Engineering News Online Audio Articles

South Africa's unemployment rate increased to a new record of 35.5% in the fourth quarter of 2021, a 0.4 percentage point increase on the 34.9% recorded in the third quarter.

This is the highest the unemployment rate has been since Statistics South Africa (Stats SA) started recording quarterly employment statistics in 2008.

Financial services company Nedbank comments that the unemployment figures ballooned as a result of a large number of discouraged jobseekers returning to the labour force on signs of improved economic activity, outpacing the number of jobs on offer.

For comparison, 262 000 new jobs were made available in the fourth quarter, while 278 000 people lost their jobs. This brings the total number of people employed in South Africa to 14.5-million, while 7.9-million job seekers remain officially unemployed.

Nedbank notes that, while economic activity rebounded in the period after being interrupted by multiple shocks in the third quarter, business confidence remained depressed as a result of slow economic reforms and persistent power shortages. This discouraged companies from rushing to expand capacity.

Stats SA further reports in its latest Quarterly Labour Force Survey (QLFS) that, according to the expanded definition of unemployment, which includes those persons who have given up on finding employment, unemployment stood at 46.2% in the fourth quarter.

Unemployment was highest in the Eastern Cape at an official level of 45% (expanded level of 53.2%), while the Northern Cape had the lowest unemployment rate, at 25% officially (50.1% as per the expanded definition of unemployment). Gauteng’s level of unemployment was officially at 36.6%, but 44.4% as per the expanded definition.

In addition, the QLFS reveals that formal sector employment increased by 143 000 jobs in the period, while informal sector jobs declined by 48 000 jobs.

The net increase in employment of 262 000 in the fourth quarter was mainly owing to jobs being created in private households (129 000 jobs) – up 11.4%, 118 000 jobs in the trade industry (4.2% increase) and 73 000 jobs in the community and social services industry – up 2.3%.

"The increase in community and social services probably reflects a spike in temporary jobs to manage the municipal elections in November, while employment in the domestic trade sector was lifted by increased activity in the hotel and tourism industries owing to more lenient lockdown restrictions," Nedbank points out.

The agricultural industry added 38 000 jobs (4.6% more), mining 25 000 (7.3% more) and the finance industry 18 000 jobs – up 0.8%.

Although the boost from the agriculture sector highlighted the industry's importance in terms of job creation, Agri SA employment specialist Lebogang Sethusha says skilled employment in agriculture has not recovered to the level of the fourth quarter of 2020.

“The [fourth quarter of 2021] result shows that 68 000 people were employed in skilled agriculture, compared to the same quarter in 2020 when 85 000 people were employed. This is a 20.6% decrease year-on-year,” she says.

While the quarter-on-quarter results show a level of recovery – with skilled employment at 63 000 individuals in the third quarter of 2021 – Sethusha says there is still much ground to be made up. “It remains a concern that this drop in skilled employment represents a brain drain for the sector.”

Despite the latest employment levels, she says the agriculture sector’s growth continues to be stifled by poor infrastructure, such as road, rail and ports, among many other challenges, such as rising input costs.

“In this difficult climate, the growth in employment in the sector for [the fourth quarter of 2021] shows that the sector is still capable of absorbing labour. Addressing the constraints on growth would enable the sector to create even more employment opportunities during this difficult period as the economy recovers from the Covid-19 pandemic,” says Sethusha.

Decreases in jobs during the period were ma...

As part of a growth strategy long in the making, Bell Equipment will increasingly shift articulated dump truck (ADT) production from its Richards Bay plant, in KwaZulu-Natal, to the northern hemisphere, says CEO Leon Goosen.

The Bell ADT is the group’s high-volume product, with 80% of the world market for this product located in the northern hemisphere, and two-thirds of Bell ADT sales flowing from markets in North America, the UK and Europe, Goosen tells Engineering News Online.

Moving raw materials and components back and forth between South Africa and Bell’s Germany plant is proving to be increasingly costly and highly inefficient, notes Goosen.

“We need to move production closer to the client. Doing so will also allow us to flex up and down quickly according to market demand.”

