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Engineering News editor Terence Creamer discusses the Industrial Development Corporation’s recent loss and some of the big policy choices that could affect its role and outlook.

The Industrial Development Corporation (IDC) has confirmed that it has approached the National Treasury for an explicit guarantee, which it says will enable it to attract more concessional funding to meet its development mandate.

The State-owned development financier has also approached the South African Revenue Service to explore the prospect of being granted tax exemptions similar to those in place for the Development Bank of Southern Africa.

CFO Isaac Malevu told Engineering News in an interview that the scale and timing of the guarantee had not been decided, but he confirmed that the proposal had been made to the National Treasury.

"An explicit guarantee would help us attract concessional funding . . . and secondly, it will help reduce the credit risk of the IDC, and hopefully that improves our credit rating," Malevu explained.

"That's what we're looking for, because at the moment, when we talk to investors, our non-performing loans ratio and impairments ratio are seen as high. But if we had a guarantee, the picture looks very different."

CEO Mmakgoshi Lekhethe, who previously worked at the National Treasury, could not be drawn on the department's reaction to the request, which comes at a time when the National Treasury is still seeking to reduce the contingent liabilities on the national accounts.

Instead, she highlighted to Engineering News the fact that the IDC had not been among those State entities that had sought regular support from the National Treasury, which "recognised the role that the IDC was playing" in supporting the retention of key industries and in preserving industrial employment.

She added that the strategic nature of the sectors supported by the IDC had also been amplified by recent geopolitical developments, especially the war that had disrupted shipping in the Strait of Hormuz.

"We are being very firm, and we've approached the Treasury through the Minister of Finance to request that they meet us halfway with that guarantee," Lekhethe said.

The National Treasury generally uses either the Medium-Term Budget Policy Statement in October or November, or the February Budget, to announce the type of policy changes being sought by the IDC.

STEEL IN FOCUS

Confirmation of the approach to the National Treasury and SARS comes against a backdrop of government wanting the IDC to play a more developmental role in sustaining strategic sectors, such as steel.

Speaking at the group's 2025/26 financial results, Trade, Industry and Competition Minister Parks Tau reaffirmed the high expectations he had of the IDC in sustaining the domestic steel industry, which is under pressure as a result of global oversupply and rising international tariffs.

South Africa's largest steel producer, ArcelorMittal South Africa (AMSA), is currently trading under a cautionary announcement because of ongoing discussions with the IDC over a possible transaction.

Tau said that the Steel Masterplan was under review and that once the changes were announced, which could be during the course of September, he expected that the IDC would fully align itself with the new strategy.

He described AMSA as a major part of the domestic steel ecosystem and said sustaining both its primary production and some of the niche products it produced was crucial to certain downstream sectors, making specific reference to the automotive industry.

"Thus the decision to engage in the commercial discussion and commercial transaction with AMSA," Tau elaborated.

Lekhethe told Engineering News that the IDC was likely to pursue the transaction despite the absence of a strategic equity partner, while stressing that interest was being shown by potential future partners.

"What we've decided to do is acquire the asset, and get on and do the work ourselves with the company, and depending on the turnaround strategy and the engagements, we can then decide what to do . . . [T]here are a lot of interested parties out there, but we haven't identified any strategic equity partner yet."

The State-owned Industrial Development Corporation (IDC) slumped to a R4.7-billion loss for its 2025/26 financial year from a profit of R329-million on the back of losses reported by associate companies and subsidiaries, notably Foskor.

The phosphate rock miner and fertiliser producer's Richards Bay acid plant was placed into care and maintenance during the year after the supply of sulphur and ammonia, which are key inputs, was heavily disrupted by developments linked to the US/Israel war on Iran.

The prices of sulphur and ammonia have also reportedly tripled since the start of the war, making the resumption of production commercially unviable.

Foskor's operations had already been impacted prior to the closure of the Strait of Hormuz by two fatalities and mine flooding; incidents that resulted in the suspension of operations for a number of weeks.

The company's operational losses were recorded at R1.2-billion, but the IDC also reversed a deferred tax benefit of R1.6-billion on uncertainty over whether it would be realised in the coming five years.

IDC CEO Mmakgoshi Lekhethe confirmed with Engineering News that initiatives were under way to source the raw materials needed to resume production at Richards Bay ahead of the key October planting season in South Africa.

However, she also said that Foskor's production costs remained elevated and confirmed that the company would continue to negatively affect the IDC's 2026/27 financial results.

"Foskor needs to look at a turnaround strategy that positions it for the future," she said, describing its prevailing cost base as too high even though the company had been identified as a "strategic" asset to the country.

