South African mining equipment manufacturers continue to endure global competition by supplying critical equipment to the mining industry, leveraging a legacy of quality and innovation. However, their long-term survival hinges on addressing fundamental economic and industrial challenges.

At the MEMSA Lunch & Learn held at Verdicchio Restaurant & Wine Cellar on 17 March, political-economic analyst JP Landman delivered a clear message to lunch guests, “The problem is not the problem; the problem is productivity.”

He emphasised that South Africa must tackle its structural barriers to productivity—broken infrastructure, lagging human capital development, and failure to keep pace with global technological advancements—if it hopes to sustain its manufacturing base.

The global steel industry faces an oversupply crisis. While short-term government interventions such as bailouts may offer temporary relief, they are not sustainable solutions. What government continues to ignore is that only 5% of the employment in the upstream steel industry is in steel making, the rest is in downstream manufacturing. A thriving steel sector requires broader economic growth, driven by an enabling industrial policy, increased productivity, and a commitment to re-industrialization.

The recently finalised Industrial Policy Action Plan (IPAP) provides a framework for this growth, focusing on four key areas: localisation, industrialisation, digitisation, and decarbonisation. If economic reforms can be implemented under the Government of National Unity (GNU), the steel crisis will resolve itself—because, as Landman pointed out, “most problems solve themselves when everyone is making money.”

The global shift in manufacturing power over the past decades is telling; in the 1950s, the USA controlled 50% of the world’s manufacturing output, fostering high employment and strong per capita incomes. By 2007/08, the global financial crisis accelerated its decline, and today, the U.S. holds just 15% of global manufacturing capacity. Meanwhile, China’s share has risen from 5% to 35%, making it a leader not just in low-cost production but in electronics, robotics, and automation.

South Africa risks a similar decline if it does not act urgently to rebuild its industrial capacity.

With the right policies, South Africa can position itself as a manufacturing hub for critical minerals and mining equipment, capitalising on global trends where manufacturers seek to produce closer to raw material sources. But to unlock these opportunities, South Africa must first solve its core challenge, productivity.

Neels van Niekerk, Executive Chairman of the International Steel Fabricators (ISF), reinforced this message, warning that low-priced Chinese primary steel and the rise of subsidised mini-mill competition pose a significant long-term threat to ArcelorMittal South Africa (AMSA) and the broader formal steel dependent industries. He also cautioned against subsidies and tariffs that only benefit and protect upstream steel at the expense of downstream industries, unless downstream is equally protected, arguing that history has shown such policies to be ineffective.

He questioned the Government’s apparent two-decade fixation on steelmaking resulting in vast over-capacities yet practically ignoring the in excess of 95% by employment downstream manufacturers in the steel and engineering industry. He argued that steelmaking can only service demand, not create demand; therefore, the starting point must be a focus on manufacturing, not steelmaking.

He strongly recommended that South Africa must study the East and not the West when developing manufacturing policies. The East does everything feasible to make their manufacturing industries more competitive, whereas South Africa leans harder and harder on existing manufacturers with laws and regulations and thereby making them continuously less competitive. Recent examples are the scrap Preferential Pricing Systems and the new 2% profit tax for the Black Industrialist fund.

South African mining equipment manufacturers face the same competitive pressures as the steel sector, with low-priced Chinese imports threatening local production. The solution lies in maintaining and further developing their excellent current IP for critical applications, African localisation and seizing opportunities under the African Continental Free Trade Area (AfCFTA).

As van Niekerk cautioned; “The re-industrialisation of South Africa is urgent. We must shift from being a resource exporter to a value-added manufacturing economy before it is too late.”

The path forward requires bold action from both government and industry. MEMSA urges stakeholders to prioritise infrastructure repair and investment to support manufacturing growth, develop skills and human capital to align with global technological advancements, support industrialisation policies that strengthen local production, rather than protecting inefficient sectors, leverage regional trade agreements (AfCFTA & BRICS) to expand market access and foster innovation and digitisation to ensure South African manufacturers remain globally competitive.

The future of South Africa’s mining supply chain depends not on protectionism but on productivity, industrialisation, and smart economic policies. If we get this right, the mining equipment sector—and the broader steel industry—will not only survive but thrive.