The move also means Bell will be less exposed to the risks presented by the volatility of the South African landscape going forward. It is also vital to the business that Bell’s global customers can trust in its ability to support them regardless of local, regional or global events.

Bell remains committed to South Africa as a local manufacturer, says Goosen. The factory in Richards Bay is to remain fully operational, and there will be no job losses.

The focus of the plant going forward is on new, smaller volume products.

As part of this shift, the plant will undergo a large-scale ‘Rise with SAP’ rollout. This project will underpin the replacement of the legacy system at the Richards Bay factory in 2023, in “a mammoth project that will promote long-term sustainability in South Africa”.

Goosen says the group’s strategy, hatched a number of years ago, was based on the realisation that Bell’s success could not hinge on the ADT portfolio alone.

“We wanted to be an original equipment manufacturer (OEM) that could stand on its own two feet – not one product of our own and a hundred other products from other OEMs that complement ours,” says Goosen.

“We wanted to invest aggressively in intellectual property development, which saw us increasingly develop our own products.”

Going forward, Richards Bay will increasingly focus on these new lower-volume products, while some ADT component production will start to shift to Germany, says Goosen.

“We’ll not abandon what we have built in South Africa. This is our roots. We are here to stay.

“Unfortunately, however, we cannot yet disclose what we’ll produce in Richards Bay, as this is still in prototype stage.”

Goosen says Bell is currently largely focused on the construction and mining industries, but notes that the group wants to expand its participation in the agricultural and underground mining sectors.

“The South African mining industry is of great importance to us.”

Introducing new products to Richards Bay will, however, mean that Bell has to reapply for incentives under government’s Automotive Production and Development Programme with the Department of Trade, Industry and Competition, as it currently largely receives benefits for ADT production.

The Numbers

Bell Equipment reported this week that it has surged back to profitability for the financial year ended December 31, recording profit after tax of R294.3-million, following a R57.2-million loss after tax for the 2020 financial year.

Revenue, at R8-billion, was up 20% on 2020.

Bell notes that its Russian business represents a small portion of the global business, at about 3% of group revenue in 2021, and that the machines destined for that country could readily be absorbed by other markets as the Russian invasion of Ukraine continued.

Bell Equipment is a global manufacturer, distributor and exporter of a range of heavy equipment for the construction, mining, quarrying, sugar, forestry and waste-handling industries.

The renewable energy transition “is the only true path to energy security”, United Nations secretary-general António Guterres has asserted, adding that the current energy crisis, precipitated by Russia’s invasion of Ukraine, underlined the need to accelerate rather than slow the transition.

In a recorded address to the 2022 edition of the Berlin Energy Transition Dialogue (BETD), Guterres warned that the world was not on track to achieve the goal of carbon neutrality by mid-century, or limiting the global temperature rise to 1.5 °C.

“Last year, global energy-related carbon dioxide emissions grew by 6% when they should be falling. In fact, with current national commitments, emissions are projected to increase by almost 14% this decade,” he said, describing the global energy mix as broken.

Guterres was also not alone in linking the issue of peace and security of energy supply to the energy transition, with International Renewable Energy Agency director-general Francesco La Camera, German Vice Chancellor Robert Habeck and German Foreign Affairs Minister Annalena Baerbock doing likewise.

Habeck said that energy, climate, foreign and security policies were “intertwined” and that Germany would move to expand renewable energy and energy efficiency to reduce its dependence on Russian fossil fuels – a dependence that he described as the consequence of past mistakes.

"You cannot steal the wind. The sun belongs to no-one,” he said, when underlining the importance of renewable energy to Germany’s fast-tracked efforts to reduce its dependence on Russian coal, oil and gas.

Germany was also moving to diversify it sources of gas supply through the construction of new liquefied natural gas (LNG) import terminals, which formed part of a strategy to reduce Russian gas consumption by 30% by the end of the year and to be largely independent of Russian supplies by mid-2024.

Besides diversification and savings, Germany is also accelerating its ramp-up of hydrogen and hydrogen imports.