The IDC's loss was further accentuated last year by developments at the Mozal aluminium smelter, in Mozambique, which also entered care and maintenance during the period.

The development financier has a 32% stake in the smelter and recorded an equity accounting loss of R2.6-billion on that position in the year to March 31, 2026.

At a company level, where the results of subsidiaries and associates are not included, the IDC reported a R2.3-billion profit, an improvement on R1.8-billion reported in the previous financial year.

CFO Isaac Malevu argued that the IDC funding model remained resilient, despite economic headwinds, pointing to an improved debt-to-equity ratio of 47.7% and a reduction in nonperforming loans to 35.1%, a figure that remains worryingly high.

He said overall nonperforming loans in value have declined by R11-billion from R35-billion in March 2022, but described the top five as remaining "sticky", while also making up more than 50%, or R12.4-billion, of all nonperforming loans.

Lekhethe said the reduction in nonperforming loans remained a top priority for the executive and the board for the remainder of the current financial year.

"If we can remove at least one or two of the top five, our nonperforming loans go down a lot, our impairments go down, and that releases capacity on our balance sheet for us to do more," she said.

The IDC expects to match its 2025/26 disbursements of R17-billion in the current year, but the figure could be elevated by some large transactions under consideration, including a possible purchase of steel producer ArcelorMittal South Africa, which is trading under a cautionary.

Over the coming five-year period, the IDC is budgeting total disbursements of R56-billion to traditional sectors, as well as the priority sectors of critical minerals, green industries, grid infrastructure, defence-related manufacturing and the blue economy.

Rising vehicle imports from China and India are placing pressure on production volumes at South Africa's local vehicle manufacturers, with this pressure spilling over to component manufacturers, says Metair CEO Paul O'Flaherty.

Speaking at the component manufacturer's interim results announcement for the six months ended June 30 on Wednesday, O'Flaherty noted that Metair managed a "very solid performance" despite two of its main customers showing a decline in vehicle production from peak levels.

Metair comprises of two divisions – automotive component manufacturing for original-equipment manufacturers (OEMs, or vehicles manufacturers), which represents 67% of its revenue, and aftermarket parts and retail, at 33% of the JSE-listed group's revenue.

Metair's OEM customers include Isuzu, Volkswagen and Mahindra, with the bulk of business, however, flowing from Toyota and Ford.

While vehicle sales had been booming in South Africa in recent months, imports had accounted for most of the growth, noted O'Flaherty, with locally built vehicles now representing under a third of the new-vehicle market – the lowest share on record.

In tandem with this, vehicle exports from South Africa for the first six months of the year had declined by 7.8% compared with the same period last year.

While production in the first half of the year at Toyota had held steady, at 66 074 units, vehicle output at Ford's Pretoria plant had declined by more than 15 000 units, to 46 193 units.

The outlook for the rest of the year was that production should remain stable at both plants, said O'Flaherty.

He added, however, that it was necessary for government to create a platform that would allow the local automotive industry to return to growth.

Government is currently reviewing its manufacturing support to the local automotive sector in the face of rapidly rising imports.

O'Flaherty noted that Metair had been hard at work to diversify its OEM portfolio.

Talks about a new Stellantis plant in the Eastern Cape had stalled, however, with little movement seen in recent months.

Chery had taken over the Nissan plant, in Pretoria, with Metair engaging the Chinese manufacturer on its parts needs.

It was not clear, however, if production would be semi-knockdown (very few local parts), or completely knockdown (much greater potential for localisation).

O'Flaherty said Metair's diversification strategy did not involve walking away from OEM parts production.

He said it was clear that the local OEMs were not going to "sit back" and accept the status quo, and that the industry was confident that it could return to firmer ground in the medium term.

As for Metair's aftermarket business, O'Flaherty believed there were signs of improvement in the general aftermarket, with retailer AutoZone's trading day sales per day growing ahead of the market.

The retail chain's progress remained six months behind expectations, however.

Metair on Wednesday reported that group revenue for the six months had increased by 1% to R8.5-billion; with earnings before interest and taxation also growing by 1%, to R444-million.

"Metair is a materially different business from what it was two and a half years ago," said O'Flaherty.

"Substantial work has been undertaken to improve its flexibility and adaptability to navigate adverse market conditions by closing loss-making businesses, restructuring profitable businesses and capitalising on opportunities as they arise.

"A new refinancing package has also created the runway to execute on the recovery and growth plan, although the debt remains elevated.

"A new team is in place, a new business model has been implemented, and all major restructuring is substantially complete, subject to market conditions.

"The company's risk profile has been materially enhanced, and there are no further unusual items in its results."

