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South Africa - Scrap exports affect pump supply

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South African <link _top>foundries cannot produce <link _top>castings to meet the pump industry’s demand, South African Pump Manufacturers Association (Sapma) chairperson and pump solutions provider Hazleton Pumps MD Mathys Wehmeyer told.

Speaking at Electra Mining Africa 2008, Wehmeyer states that <link _top>foundries are struggling to provide high-quality <link _top>castings as quickly as the local market demands them, owing to a lack of raw materials and a favourable market for exports.

“A <link _top>casting is the starting point for a pump. If there is not one available or if it is not of a high enough quality, then the pump cannot compete on the market,” says Wehmeyer.

He points out that although South Africa has a large amount of <link _top>scrap material, <link _top>scrap dealers are exporting as much as they can accumulate. <link _top>Foundries draw a substantial amount of their raw material from <link _top>scrap metal.

This has a twofold effect on South African <link _top>foundries. Firstly, they struggle to find <link _top>scrap material to use as raw materials.

Secondly, they struggle to find <link _top>scrap material at a reasonable price. They pay a higher price because the demand far outstrips the supply. This price premium is passed onto pump manu- facturers and eventually makes its way to the end-user as the price of locally manufactured pumps increases.

Wehmeyer comments that this will make competitively priced products being imported from India and China more attractive to customers.

He adds that the favourable export rate is also affecting supply as <link _top>foundries export much of their stock.

“During an economic cycle of greater exports, the <link _top>foundries put all their energy into international contracts. Sapma’s concern is that South African pump manufacturers will be supplied with the tail-end of international jobs. We often receive material which has not been monitored and checked for quality to the same standard as the rest of the batch, or we get the dregs of the batch,” says Wehmeyer.

“As an association, Sapma has voiced its concerns to the <link _top>Foundry Association. I have personally contacted the chair-person of the <link _top>Foundry Association of South Africa with a view to committing to a regular meeting between the two associations,” say Wehmeyer.

To that end, Sapma would like to add companies that have a high demand for pumps to its voice. The involvement of bigger end-users, such as State-owned utility Eskom and petrochemicals giant Sasol, will provide a greater urgency to Sapma’s concerns and help create a foundation of better communication between the two associations to find a suitable solution.

“Sapma does not want to stop exports as this is money coming into the country, but it would like a balance between exports and contracts for the local market,” says Wehmeyer.

He comments that he would like to see the passing of legislation to keep <link _top>scrap material, or most of it, in the country and legislation that allows <link _top>foundries to export only if they have supplied a certain volume to the local market. He says this is necessary because a company will not concentrate on supplying to South African companies if it can generate larger profits exporting its products.

Wehmeyer proposes that keeping <link _top>scrap material in the country will have a positive effect on South Africa’s energy crisis. <link _top>Iron ore requires a substantial amount of energy to be turned into steel and there are great costs involved. Wehmeyer says <link _top>scrap material is a resource that should be kept in the country and its exportation should be controlled. He says that by exporting  material, <link _top>scrap dealers are doing the country a disservice and are giving foreign manufacturers a price advantage as the cost of refining <link _top>iron ore into steel is less of a factor in their pricing structure.