Habeck told BETD delegates that Germany’s fertiliser production was also dependent on gas and hinted at possible ammonia imports to displace that dependency and to reduce the prospect of a food-security crisis.

The selection of Brunsbüttel as the site for an LNG terminal with a regasification capacity of eight-billion cubic metres is also believed to be part of a plan to shore up supply to the Yara fertiliser facility, which is also located in Brunsbüttel. However, this could be supplemented by ammonia imports, including green ammonia derived from green hydrogen.

La Camera, who used the occasion to release Irena’s ‘World Energy Transitions Outlook 2022’, said that an acceleration of the energy transition was essential for long-term energy security, price stability and national resilience.

Ramping up renewables, together with an aggressive energy efficiency strategy, also represented the most realistic path toward halving of emissions by 2030, which was crucial to limiting the rise in the global average temperature to 1.5 °C.

“Investing in new fossil fuel infrastructure will only lock-in uneconomic practices, perpetuate existing risks and increase the threats of climate change,” La Camera warned.

The outlook document itself said that investments of $5.7-trillion a year to 2030 were needed for the world to be compatible with the 1.5 °C climate goal.

Renewables would have to scale-up massively across all sectors from 14% of total energy today to around 40% in 2030.

The outlook sees electrification and efficiency as key drivers of the energy transition, enabled by renewables, hydrogen and sustainable biomass.

“Green hydrogen needs to move from niche to mainstream by 2030,” La Camera said.

Meanwhile, Baerbock also used the platform to warn against the creation of new dependencies, noting that wind farms and power lines required minerals that were sometimes produced in countries that were “not flawless democracies” and which had “authoritarian tendencies”.

“Clean energies...

The Association of South African Quantity Surveyors (ASAQS) says it welcomes the announcement by President Cyril Ramaphosa that a special police unit is being set up to deal with “the construction mafia that has been disrupting businesses in the country for years”.

The association says it has made numerous calls since 2019 for greater involvement from the South African Police Service, as the issue affects domestic infrastructure projects, investor confidence and the safety of professionals in the built environment.

“The construction mafia entails gangs who intimidate foremen, project managers and construction bosses by going onto project sites and demanding a stake in the project.

“The result? Construction projects worth at least R25-billion being violently disrupted and halted in South Africa.”

ASAQS VP Newton Baloyi says disruptions in the construction sector are not limited to these mafia groupings.

“It usually happens the moment labour and companies from outside the local communities are appointed to projects.

“The local community gets upset, as they feel deprived of opportunities for meaningful economic participation”.

Baloyi believes this can be expected, as many megaprojects are located in an environment where people live in poverty and are unemployed.

He believes that a mindset shift is required to fully address the issue.

“Projects [should be] evaluated and monitored not only on the basis of technical and financials, but also socioeconomic impact. And this happens once clients and built environment professionals realise that projects are actually an opportunity for the deliberate socioeconomic upliftment of communities. Instead of simply ticking the boxes of compliance, we should focus on real impact.”

Baloyi says the first step to meaningful community involvement is to integrate social and economic sustainability into the planning of projects.

"In order for integration to happen, project procurement strategies should proactively identify opportunities for the localisation of project value chains.

“This can be best handled by built environment professionals as part of the project development process.

“It's critical that a project is developed and marketed in such a way that local communities have a say and a sense of ownership.

"All too frequently, the buck is passed on to the contractor,” says Baloyi.

“But engagement with the community shouldn’t start when the contractor arrives on site. It must come from the developer and his professional team prior to the arrival of the contractor.”

Baloyi adds that project teams should focus beyond simple subcontracting and labour.

“We need to consider other high-impact opportunities for maximum circulation of money in the communities, such as the part localisation of material supplies, manufacturing, assembly, unbundling projects and ringfencing opportunities for the local communities.”

Baloyi says that once a community has taken project ownership, it becomes easier for those communities to identify criminal elements.

“They are then personally committed to the project and part of its beneficial elements.”

