Jubilation was palpable on site at Agni Steels SA this week as the company fired up its furnaces to start production at its R400-million, state-of-the-art steel mill in the Coega industrial development zone (IDZ).
Agni Steels’ venture is the first ever black-owned steel mill in the country and is a testament to the value of the Minerals Beneficiation Bill passed in 2011.
In celebration of the milestone, the Agni Steels India directors were in South Africa to oversee the momentous “switching on” moment. Shenbagavalli Ramji, Chinasammi Sakthi and Kugalur Ilangovan the sons of the original Agni Steels India founders and directors, R. Krishnamurthy, M. Chinnasami and K. Thangavelu, were in South Africa to mark the occasion – and to ensure that everything ran according to plan.
The firing-up of the plant is the fruition of over eight years of hard work that started as “a dream,” Ramji said.
The trio from India are young entrepreneurs following in their father’s footsteps in Africa. Their fathers were the first to set up a steel mill in the Erode, Tamil Nadu, India in 1992.
The Agni Steels South Africa venture is their first on their own as directors, in partnership with the three South African directors Sharaz Khan, Hassan Khan and Dhiroshan Moodley.
“To be frank we are very proud at this moment and we are enjoying it for the joyous celebration it should be. We are of course thankful to the South African directors for giving us the opportunity, to Coega for their help and association, and to the Industrial Development Corporation for their support and belief in us,” said Ilangovan.
“This is not a small thing we have achieved. Our SA partners have persisted following a dream spanning over eight years – a dream where the financial forecasts fluctuate, the export market changes due to currency variation and the whole business plan takes on a new shape almost a decade later, but we are here now, as a team, to witness realisation of this dream.”
Despite the changing context, there have been rewards, and the directors said they were excited to witness the positive shift in the South African policy environment as the Minerals Beneficial Bill prioritises the type of activities Agni is involved in.
The beneficiation strategy aims to providing a strategic focus for South Africa’s minerals industry in terms of developing mineral value chains and facilitating the expansion of beneficiation initiatives in the country.
“The revised South African approach to scrap metal beneficiation and the DTI’s policy on supply whereby local consumption requirements must be fulfilled prior to exportation of locally available raw materials are developments that make us very happy.
“These are exactly the methods or schemes that international IDZs present as a key value proposition and incentive for investment. With these policies in place South Africa will experience growth,” said South African Director Hassan Khan.
The Agni project will benefit from the Minerals Beneficiation Bill of 2011, which incentivizes local beneficiation of scrap metal in particular. Trade and Industry Minister Dr Rob Davies said earlier in March at Coega that there was a “shortage of specialised steel products produced in South Africa” and as a result the country now imports steel: “Agni Steels would contribute to reversing this trend,” he said.
The new Agni plant is also geared for expansion to meet any future demand, with partial infrastructure already in place to ramp up production to 20 000 tons per month when a new set of furnaces are added in the next phase. The directors also said the initial phase – located in zone 6 of the Coega IDZ – was the “first stepping stone in an entire growth strategy”.
“We have only used half of the 12 hectares we have taken from Coega,” said SA director Moodley, “as we are committed to growing in South Africa, creating more employment and critically expanding within the metals sector by way of our planned second and third phases whereby various structural steel products will be manufactured.”
Sakthi said there was also a positive South African sentiment in India at the moment: “There is a good feeling about South Africa in India and there is growing interest from the Confederation of Indian Industries. You know, when one industry comes, others come too, they don’t come in isolation and we are hoping the success of our investment bodes well for South Africa in general.”
The Agni Steels project has already spurred the development of business in the Eastern Cape by purchasing vast volumes of scrap metal from scrap dealers across the province.
The company is also committed to skills development and recognising potential. Ramji cited an example of a truck driver who had now become a key person in operations.
“One of the things we have been very proud of is our staff development. Although the level of education that is available in India is higher than South Africa, we are supporting training so people can move up the ranks, by creating opportunities for people to grow.
“In this way, with training, someone can move from driver to Melting supervisor and a junior electrician can become an overall supervisor. The socio-economic impacts of these promotions, which have really happened, are already being felt across these employees’ lives.”
Agni has currently employed 165 people and will employ more this week. A group of 90 Indian specialists are also based at the steel mill for a two year contract with the expressed purpose of transferring skills to their South African counterparts.
The plant will initially produce 100 000 tons of mild steel billet annually and about 270 people will be employed, with 90 working per shift 8-hour shift.
Now that the furnaces have been fired up, a three-shift system will kick into action enabling the plant to run 24 hours a day, 365 days a year.
The establishment of the innovative new mill, also the first in history of the Eastern Cape, was not without its challenges and a commitment to perfection meant that occasionally timelines were pushed out.
The director’s said a one-stop shop for foreign investors would have gone a long way in assisting with a range of bureaucratic challenges across labour, permitting, finance and home affairs. The one-stop shop solution is enshrined in the new SEZ Bill and is an indication that government has taken heed of similar investor concerns.
“It would have been great if we had had a single point to deal with, to simplify the process, as delays generate costs, particularly as we are playing in a globally competitive market. But in the end everything worked out and we are pleased to see the new policy directive on a one-stop shop in place,” Illangovan said.
The partnership between Indian and South Africa has also been a “dream” with Sharaz saying Agni Steels India exhibited all the qualities they required when identifying a consortium partner.
“We visited over 30 steel mills in India – the moment we came to the gates of Agni Steels India, we instantly knew in our hearts that this was the company we would joint venture with, the level of safety health and environmental commitment was outstanding and the technology cutting edge.”
The rest is history and – with the furnaces firing at 10 000°C to be exact – South Africa watches with interest as the beneficiation venture kicks off.
Agni Steels’ Coega Metal Sector manager, Sadick Davids, said two good things come out of this investment “beneficiation and industrialisation”.
“The hope is that the Agni investment would inspire black youth and entrepreneurs to partner with global investors on ventures. It is also likely that Agni’s investment would advance other projects like the manganese smelter – which also uses furnaces.”
The CDC congratulated Agni on its achievement. “We have watched the plant go up – and iconic red on the hill side – and it’s wonderful to see it come online. The Agni Steels SA is a testament to committed investment and partnership and we commend them on this achievement,” said CDC head of marketing and communications, Ayanda Vilakazi.
The high-tech smelting facility will produce mild steel billets from scrap metal. During the first phase of the project the plant will produce steel billets for export to India and other African countries thereby enhancing local beneficiation.
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