Sa foundry industry and nftn sa foundry industry as employer



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  • SA Foundry industry and NFTN

  • SA Foundry industry as employer

  • Engagement of Industry with Government

  • Energy cost for the Foundry Industry

  • Proposals for competitive energy prices





Some of our stakeholders

    • Some of our stakeholders


Metal Melting and pouring of castings

  • Metal Melting and pouring of castings

  • 180 production plants in SA

  • Big plants (1000 people +) to very small (20 People)

  • International companies to family business

  • Some in-house foundries

  • Iron, Aluminium, Zinc, Bronze, Special alloys

  • High level of flexibility and engineering versatility

  • Added Value: machining, coating, assembly

  • Spread all over country: Gauteng, KZN, WC, EC



Industry structure by type

  • Industry structure by type







Customers are global companies

  • Customers are global companies

  • Market is extremely well developed and pricing must be globally competitive

  • Programs are global and can be produced anywhere in the world

  • Automotive contracts imply price reductions over life time, i.e. price must reduce by 3% every year

  • Need to be competitive in Dollar or Euro terms

  • Foundry products are commoditised

  • Local contents will be preferred by local OEM’s, but local market is relatively small (<1% of global automotive market)

  • Scale of local projects often too small to fill up foundries in SA

  • Customers are not willing to compensate us for rising local costs, they just move away from us and/or not awarding new orders.







Direct Employment estimated between 12,000 and 15,000

  • Direct Employment estimated between 12,000 and 15,000

  • 20,000 people employed in processing of components

  • Employment is estimated to have reduced by 10%-15% since 2008 (from 42 companies surveyed)

  • Recent Plant closures:.

    • 2010- Eclipse West Plant- 500 jobs lost
    • 2010- Eclipse East Plant partial closure
    • 2011- Eclipse Dimbaza in EC- 350 jobs lost
    • 2011 Krynie Brothers in Gauteng – 22 jobs lost
    • 2011 Belmec in EC– 70 jobs lost
    • 2011 Alfa Foundries Springs – 60 jobs lost
    • 2012 Last week Crown Cast closed its doors – 130 jobs lost
    • 2012 Another foundry looming to close down 280 jobs


  • Capital intensive industry

  • Material cost is substantial: no real local advantage and large scale export of foundries’ raw materials such as high value steel scrap

  • Labour rates: have increased significantly in SA

  • Continued Rand strength

  • Government incentives are reducing (MIDP/APDP)

  • Added pressure on environment creates additional costs

  • Escalating Energy cost : From very competitive in 2008 to uncompetitive in 2011





Automotive Foundries: market is small but diverse in its requirement

  • Automotive Foundries: market is small but diverse in its requirement

    • Competitive foundries are high volume and/or focussed on specific products
      • E.g. German or Brazilian iron foundries: 150,000 Tonnes per annum or more covering few products
      • SA iron Foundries: 15,000 to 25,000 tonnes covering a wide array of products
    • High volume foundry in SA must rely on export: exchange rate risk
  • Supplier base more limited and less developed, sometimes monopolistic

    • Examples are waste disposals, scrap materials and some raw materials




  • Intensified engagement started in 2011 at various levels

  • Engagement with local governments by various individual companies

  • Engagement with provincial governments

  • Engagement with Nersa as NFTN energy working group in January 2012

  • Engaged with Salga as NFTN working group in April 2012

  • DTI engaged with DOE



Foundries are energy intensive: melting, heat treatment, coating processes etc.

  • Foundries are energy intensive: melting, heat treatment, coating processes etc.

  • Energy is one of the most important cost inputs

  • A survey of 42 foundries showed electricity alone as 14% of total operational cost for FY 2012 or 25% of added value

  • Operating plants with metal conversion only have electricity costs versus total operational costs as high as 18% or almost 35% of added value

  • Margins are completely eroded as a result of electricity increases.

  • The 2011 increases have landed us in a situation where most local foundries are paying higher energy costs than our competitors in France, Germany, Poland, Thailand, Mexico,…

  • Cost for electricity is a major threat to the survival of the foundries is SA







Almost all Foundries procure electricity through the Municipalities

  • Almost all Foundries procure electricity through the Municipalities

  • Problem 1 = Current Municipal Mark-ups

  • Problem 2= Eskom increases for years to come





  • -Extreme municipal mark-ups in some municipalities, particularly KVA

  • -Tariffs for large consumers similar to tariffs for small consumers

  • - Chronic under spending in many municipalities on infrastructure despite the above, increasing costs to consumers as quality of supply is poor

  • - NERSA bases tariffs on needs of individual municipalities

  • - Industry depends on needs of local government for strategic matters

  • - Industry is a milk cow for municipalities through electricity accounts





NMBM extracts more than R10 Mio out of one foundry with a R200 Mio turnover

  • NMBM extracts more than R10 Mio out of one foundry with a R200 Mio turnover

  • Some remarkable mark-ups :

  • KVA charge Eskom Megaflex: R 29.24

  • KVA charge NMBM on TOU : R 108.45









  • Need an urgent strategy for the foundries regarding energy pricing to prevent catastrophe

    • 2011/2012 pricing in some municipalities already threatens the survival of many foundries
    • 2012/2013 increases are a further step to mark the end of many foundries
    • Our proposal is that all foundries have access to electricity at Eskom Megaflex rates for 2012/2013


Municipalities are currently burdening the energy intensive users and seriously jeopardising their survival, causing plant closures and plant reductions

  • Municipalities are currently burdening the energy intensive users and seriously jeopardising their survival, causing plant closures and plant reductions

  • Projected Eskom increases are an additional threat

  • A combination of both will be lethal for the industry

  • The Foundries in South Africa need urgent intervention regarding energy tariffs to avoid catastrophe

  • Tariffs must be globally competitive and stable







Kataloq: docs
docs -> GƏNCƏ ŞƏHƏr məDƏNİYYƏt və turizm idarəSİ GƏNCƏ ŞƏHƏr məRKƏZLƏŞDİRİLMİŞ Kİtabxana sistemi Aqrar iqtisadiyyata dair nə oxumalı?
docs -> Gəncə şəhər Mərkəzləşdirilmiş Kitabxana Sisteminə daxil olan yeni kitabların siyahısı: İngilis dilində
docs -> Hazırlayanlar: Arzu Hüseynova Xəyalə Məmmədova
docs -> Gəncə şəhər mks-nin fonduna 2011-ci ilin IV rübündə daxil olan Yeni kitabların siyahısı: Azərbaycan dilində : Abbas, Aqil
docs -> Dahi şair Nizami Gəncəvinin anadan olmasının 870 illiyi-1141 1209 / b Metodik tövsiyə b
docs -> AZƏrbaycan respublikasi məDƏNİYYƏt və turizm naziRLİYİ Nizami Gəncəvi adına Gəncə Tarix-Diyarşünaslıq Muzeyi Muzeyin tarixi
docs -> Azərbaycan Respublikasının Mülki Məcəlləsi Qəbul edilmişdir

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