The JSE share price of emerging integrated energy producer Renergen rose by more than 10% on March 28 after the company announced that the State-owned Central Energy Fund (CEF) would acquire a 10% interest in its Tetra4 subsidiary for R1-billion.

The transaction remains subject to various conditions precedent and, should a binding agreement not be entered into within 141 days, the purchase price will be renegotiated in good faith.

Renergen will use the proceeds from the CEF’s subscription to progress development of Phase II of the Virginia gas project.

The transaction will introduce State participation in the project, which will strengthen Renergen’s strategic position locally as a domestic energy producer and broaden the positive relationship Renergen enjoys with the South African government at all levels.

The deal will also provide the CEF with exposure to economic participation in South Africa’s “first and only onshore petroleum production right”.

The nonbinding agreement concluded between Renergen and the CEF follows the strategic partnership announced last week between Renergen and Ivanhoe Mines, and comes at an exciting time for the company, with Phase 1 operations at the Virginia gas project, located in South Africa’s Free State, due to start in April.

Renergen is aiming to establish Virginia as a significant domestic and global gas producer.

“Renergen and the CEF’s relationship goes back many years. Importantly, during this time Renergen has successfully grown Virginia in size and scale, highlighted by the growth both of our helium and methane reserves, which have finally reached the critical mass to enjoy the CEF’s involvement.

“Today’s investment commitment is a result of long-term discussions between the CEF and Renergen and during this time, the CEF team have been amazing to deal with and I am very pleased to be able to welcome them as a major investor in our future,” said Renergen CEO Stefano Marani.

“The future is extremely bright for Renergen and shareholders should be very excited by what we are building. To sign the CEF and Ivanhoe Mines in the space of two weeks as major investors and strategic partners, highlights the significant growth of the company and the critical role Virginia will play in the future supply of clean energy as well as in-demand helium,” Marani further enthused.

CEF CEO Dr Ishmael Poolo, meanwhile, said the CEF’s participation in the Renergen project is in line with the newly adopted strategy of being a “strategic investor” in the energy value chain that is geared to support the region’s energy needs, “leading the energy security and just transition programme for South Africa”.

Renergen’s share price on the JSE rose to R43.78 apiece, compared with Friday’s close of R39.33.

Without far greater focus and prioritisation, Macsteel CEO Mike Benfield believes the Steel Master Plan will remain captive to high levels of ambition with limited real-world effectiveness.

There has been little implementation progress since the master plan’s official launch in 2021, when representatives from labour, business and government signed the 80-page document during a ceremony held at Hall Longmore’s factory in Wadeville.

In fact, Benfield tells Engineering News that there has been “no traction” since that high-profile event, which was held against the backdrop of steel shortages and rising prices, partly because of ArcelorMittal South Africa’s (AMSA’s) delayed restart following Covid-linked production cuts.

As things stand, prices remain high and are rising, but steel demand is sluggish, largely because of ongoing weaknesses in key steel-consuming sectors and the fact that steel merchants are reluctant to return to the damaging past practice of selling stock below its replacement value.

While attention is rightfully being given to the negative impact of Transnet’s poor performance on AMSA’s production, Benfield notes that market conditions are such that supply is no longer the main constraint.

“I'm generalising, of course, but there is currently an overhang of inventory in the market and some of our competitors have even stated that they had their worst February ever.”

The decision by AMSA to idle furnaces may have been precipitated by Transnet, but Benfield says it is being prolonged by the weak demand outlook and the uncertainty that has arisen following Russia’s invasion of Ukraine.

There is particular frustration at the lack of infrastructure progress, despite government’s ongoing promise that economic and social infrastructure lie at the heart of the Economic Reconstruction and Recovery Plan.

Benfield believes that the Steel Master Plan will remain ineffective until firm commitments are made to a prioritised list of infrastructure projects, particularly in the areas of rail, ports and power.

He is somewhat heartened by moves by Transnet to allow for grater private sector participation on its rail network and to facilitate private port terminals. However, actual projects are few and far between.

“Government realises that they don’t have to own the infrastructure, which is a positive development.

