 81 454 -4%
Finished Product
Apparent Consumption
Primary Product
Apparent Consumption
2016 2017 %
110 064 106 231 -3.5%
minus
equals
minus
equals
Imports*
2016 2017 %
37 950 37 950 0%
Exports*
2016 2017 %
62 727 62 727 0%
Net Exports
2016 2017* %
24 777 24 777 0%
* 2017 based on 2016 figures

7. -140,000
-90,000
-40,000
10,000
60,000
110,000
160,000
210,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Stainless Steel Primary Product Apparent Consumption
Primary Producer Supply Flat Imports Other Imports
Primary Non-Producer Exports Other Exports Total Apparent Consumption

8. Sassda Short Track Report
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
2 3 4 5 6 7 8 9 10 11 1/17 2 3 4 5 6 7 8 9 10
Our current stainless steel related orders are …
Poor Not Sufficient Sufficient Good
2.28 2.282.222.42 2.28 2.23 2.402.35 2.36 2.38 2.26 2.33 2.25 2.29 2.27 2.15 2.12 2.22 2.33 2.46

9. Sassda Short Track Report
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
2 3 4 5 6 7 8 9 10 11 1/17 2 3 4 5 6 7 8 9 10
The current stainless steel related business situation is considered to be …
Poor Not Sufficient Sufficient Good
2.16 2.372.202.142.162.162.202.17 2.34 2.27 2.292.29 2.18 2.21 2.12 2.03 1.94 2.12 2.25 2.28

10. Sassda Short Track Report
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
2 3 4 5 6 7 8 9 10 11 1/17 2 3 4 5 6 7 8 9 10
Stainless steel related business expectations in the next three months are …
Worse Unchanged Better
2.38 2.802.852.572.572.422.432.40 2.59 2.50 2.80 2.96 2.59 2.59 2.48 2.39 2.64 2.71 2.63 2.62

11. Industry Expectations Index
46.0%
46.8%
47.7%47.2%
52.5%52.3%
61.6%
59.9%
52.9%
50.0%
60.1%
65.3%
53.0%53.1%
49.4%
46.2%
54.8%
57.0%
54.3%54.0%
40%
45%
50%
55%
60%
65%
70%
Stainless Steel Industry 3 Months Expectations Index

12. Southern Africa Stainless Steel
Development Association
Established in July 1964
382 members, mainly companies
Eight employees
 Head Office in Edenburg
 Regional Managers in Western Cape and KwaZulu-Natal
Members in South Africa, Namibia, Zambia and
Kenya

13. Membership Breakdown
Service Provider
18%
Other
7%
Primary
3%
Converter
63%
Trader
9%Scrap
0%
Value Chain
76%

14. Sassda Purpose Statement
To provide a platform for Sassda members to
collectively
 Promote the sustainable growth and development of
the industry
 Main emphasis on stainless steel converted within the
South African economy

15. Sassda Value Proposition
Sassda cost effectively links and empowers members
 To grow the locally converted stainless steel finished
product market within the South African economy
 To connect potential customers with members
 To provide stainless steel specific information and
training
o in order to promote member efficiency and productivity
o and enable our members to offer a better service to their
customers

16. Sassda Strategy
Concentrate on growing the market
 Strategic pillars to support the purpose statement
oMarketing of stainless steel
oEducation and training
oExport promotion
oSafeguarding the industry
oRaise the profile of sassda
oMarket development
oMember engagement
oTransformation of the industry, including sassda

17. Marketing of Stainless Steel
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Value to Members of Marketing of Stainless Steel
2015 2016 2017
Welding Brochure
Corporate Profile
Roofing Brochure
Handling and Cleaning
4 hr presentation
186 architects
Member Exhibits
Technically brilliant
Aesthetically brilliant
Financially brilliant
About 100 sessions per
month
What if Eiffel Tower
was stainless steel
LCC is critical for
material Selection
3.25 X entries of 2014
Over budget on
sponsorship by 40%
ISSF Bronze Award

