RATTLED by the demise of the Zimbabwe Iron and Steel Company (ZISCO), the country’s engineering, iron and steel industry is regrouping and re-strategising.
Between 2011 and 2014, some 4 610 companies linked to this sector closed down, resulting in 55 443 job losses.
Capacity utilisation declined from an average 57 percent in 2011 to 44 percent in 2012 and 39 percent in 2013.
The sector has been constrained by erratic power supplies, lack of capital, higher input costs, obsolete machinery and dilapidated infrastructure.
Consequently, manufactured goods have failed to compete both locally and internationally.
The sector registered an overall loss of revenue of about US$3,3 billion between 2008 and 2012, which translated to an average loss of about US$660 million per year.
Exports constituted 41 percent (US$7 billion) of trade, against 59 percent (US$10 billion) imports.
Exports were dominated by primary metals and metal products over value added engineering goods from the Zimbabwean manufacturing sector.
Engineering, Iron and Steel Association of Zimbabwe president, Zondi Kumwenda, said the industry had undertaken a comprehensive value chain diagnosis to understand the challenges affecting the performance of the sector.
Kumwenda said the strategy was launched recently and sought to identify challenges, opportunities, and key activities needed to address value chain constraints and to enhance the role of the private sector in the iron and steel industry, build sector knowledge and bring about partnerships between all the private and public actors in the sector.
“This comes at a time when the sector is facing impediments, further exacerbated by the fall of the Zimbabwe Iron and Steel Company, which used to drive industries based in Kwekwe, Gweru, Redcliff, and the surrounding areas, creating employment to thousands of people in firms whose operations depended directly or indirectly on the steel giant,” he said.
The downfall of ZISCO has cast a dark shadow in the industry and heavily impacted on downstream industries.
Experts in the industry are still pinning their hopes on the resuscitation of ZISCO, which had earlier been taken over by an Indian conglomerate, Essar, and should have been renamed New ZimSteel.
The take-over was apparently not finalised and ZISCO remains operational as a parastatal.
“Hope is not lost, we have the minerals, and we can do something to ameliorate the situation, even in the absence of ZISCO steel until things normalise,” said Kumwenda.
Given that about 40 percent of expenses in iron and steel manufacturing are related to power costs, the strategy acknowledges that countries that are using gas are currently benefitting from the record low gas prices which are envisaged to remain subdued for the next three or more decades.
Although use of coal was generally cheaper, this has changed owing to the availability of gas.
The need for the harmonisation of policy between Industry and Commerce, and Mines ministries was also emphasised in the strategy.
“The government is aware that for the sector to return to viability, the issue of resuscitating ZISCO steel is vital,” said Minister of Industry and Commerce, Mike Bimha.
He said his ministry was committed to working with the private sector, and that the country is open for business to regional and international players.
Bimha said this sector was one of the pillars of the economy as it provided employment to many in line with the country’s policy of promoting value addition.