The Sunday Mail
The establishment of the Manhize Steel Plant in Mvuma is a positive development that should excite all Zimbabweans given its potential impact on exports, job creation and livelihoods.
The billion-dollar project, which is part of President Mnangagwa’s drive for economic development, will be one of the largest steel mills in Africa.
The National Development Strategy 1 (NDS1) has already committed to making deliberate efforts to support the steel industry and its value chain.
The steel plant will enable Zimbabwe to reduce the huge steel import bill.
Zimbabwe imports iron and steel, including fittings, worth more than $300 million a year.
According to Trade Map, Zimbabwe imported iron and steel worth $128 million in 2020, with the bulk coming from South Africa ($108.2 million), China ($9.3 million), Zambia ($5 million) and the Seychelles ($2.2 million).
During the same period, the country imported iron and steel articles worth US$178 million from all over the world.
Of this figure, $110 million of products came from South Africa, $50 million from China and $5 million from Zambia.
When the Manhize plant goes into production, the country will potentially be able to meet all of its iron and steel needs, eliminating the huge import bill.
The steel sector has been identified as a priority sector under the National Export Strategy (2019-2023).
It was once the backbone of Zimbabwe’s economy and powered sectors such as agriculture, transport, manufacturing and mining.
Products that dominated exports in the region and beyond included steel bars, plates, boilers, bearings, pulleys, wire ropes, railroad equipment as well as agricultural and mining equipment.
Once the mill is operational, Zimbabwe will recover the lost markets.
The country will become one of the largest steel players in the world, with the capacity to meet the requirements of most countries in Africa and beyond.
The plant is expected to start producing 1.2 million tons per year, which will facilitate increased exports of iron and steel and their articles.
In 2020, exports of iron and steel and their articles amounted to approximately US$154 million, according to Trade Map.
Of this figure, Mozambique was the largest export market, with products worth US$121 million, followed by South Africa (US$23 million) and Botswana (US$4 million). US dollars).
In terms of quantities, the country exported 28,000 tons of iron and steel in 2021, and around 1,753 tons of iron or steel articles in the same year.
With an expected maximum production of five million tons of Manhize, the country should absorb all its needs and end up with surplus products to export.
African countries imported iron and steel worth US$18 billion in 2021, up from US$15 billion in 2017, indicating an increase in demand.
Of this figure, the largest importers were Egypt ($3.5 billion), South Africa ($1.8 billion), Morocco ($1.7 billion), Kenya (1 .3 billion), Nigeria ($937 million). ) and Tunisia ($905 million).
Building on the African Continental Free Trade Area, Manhize has the potential to boost Zimbabwe’s trade with the rest of the continent.
Quick wins in regional markets
Potential export markets for iron and steel produced in Zimbabwe include Zambia, Botswana, Angola, Democratic Republic of Congo (DRC), Malawi, Mozambique and Namibia.
Zambia imported iron and steel worth US$226 million in 2020, with the bulk coming from South Africa (US$113 million), China (US$64 million), Chile (US$27 million) and India (US$3 million).
Zambia has imported more iron and steel over the years, increasing from around 58,000 tonnes in 2018 to 81,000 tonnes in 2021.
Building on Zimbabwe’s proximity to Zambia, the steel mill has the potential to produce products that will be competitive in the neighboring country.
In Malawi, most iron and steel imports – worth around US$83 million in 2021 – came from China, which accounted for around US$38 million.
The other main suppliers to the market are South Africa, Zambia and Mozambique. In terms of quantities, Malawi imported 39,000 tonnes of iron and steel in 2021.
In the same year, Mozambique also imported about 111,000 tons of iron and steel worth US$99 million.
The main suppliers were South Africa, China, Japan, Turkey and Portugal.
In 2021, Namibia imported 26,000 tonnes of iron and steel worth US$95 million, with the main suppliers being South Africa, China and Zambia.
The DRC also imported 46,000 tons of iron and steel worth US$126 million in 2021, with the main suppliers being South Africa, China, Zambia and Turkey.
All of these markets are potential for Manhize.
Given the proximity of these markets and their current source markets reaching as far as Asia and Europe, there is no doubt that locally produced iron and steel will be competitive in the region.
Logistics is key
For Manhize to contribute significantly to export growth, there is a need to create a facilitation infrastructure that will facilitate the movement of products across the country and across borders.
A functioning and interconnected rail system is the cheapest and most convenient mode of transportation for iron and steel.
An efficient railway system linking the factory to all major cities and exit points will reduce the cost of locally produced iron and steel, which will improve their competitiveness in export markets.
It is encouraging to see that under NDS1, the Second Republic is committed to improving rail infrastructure and increasing freight and passenger movement.
The target under NDS1 is to increase freight from 2.6 million tonnes per year in 2020 to 6.7 million tonnes per year by 2025.
Given the projected tonnage that will come from Manhize, a rail network will facilitate the movement of goods and contribute to the objectives set under NDS1.
Allan Majuru is the Managing Director of ZimTrade.