“But we are still not seeing the pathway, through the tender activity, to accelerated project activity.”

One of the current constraints relates to the precipitous fall in empowerment scorecard levels across the sector, which is lowering the local procurement incentive. Yet efforts to raise the problem with government have not proved successful, despite the fact that there is now little scorecard value in buying local.

Much of government’s focus, instead, has been on limiting grey products from entering the country, which while important on the margins, is not addressing the fundamental lack of demand in the economy.-

“So, the Steel Master Plan has sort of run aground, despite the good intentions out there.

“We need to re-energise it, we need to prioritise and we need to get workstreams going around those priorities,” Benfield concludes.

Stellantis South Africa launched 11 new products into the local market last year, with another 11 planned for this year.

Stellantis has now almost completed a full year of operation in South Africa following a global merger that grouped Fiat, Fiat Professional, Abarth, Alfa Romeo, Citroën, Jeep, Opel, Peugeot and MOPAR under one roof.

The brand’s commercial network has 78 dealerships, with another ten planned for this year.

Stellantis South Africa registered volume growth of 35% last year, this in a market that grew by 22%.

“Stellantis . . . aims to become the leading automotive group in the Middle East and Africa region, providing distinctive, affordable and efficient transportation solutions,” said Stellantis Middle East and Africa COO Samir Cherfan on a recent visit to the local company.

“In South Africa, we have a strong growth ambition by 2025 through a product and network offensive.”

Cherfan stated that Stellantis could be in the top five South African motoring companies by 2030.

A shorter term target is 10% market share by 2025.

Stellantis South Africa currently sits outside the top twelve automotive companies in in the country in terms of new-vehicle sales.

BMW says it plans to sell around 25% of its vehicles entirely online by 2025.

Announcing its results earlier this month in Germany, the car maker said the introduction of two new electric models, the iX and i4, has seen the group “significantly expand its digitalisation of the customer interface”.

“For instance, as well as offering intuitive configuration to simplify the purchasing process, pre-configured new vehicles and newer used cars across the entire model range can already be bought online in the BMW Group’s domestic market of Germany.”

However, emphasised BMW, “our retailers would have an important and future role as the point of sales and service”.

The car maker also noted that it expected sales of its fully-electric vehicles to increase rapidly, and that it aimed to have more than two-million fully electric vehicles on the roads by the end of 2025.

“Fully-electric vehicles could make up 50% of the company’s global sales earlier than 2030.”

Under suitable conditions, the BMW Group’s goal is to have delivered 10-million fully electric vehicles to customers by 2030.

Starting at the end of the year, the new iX1 will be BMW’s fully electric offer to customers in the high-volume premium compact segment.

By 2030, the Rolls-Royce brand would have a product range that was exclusively all-electric, added the German premium brand.

Mini is also on the road to a fully electric future from the early 2030s onwards.

BMW, notes, however, that all of its projections were dependent on the expansion of charging infrastructure worldwide being able to keep up with the increase in models available, as well as growing customer demand for fully electric vehicles.

A stable supply of raw materials will also be key.

The BMW Group said it did not expect all markets worldwide to have the necessary framework conditions in place for all customers to transition to pure electromobility in the early 2030s.

“For this reason, options with highly efficient conventional drive technology will still be needed to meet people’s individual mobility requirements, while at the same time contributing to carbon dioxide reduction in the transport sector.

“Hydrogen fuel-cell technology is also expected to account for a growing percentage of the drive-train mix from the second half of the decade onwards,” added BMW.

“The BMW Group is systematically pushing forward with development of this technology as an additional option for sustainable individual mobility.”

The car maker said a small series of the iX5 Hydrogen will be used for demonstration and testing purposes for the first time this year.

“We see hydrogen-electric drivetrains as a complement to battery electric drivetrains.”

BMW also noted that international demand for semiconductors was likely to remain high, with a corresponding continued difficult supply situation.

“As in 2021, there is still a risk of supply bottlenecks for the semiconductor components required for in-house production. The situation is not currently expected to improve until the second half of 2022.”