O'Flaherty said the once-deeply-troubled Metair had now transitioned into a stable operating phase, with the focus on generating earnings before income,...

The third edition of South Africa's 'Construction Book', which lists 110 infrastructure projects that are expected to enter procurement over the coming 12 to 18 months, has been released by Infrastructure South Africa.

Its publication coincided with the 2026 edition of the Sustainable Infrastructure Development Symposium South Africa held in Cape Town, where President Cyril Ramaphosa announced in a virtual address that the projects had a combined value of some R395-billion.

He also confirmed that quarterly performance reports on the Construction Book would be published "to ensure that these projects move from the page onto the ground".

Public Works and Infrastructure Minister Dean Macpherson said that while there had been some improvement in converting projects from previous books into procurement activity, it was "not yet good enough" at 58%.

"From now on, quarterly performance reporting will identify which projects are advancing, which are falling behind and where intervention is required," Macpherson added.

He said the idea was to use the book as a market-signalling instrument and encouraged the construction industry, investors and other partners to engage with the opportunities reflected in the latest edition to help strengthen the pipeline and improve delivery.

The book includes projects in the water, energy, digital and social infrastructure sectors, as well as ten municipal infrastructure projects in eThekwini, Cape Town, Polokwane, Tshwane, Mogale City and Johannesburg.

For the first time, public-private partnership (PPP) projects have been included, comprising a national rail corridor, a project at the George Mukhari Hospital, in Gauteng, and the Beitbridge-Musina Water Transfer Scheme, in Limpopo.

Amid the growing focus of government on municipal infrastructure, this category of projects is the largest in the book by value at R112-billion and covers energy, water and sanitation, property developments, and healthcare upgrades.

Energy, which had been the dominant category in previous books as South Africa struggled to address loadshedding, remains a key feature, with 29 projects valued at a combined R86-billion.

Key projects highlighted include the Aries-Aggenys 400kV Line, in the Northern Cape, and the Refurbishment of the Main Plant at Steenbras, in the Western Cape.

Forty-one transport projects with a total investment value of R81-billion also feature, with the majority of projects being pursued by the South African National Roads Agency Limited together with major municipalities, alongside some Transnet rail and ports projects.

The sector includes a mix of procurement strategies ranging from PPPs to open and negotiated tenders.

Sixteen social infrastructure projects with a combined value of R52-billion are also included in the book, with the projects at the Tygerberg and Belhar Hospitals in the Western Cape listed, alongside Durban Film City, projects at the Joburg Fresh Produce Market and the Limpopo Central Hospital.

A total of 18 water projects with a combined value of R35-billion are included, including the Southern Aqueduct in KwaZulu-Natal and a desalination project being pursued by the City of Cape Town.

Digital infrastructure projects feature for the first time, with three listed with a combined value of R28-billion.

Existing and future projects are catalogued, including the South African Radio Astronomy MeerKAT project, where 60 new dishes are being built, and the first phase of the SAeX East Subsea Fibre-Optic Cable.

The book has been published following the launch of Phase 3 of the Government-Business Partnership, which included infrastructure as one of four sectors that would be prioritised in an effort to lift growth to 3% and to create one-million new jobs by 2030.

The other growth sectors are mining, agriculture and tourism, with the partnership also continuing with its previous focus on electricity, freight logistics, crime and corruption, and youth employment.

In his address, Ramaphosa lamented ...

Cape Town Mayor Geordin Hill-Lewis has described the record R12.3-billion spent by the city on infrastructure last year, which he said was the biggest investment yet by a city-government in South Africa, as the "minimum" level of investment needed.

To match the rise in demand for services and to support higher levels of economic activity far higher levels of investment would be required in the future, he added.

"Even at those record levels of investment, we are only just keeping pace with the rapid growth of our city," Hill-Lewis said at the 2026 edition of the Sustainable Infrastructure Development Symposium South Africa, where he pointed to rapid urbanisation as a key driver.

"That should give us some pause for thought and some perspective nationally. If a city is investing at record levels, but still regards this investment as the minimum required, we need to ask what level of infrastructure investment South Africa's cities and towns across the country will require to prepare for the years ahead."

The leader of the DA said he had studied the infrastructure budgets of all the other major cities and had concluded that a major increase in infrastructure investment was required.

As a "rule of thumb" he postulated that yearly spending would have to rise to between R10-billion and R15-billion across the major cities to address backlogs and begin preparing for growth.

"That budget should grow every year by at least the combination of inflation and population growth in your city," Hill-Lewis added, describing it as a "budget rule" that was being implemented in Cape Town currently.

