Rebuilding industrial capability as a foundation for decarbonization

But our recent INDABA Partnership study tour of Southern Africa reinforced another, less frequently discussed point: successful industrial transitions may also depend on what a country is able to retain.

South Africa has produced iron and steel at industrial scale for generations. That history has created more than physical production capacity. It has produced skilled workers, metallurgical expertise, supplier networks, infrastructure, research capabilities, and knowledge accumulated through decades of operating complex industrial systems. 

Today, many of those capabilities are under pressure. South African steelmakers face a difficult combination of weak domestic demand, global excess capacity and import competition, high input costs, logistics constraints, and uncertainty surrounding future energy supplies. These challenges have contributed to declining production and investment at precisely the moment when the global steel industry is being asked to undertake one of the largest technological transformations in its history.

During our visit to ArcelorMittal South Africa's Vanderbijlpark Works, we were struck by this tension. The site represents an enormous concentration of physical and human capital, but it also illustrates how difficult it can be to invest for a lower-carbon future while simultaneously confronting immediate competitiveness challenges.

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