BSI STEEL: Seasoned BSi Steeled for Strong Growth

The South African steel industry has been part of the backbone of the country for more than a century. The country’s rich iron ore resources have attracted the attention of multinational businesses, and for many years the sector provided a reliable, steady stream of strong product for the domestic and export markets.

But a heavy cloud has formed over the industry in the past decade. Cheap imports, lacking local demand, steep product pricing, poor quality and infrastructural issues have combined to create worry and stress. With the onset of the Covid-19 pandemic, effectively halting construction projects and mining activity, flattening demand across many industry sectors, steel has been hit hard.

In 2017, the South African Journal of Industrial Engineering floated the possibility of the iron and steel industry going extinct, citing a one third decline in production from a peak in 2006 of 9.7 million metric tonnes. Today, production sits at around six million tonnes – for context, China (the world’s largest producer) has an output of more than 900 million tonnes annually.

Imports are now seen as the major threat to the local industry. Chinese, Brazilian, Japanese, Russian and Indian companies are selling successfully in South Africa. In 2010 iron and steel imports were at 2.8 million metric tonnes, across a range of different products. By 2014, the number had increased by 113% to almost six million metric tonnes. This demonstration of South Africa’s deindustrialisation journey was again unwelcomed by local steel manufacturers. Because of the raft of issues facing businesses, many have been overwhelmed. In 2009, CISCO stopped operations; the AMSA Vanderbijlpark mini-mill plant followed in 2012, and then the AMSA Vereeniging mini-mill plant shut in 2015. In 2016, EVRAZ HSVC also closed its doors.

But the figures don’t make sense. By allowing the steel industry to fail, South Africa is losing a major contributor to GDP, an important creator of sustainable jobs, and a key component across many other trades. Steelmaking represents 1.5% of the country’s GDP and accounts for some 190,000 jobs. According to the South African Iron and Steel Institute, every 1000t of steel produced locally adds R9.2-million to GDP; provides three jobs directly and three indirectly; enables domestic procurement spend of R5.3 million, of which R0.5 million is spent with SMMEs; and gives rise to products that could be fuelling industrialisation.

So, the industry now looks to its well-established players, the government, and local industry partners to ensure it is not allowed to crumble and crack.

One of the key players across southern Africa is BSi Steel. This experienced industry expert has all the knowledge and capability to ride out challenges in the sector while ensuring clients have access to the important products needed to fuel their operations.

HISTORICALLY STRONG

BSi Steel first opened its doors in 1985 when William Battershill established Discount Steel selling steel tubing to farmers. After just a few years, the operation grew substantially and entered new markets, building relationships with new steel suppliers all the time. By 1995, the company realised the need to enter Gauteng to become more involved in the larger construction projects in the country’s most densely packed region. Garrison Steel was founded, and the company experienced another strong period of growth as South Africa became a democracy. In 2001, the group was renamed BSi Steel before a new warehouse was purchased in 2002, leaving the company owning two facilities and offering strong processing and distribution capabilities.

In 2007, William Battershill and the management team listed BSi Steel on the AltX exchange in Johannesburg, raising R100m in funding which helped to fuel expansion. First, a new site in Klipriver was purchased, and then construction of a new 36,000 m2 warehouse and office building was completed. The group’s processing division, Shearcut was established and further processing lines were installed.

The steel reseller was now in a very strong position and continued to push for national and international expansion. Between 2009 and 2014, BSi opened new branches in Ghana and Mozambique, adding to the African presence in Zambia, the DRC and Zimbabwe.

In the build up to the 2010 FIFA World Cup, there was a infrastructure boom in South Africa and BSi Steel benefitted, but globally the financial crash was causing havoc and it was only a matter of time before South Africa was engulfed in the turmoil. As the fallout became clear, BSi quickly switched its focus to efficiency, wrapping up operations that were losing money and restructuring to ensure long-term viability. After this period of consolidation, BSi was strongly positioned to ensure low cost but large-scale steel distribution across southern Africa. “BSi is in a very strong position today with some exciting growth prospects for the years ahead,” the company says.

STRENGTH AT THE TOP

Under the stewardship of William Battershill, BSi Steel has grown its presence and portfolio and is now an industry leading business, vital in the operations of its clients.

The company can offer long, flat and tubing products alongside cold formed and roofing products. Bronze, brass, aluminium and other materials are part of the range. The company’s processing division brings coil slitting, precision cutting and medium gauge plate cutting among many other services.

“As a specialist division within the BSi Steel Group, Shearcut prides itself on efficient customer service and accessible technical processing expertise to both internal and external customers, Shearcut is proud to be PWC ISO 9001:2008 certified by the internationally renowned certification body PwC,” the company states.

“Shearcut has over the recent years made significant investments in terms of high spec machinery and equipment in order to boost the division’s processing capability and capacity. Our professional management and planning team seek to provide a personalised service while offering customers flexibility on lead times and JIT (just-in-time) delivery options.

“By working in partnership with you, we are able to help enhance your product performance, improve your efficiency and help you to create more sustainable solutions. The stockholding at our Kliprivier warehouse facility is substantial which allows us to offer our clients rapid turnaround times. For our premium clients we offer a strategic stockholding that will always be available along with other general grades. We provide a JIT service that should reduce client stockholding costs.”

In 2019, BSi Steel gained its Level 4 BBBEE rating from BDO South Africa and continues to support various CSI initiatives, particularly those focussed on skills development. This is a company that always has one eye on the future.

“BSi Steel is committed to being a responsible member of the communities within which it operates. We believe we have significantly improved the lives of our fellow citizens by investing time, effort and money in a variety of organisations and projects,” the company says.

As economic conditions in South Africa have become increasingly unpredictable and unstable, further catalysed by the Covid-19 pandemic, BSi has been forced into some efficiency strategy adjustments, but remains an active and important supplier to South African and southern African construction and infrastructure projects. The full product range remains available in all areas, and the company is confident its pricing remains competitive.

There are green shoots in the industry and the company has many opportunities to look forward to. In September, the country’s largest steel producer, ArcelorMittal, said it would refire the second blast furnace at its Vanderbijlpark operations as steel demand increased. Industry analysts put this down to a rebound following the need for projects started before national lockdown to be completed. This will add another 600,000 tonnes of flat steel to output and the company warned it will still require exports to make the move viable – even while supplying retailers and traders who have low stock after lockdown.

For BSi Steel, stock level is not an issue, distribution is smooth and well-practiced, and the efforts of the DTIC to level the playing field for the SA steel industry are encouraging. Through many economic challenges, BSi has remained strong. This time around it is unlikely to be any different.