Such spending could not be funded by government alone and would require support from development finance institutions and private sector finance in the form of public–private partnerships.

"South Africa needs to become much better at identifying where public resources should be used, where private capital can fill the gap, and how to combine those two to deliver infrastructure at much greater scale," Hill-Lewis said.

The mayor also stressed the importance of project preparation as "a construction project on paper is not infrastructure. It becomes infrastructure when it is properly planned, financed, procured, constructed, maintained and operated well."

This theme was underlined by both President Cyril Ramaphosa in his address and by Public Works and Infrastructure Minister Dean Macpherson, who noted Infrastructure South Africa had R600-million available to disperse through competitive bid windows to help public institutions transform promising concepts into investment-ready projects.

"The first bid window received 277 submissions with an estimated combined capital value of roughly R322-billion. Infrastructure South Africa is now providing preparation support to more than 26 projects with an estimated capital value of approximately R148-billion," Macpherson reported.

He also announced that projects selected following Bid Window II represented a potential capital investment value of about R57.8-billion, while Bid Window III had opened in July to create another opportunity for the public sector to bring forward high-value projects requiring preparation support.

Infrastructure South Africa has indicated that it plans to offer quarterly status reports on the projects that are included in its so-called 'Construction Book', which is published yearly and lists public infrastructure projects across all three spheres of government that are considered "construction-ready".

Speaking ahead of the release by President Cyril Ramaphosa of the third edition of the book, Infrastructure South Africa head Mameetse Masemola said the quarterly updates would provide an indication as to whether the projects were proceeding as intended.

She acknowledged that a collation of projects was insufficient and indicated that it, thus, intended to provide regular reviews in a bid to offer "line of sight" over government's R1.1-trillion infrastructure commitment "from budget to delivery".

The third edition, Masemola confirmed, would also include public-private partnerships for the first time, but would have municipal infrastructure, including water, sanitation, electrification and road, as its key focus.

This was in line with the 'Shaping the Future of Municipal Infrastructure' theme of the 2026 edition of the Sustainable Infrastructure Development Symposium South Africa, where the new Construction Book was due to be unveiled.

Public Works and Infrastructure Minister Dean Macpherson indicated that the conference would also highlight progress on the country's 81 Strategic Integrated Projects (SIPs), which comprised 263 individual projects.

The SIPs, which were Gazetted only following Cabinet approval, had an estimated combined investment value of R2-trillion and included both public-sector-led and private-sector-led infrastructure projects.

"Over the last 18 months, 37 projects worth approximately R69-billion have been completed. Eighty-two projects worth approximately R502.7-billion are currently in construction. A further 54 projects worth approximately R206-billion are in documentation and procurement," Macpherson reported.

"These figures show both the scale of the pipeline and the importance of sustained coordination across the infrastructure system," he added.

The conference was also taking place only days after the launch of Phase 3 of the Government-Business Partnership, which listed infrastructure as one of four sectors that would being prioritised in an effort to lift growth to 3% and to create one-million new jobs by 2030.

The other growth sectors are mining, agriculture and tourism, with the partnership also continuing with its previous focus on electricity, freight logistics, crime and corruption, and youth employment.

While specific targets had been set for the other three sectors, it was indicated that work was still under way to finalise the framework for infrastructure.

Nevertheless, business did name Fani Titi, Sim Tshabalala and Hendrik du Toit as its three CEO sponsors for the partnership's focus on infrastructure.

Few could dispute that Discovery CEO Adrian Gore has emerged as the most influential South African business leader of his generation. Even those, or perhaps especially those, who do everything from tying their smartwatch to their dog's collar to get their 10 0000 steps, or who make that special trip to the gym on a Friday simply to tag-in so as to earn those last 100 points needed to meet that week's fitness goal.

Gore and Discovery are so fully integrated into South Africa's cultural imagination that dinner-table discussions regularly turn to whether they are dictating everything from how and when we sleep to where we buy our groceries. Pontifications veer wildly from whether Vitality is akin to an Orwellian 'Big Brother' to facetious questions about why Discovery has not created a rewards programme to incentivise municipal officials to fix chronically broken traffic lights.

More recently, Gore's impact has taken a more explicitly political turn. He is playing a central role in the Government-Business Partnership and was key in mobilising fellow CEOs to pledge support for unlocking the country's potential at a time when that potential risked being blacked out by extreme and intensifying loadshedding.

The partnership has been criticised for intervening to save politicians who should have been left to fail spectacularly at the polls. But given the stakes, the silent majority is arguably grateful for the impetus the partnership is adding to efforts to tackle the country's multiple crises.

