The beneficiation of South African raw materials will be taken a step further with the investment in a proposed R223-million stainless steel precision strip processing facility at the Coega IDZ.

This is according to Columbus Stainless market development commercial manager Ken Dewar, who represented Southern Cross Precision Strip at a stakeholder meeting in Port Elizabeth yesterday.

"At present there are no precision strip processors in the country and manufacturers mostly import the material.

"This is a process that Columbus can't do profitably (alone) and within the standard requirements of the industry," said Dewar.

The country uses 1% of the global supply of precision steel, which is used mostly in the automotive industries by flexible exhaust coupling manufacturers.

Columbus invited German steel company Boecker & Wender Stahl (BWS) to set up the proposed facility in South Africa.

BWS will ultimately hold a controlling share (51%) in the facility, while the rest will be taken by Columbus Stainless (23%) and the Industrial Development Corporation (26%). As part of the deal, Columbus in Middelburg, Mpumalanga, will supply most of the raw materials for the facility, which is expected to have an input of 9 100 tons of stainless steel a year during its first phase.

Various locations were looked at before the companies decided on the Coega IDZ, which is close to the customers. Dewar said five potential clients in the coupling industry had been identified, four in Port Elizabeth and the other in Cape Town.

Apart from demand by coupling manufacturers, the facility could possibly produce material for a range of products including catalytic converters, hypodermic needles, razors, air brake systems and computers, said Dewar.

"The product has not been manufactured before in South Africa, so other uses can still be developed," he said.

The construction, which will cost R50-million, is expected to start by mid-year and should be completed within two years.

State-of-the-art equipment will be imported from Germany and will ensure that the plant is equipped with the latest technologies. Dewar said BWS had one facility in Germany and was investing in South Africa to modernise its operations. The facility will produce up to five grades of steel with a thickness of up to 0,35mm and width of 400mm during the first phase of production and 800mm during the second phase.

Its entire staff complement of 150 people will be recruited from Port Elizabeth, including the top management.

The project is expected to indirectly benefit 5,000 people in downstream production facilities. Dewar said the investors had reached an agreement with the motor industry development programme administrators to allow for the programme's benefits to be used during the construction phase of the project.

According to this agreement, Columbus steel will be exported to the BWS facility in Germany, where it will be rolled to the required width before it is shipped back to Port Elizabeth to be sold to the coupling industry.

MIDP certificates will be awarded on the original value of the material.

"The reason for this is to ensure that we secure our market share and that the market does not move to China before we are finished with construction," said Dewar.