22. Life Cycle Costing Input Mild Steel
Utility Ferritic Stainless steel
(e.g. 3CR12)
Lean Duples Stainless Steel
(e.g. LDX 2101)
Ratesand
Duration
Cost of Capital pa 2% 2% 2%
Inflation Rate pa 1% 1% 1%
Desired Duration (years) 100 100 100
Downtime per Maintenance Event (days) 0 0 0
Value of lost production (amount per day) 0 0 0
InitialCosts
Material Cost
7 300 t @ $600/t 7 300 t @ $1 475/t 5 475 t @ $2 575/t
$4 380 000 $10 767 500 $14 098 125
Fabrication Cost
1.25 Material Cost 1.25 Material Cost 1.25 Material Cost
$5 475 000 $13 459 375 $17 622 656
Other Installation Costs
Painting Cleaning (0.3 x painting costs) Cleaning (0.3 x painting costs)
$4 073 376 $1 222 013 $1 222 013
OperatingCosts
Maintain
Maintenance Cost Per Event
Painting None Cleaning (0.3 x painting costs)
$4 073 376 $0 $1 222 013
Time Between Maintenance Events (years) 7 N/A 20
Replace/Dismantle
Scrapped After 100 years Scrapped After 100 years Scrapped After 100 years
Elapsed Time Between Replacement (years) 100 100 100
Removal Cost Per Event $1 000 000 $1 000 000 $1 000 000
Material + Installation Cost Per Event $0 $0 $0
Residual Value of Material Per Event
7 300 t @ $200/t 7 300 t @ $300/t 5 475 t @ $700/t
$1 460 000 $2 190 000 $3 832 500
Annual Material Related Cost $0 $0 $0

25. -$10
$0
$10
$20
$30
$40
$50
$60
Mild Steel 3CR12 LDX 2101
Millions Life Cycle Costing of Eiffel Tower
Material Costs Fabrication Costs Other Installation Costs
Maintenance Costs Replacement Costs
$48 709 718
$24 631 244
$34 571 608

26. $-
$10
$20
$30
$40
$50
0 20 40 60 80 100
Millions Total Accumulated Costs of the Eiffel Tower
Mild Steel
3CR12
LDX 2101

27. Education and Training
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Value to Members of Education and Training
2015 2016 2017
Being completely
overhauled
111 delegates
147 documented
enquiries including site
visits and reports
Nine completed
Six more planned
43 delegates207 people over 4 visits64 delegates84 delegatesHygiene fabrication
Wits post graduate
4th Year architectural
students at 11
universities
Prize sponsorship
Video productions

28. Safeguarding the Industry
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4
Stolen material
notifications
Stainless Steel Industry
Statistics
Lobbying (e.g. localisation,
designation)
Sassda Short Track
Industry Survey
PUM
Value to Members of Safeguarding the Industry
2015 2016 2017
All stainless steel
fabricated products
designated for local
production
Finished Product
Statistics to give
complete industry
picture.
Tariff protection

29. Raising sassda’s Profile
2.00
2.20
2.40
2.60
2.80
3.00
3.20
3.40
3.60
3.80
4.00
Media releases Sassda Engagement with the dti Sassda engagement with DCCI,
JCCI, TIKZN, Wesgro, etc.
Social media
Value to Members of Raise Sassda Profile
2015 2016 2017
Regular bimonthly
meetings with ferrous
metals desk
Facebook
Twitter

30. Export Promotion
2.00
2.20
2.40
2.60
2.80
3.00
3.20
3.40
3.60
3.80
4.00
Trade shows with the dti Africa Project Access database Outward bound trade missions Africa Project Access newsletter
Value to Members of Export Promotion
2015 2016 2017
Zambia National
Pavilion
Ivory Coast,
Mozambique,
Tanzania
Evening Presentation
Africal List

31. 2.00
2.20
2.40
2.60
2.80
3.00
3.20
3.40
3.60
3.80
4.00
Structural Applications Water municipal service
pipes
Roofing Abattoirs Beer kegs
Value to Members of Market Development
2017
Use ISSF course and
Guide 27 to create
course with SAISC Global ISSF project
NI and IMOA visited SA
to visit producers and
muncipalities
Sub-committee formed

32. Member Engagement
2.00
2.20
2.40
2.60
2.80
3.00
3.20
3.40
3.60
3.80
4.00
Member Engagement
2015 2016 2017
Max one a day
Will now use PR for
internal
communication to
improve relevance and
importance
Remains critical
Every member visited
at least once every two
years by sassda
champion
Douglasdale Dairy
SAB Alrode
Chamdor planned
416 golfers
46 bowls/boules
148 dinner only
610 TOTAL

33. Conclusion
Good potential for sustainable growth in industry
 Dependant on outcome of December ANC elective conference
Sassda is a member driven association
 Outside-In
 Members are our customers
 Sassda is a team of talented individuals
 With a mission to add value to our members’ lives
o More profitable
o More productive
o Easier to do business