Gore has now documented how the impact of an individual and an organisation can be multiplied in his book titled The Four Principles, which are outlined as including disciplined optimism, focused urgency, declared goals and the Pareto Tail.

Given that Gore is so readily associated with optimism, at times disparagingly so, it is worth reflecting on how he approaches the subject.

Showing optimism in times of crisis, he acknowledges, has connotations of reckless naivety. It also chafes at the prevailing attitude where being negative is associated with being savvy, rational and sophisticated.

As a principle outlined in the book, however, optimism is not a knee-jerk emotional state. Rather , it's a "disciplined tactic" designed to overcome negative biases or a declinist narrative so that it no longer distorts one's perception of reality.

This shift in mindset does not ignore the inevitable risks, which Gore the actuarial scientist has been trained to scope, but acknowledges that opportunities are just as inevitable.

While adopting such an attitude appears simple or even simplistic, it's a principle that is extremely difficult to adopt. Doubly so for those of us in the media, who are expected to not only see the hole in the doughnut but to report on it relentlessly. And, in many instances, that is precisely the role that the media must play.

It is never the full story, however. And South Africans could do worse than adopt such optimism tactically when there are big problems to solve, of which there are many.

Engineering News editor Terence Creamer discusses the launch of the third phase of the Government-Business Partnership, the key themes of this new phase of the partnership and the willingness of business to assist at the crisis-ridden City of Johannesburg and in shaping a new cou

The four sectors of mining, agriculture, tourism and infrastructure have been selected under Phase 3 of the Government-Business Partnership as the platforms for raising South Africa's growth to 3% and to create one-million new jobs by 2030.

These new focus areas were unveiled jointly in Johannesburg on August 20 by President Cyril Ramaphosa and Discovery CEO Adrian Gore, a key business convenor of the partnership since its launch in 2023.

The initiative initially focused on averting South Africa's potential economic collapse amid extreme electricity loadshedding, deepening operational crises across the rail and port systems, and chronic crime and corruption. The themes of energy, logistics, and crime and corruption remained on the partnership's agenda, together with a focus on youth unemployment, which was added during Phase 2.

Besides the four growth sectors, Phase 3 would also include a focus on the crisis-ridden City of Johannesburg, once business had been assured of a willing and credible counterparty in the municipality, while also giving attention to South Africa's "narrative", which continued to weigh on investor perceptions.

In all, therefore, the partnership would have ten focus areas bundled under the themes of 'growth enablers' (energy and logistics); 'growth drivers' (mining, agriculture, tourism and infrastructure); and 'confidence multipliers' (crime and corruption, City of Johannesburg, country narrative and youth employment).

Gore described the new phase as a "deliberate step change from removing the constraints holding the economy back, to actively driving growth in the sectors where South Africa can genuinely compete globally, grow and create jobs".

He stressed, too, that 3% growth represented the minimum level at which South Africa would begin to stabilise unemployment, which rose to a devastating 33.6% in the last quarter, with 8.5-million people out of work.

At levels above 3%, but particularly above 5%, South Africa would begin to reduce unemployment and properly absorb the 300 000 people entering the jobs market yearly.

Ramaphosa underlined this point, arguing that 3% could not be "the summit of our ambition".

"We need growth that reaches rural communities, townships and smaller towns.

"For this reason, Phase 3 should expand the partnership's work into tourism, agriculture and agro-processing, and mining.

"These sectors have been selected because they have significant potential to attract investment, earn foreign revenue, strengthen localisation and create employment at scale," the President added.

R50BN MINING INVESTMENT TARGETED

In mining, where Gore described South Africa as a "geological superpower", the Phase 3 objective was to unlock more than R50-billion in capital expenditure by February 2028.

Immediate attention would be given to identifying sector competitiveness improvement opportunities by February 2027 and rolling out the cadastral system nationally by March 2027.

In addition, the partnership aimed to address administrative and approved-project implementation bottlenecks by February 2028.

In agriculture and agro-processing, improving port efficiencies, especially at the Port of Cape Town, and expanding market access were viewed as ways of boosting yearly export value by R5-billion and increasing the sector's GDP contribution by as much as R18.2-billion, respectively.

Attention would also be given to land reform to facilitate production on some 100 000 ha of land and to identifying up to three high-potential import-substitution opportunities for further agro-processing locally, which could add 100 000 new jobs.

Gore saw tourism, meanwhile, as a key labour-intensive export industry, with one job created for every 13 tourists.

Under Phase 3, the intention is to increase international tourist arrivals by land and sea from 7.5-million to 8.1-million by December 2027 and from 3.05-million to 3.8-million by air.

Here, attention would be given to opening additional direct air routes with new and ...