At BMW Motorrad, all future urban motorcycles will be fully electric, noted BMW.

“Customers can expect a new electric two-wheeler from BMW Motorrad every 18 to 24 months.”

Volkswagen Doubles EV Sales

In the 2021 fiscal year, the Volkswagen group said it delivered more electric vehicles worldwide than ever before – more than 369 000 electric vehicles (up 73%), of which some 106 000 were plug-in hybrids (up 33%) and 263 000 were all-electric vehicles (up 97%).

This means that Volkswagen doubled battery electric vehicle deliveries compared with the previous year.

Three new electric models were launched in 2021, the ID.4 and the ID.5, and the ID.6 in China.

This year saw the debut of the ID. Buzz van.

Also announcing its financial results in March, Volkswagen said it planned to “significantly increase deliveries of all-electric vehicles in the current fiscal year”.

South Africa’s current Integrated Resource Plan (IRP) is significantly underestimating what new capacity should be being built to cater for the decommissioning of the coal-fired power stations and any future demand growth, African Rainbow Energy and Power (AREP) CEO Brian Dames has warned.

Speaking during a breakaway session on energy at the recent South Africa Investment Conference, the former Eskom CEO argued that the plan – published in late 2019 and which energy commentors frequently describe as being sorely out of date – “should be a lot more aggressive”.

Dames was supported in this assertion by several other panel members, including Presidential Climate Commission (PCC) executive director Dr Crispian Olver, who said that the government-led procurement programme was not sufficiently scaled and described the IRP planning process as too rigid and “not fit for purpose”.

South Africa should, Olver argued, be procuring new renewables at a yearly rate of at least 3 000 MW to address existing supply constraints and to ensure supply security as Eskom began decommissioning its coal plants.

“That is going to require a massive ramping up of our Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), and I mean a quantum leap from the pace at which we have been doing it to date,” he said.

Eskom CEO Andre de Ruyter reported that the utility estimated that some 68 000 MW of mostly new variable renewable-energy capacity would have to be added to cater for the 22 000 MW of coal that the utility would be retiring by about 2035.

The State-owned utility was hoping to build about 8 000 MW of that new capacity, leaving 60 000 MW that would have to be built by private and/or municipal generators.

Investment at such a scale would create new green industrialisation opportunities and had the potential to generate 160 000 new net jobs, but it also required policy certainty and a level playing field to ensure investment.

"We are going to set up an independent transmission system and market operator precisely to give investors the confidence that their bids into the power pool will be fairly adjudicated.

"So, from our perspective, we are all systems go to make sure that this transition happens, that it happens quickly and that it is just," De Ruyter said.

Dames reported that AREP would invest R3-billion in the coming few years to build renewables projects linked to the REIPPPP, as well as the opportunities opening up for distributed generation in light of the recent 100 MW reform.

However, the company could and would invest more if there was sufficient transmission and long-duration storage capacity to transport and absorb the renewable electricity and if the IRP was better calibrated to the electricity needs of the country.

AREP would also consider investing in the manufacture of renewables components, but not in solutions where the competitive or comparative advantages were absent in South Africa, such as was the case with certain solar photovoltaic components.

Olver said a just transition in the Mpumalanga province, where most of the country’s coal mines and stations are located, should be coupled with an industrial strategy that aims to transform the province into a green manufacturing hub.

“I don't think our answer lies in the spray-and-stick kind of green economy stuff.

“We need a hardcore industrial strategy and I think that industrial strategy is about making Mpumalanga a green energy hub.”

Olver also warned against delaying the transition from coal to renewables, describing the country’s carbon-intensity as its greatest economic risk over the medium- to long-term.

“Our embedded emissions are or amongst the highest in the world: they are double what China's emissions are and 75% higher than India.

“If we don't adjust, we face being shut out of the global economy and trading system as other countries start to decarbonise.

“We all think about the physical risks of climate change, but what's becoming increasingly clear t...

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the South Africa Investment Conference, during which the energy transition emerged as a theme; discussion around a just energy transition; and the uncertainty in the energy market.