The key purpose of the Fund is to assist qualifying enterprises in the downstream steel sectors to improve their competitiveness and assist companies. The Fund will be applied to finance the following initiatives, which directly address competitiveness issues:
- Modernisation of plant machinery and equipment;
- Upgrade of plant machinery and equipment to meet quality assurance requirements;
- Capacity expansion of existing plants;
- Process improvements for cost efficiencies and productivity and assist with plant optimisation;
- Working capital requirements or revolving facility;
- Assist firms to achieve appropriate industry quality certification and standards including environmental standards;
- Establishment of start-up enterprises; and
- Development and testing of prototypes, as well as the testing and certification of new products (for example by SABS or international certification where appropriate)
The following downstream steel sectors should qualify under the Fund:
- Foundry industries;
- Fabrication sectors (focused on pressure vessels, pipes and pipe fittings sub-sectors; structural steel and any fabrication work in support of steel intensive designated sectors/products);
- Parts and component manufacturers of steel-intensive products;
- Valve and pump manufacturers;
- Machining plants;
- Capital equipment industries particularly steel intensive rail and rolling stock components; and
- Any other steel-intensive business.
- Intergrated steel mills
- Component manufacturers that qualify for other incentives
- Large Original Equipment Manufacturers (OEM) that already benefit from APDP
- Sub-sectors where there are already substantial government assistance in place
Qualifying Firm Size
- Maximum annual turnover of R450 million.
- Dependent on development returns.
- 200 employees.
- R51 million turnover.
- R19 million gross asset value.
- 50 employees.
- R13 million turnover.
- R5 million gross asset value.
Very Small Firms:
- 20 employees.
- R5 million turnover.
- R2 million gross asset value.
Size of the Fund
The IDC will receive the R95million in the form of grant funding from EDD which will flow as follows over the period:
- R30 million in the first year (2017/18);
- R30 million in the second year (2018/19); and
- R35 million in the third year (2019/20).
The IDC will leverage the total R95 million allocation over 3 years, to create a substantial R1,5 billion Fund, in the form of an interest rate subsidy to normal IDC risk pricing, aimed at improving downstream competitiveness for qualifying firms in the Metals and Engineering sub-sectors.