Casting Metals South Africa: Challenges, Opportunities and Industry Outlook

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The Importance of the casting metals industry in South Africa

The casting metals industry in South Africa tends to go unnoticed, yet it plays a vital role in supporting the country’s infrastructure, mining, energy and automotive sectors. Walk through a hardware store and more than 70% of the products on display are made from cast metals, including nails, screws, bolts, nuts and hammers. Surprisingly, these everyday items are only a small part of what the metal casting industry produces. The WOW report on Casting of Metals in South Africa highlights the wide range of industrial castings manufactured by South African foundries, supplying essential components to some of the country’s most important industries. Almost every shaped component made from ferrous or non-ferrous metals begins its journey in the casting process.

Performance of the casting metals industry in South Africa

The industry is fairly well-represented in South Africa, with 27 established large metal foundries and many smaller ones – although only 123 of the 134 foundries are operational according to the National Foundry Technology Network. Perhaps this is reflective of the adverse economic circumstances South Africa has been plagued with in the recent past. Investment in capital-intensive cast metal manufacturing plants requires forward capacity planning; when economic growth is not happening, excess capacity is created.

It is encouraging to read in the WOW report that many established companies have not refrained from continuing to make substantial investments in new technologies such as 3D printing to remain competitive and not forego the ability to supply export markets including in Africa, where there is growth in end-user industries as a result of the African Continental Free Trade Area agreement. These investments are helping South African foundries improve productivity and manufacture high-quality industrial castings for regional markets.

Exogenous headwinds pose serious challenges. The major input cost for foundries, accounting for close to 50% of total inputs, is electricity. Eskom’s dismal and deteriorating performance constitutes a major headache for South African foundries, and unreliable and frequently interrupted power supply pushed annual cost increases way above inflation. The late and limited lifting of Eskom’s monopoly on electricity generation has severely hampered expansion and international market access. The industry’s main customers, particularly the mining, infrastructure and automotive sectors, have also been under pressure, with the construction industry in particular having been in a slump since 2009.

A number of established businesses in connected industries such as manufacturing have started securing alternative electricity supply. For example, Wahl Industries now has a 300kW grid-tied photovoltaic solar system on its factory roof that supplies about 40% of its electricity requirements, helping reduce operating costs for metal casting manufacturers.

Challenges facing the South African casting metals industry

These arrangements add to the cost of operations and make South African metal casting companies less competitive. Eskom, as a state-owned entity, could assist by striving to have one of the cheapest electricity supplies as was the case in the past, instead of continuously increasing tariffs and disrupting the ability of companies to compete on a level playing field.

The second major problem is the corruption and theft prevalent in the scrap metal business. As with all industrial countries, South Africa is plagued with theft of metal often sold to certain scrap metal dealers. Stricter regulations and restrictions on trading in scrap metal have been introduced to curb the R47bn loss suffered by the country due to the illicit or unauthorised trade in scrap metal, which has had a significant impact on foundries and the wider manufacturing sector.

These overly strict measures will have unintended consequences and increase the cost of doing business in this sector, especially for smaller foundries and manufacturers that often do not have the financial means to sustain their business against such shocks.

Future outlook for casting metals in South Africa

Despite ongoing challenges, the casting metals industry in South Africa is well positioned for future growth. Existing production capacity, combined with continued investment in advanced foundry technologies and productivity improvements, gives local manufacturers the opportunity to expand into growing African markets. As many neighbouring countries continue to industrialise without significant investment in modern foundries, South African manufacturers are well placed to supply high-quality cast metal products across the continent, supported by regional trade agreements such as the African Continental Free Trade Area (AfCFTA).

South Africa remains a net importer of cast metal products valued at around R1 billion. Increasing local production to replace imported castings presents a significant opportunity to strengthen the manufacturing sector, support local foundries, create jobs and stimulate economic growth. If challenges such as electricity reliability, rising input costs and scrap metal theft can be effectively addressed, the casting metals industry has the potential to become an even more competitive contributor to South Africa’s industrial economy.