Why steel drives the boiler room of South Africa’s economy

Not many South Africans know it, but in the middle of Bellville’s Sacks Circle industrial zone sits a world-class boilermaking facility that powers not just our grid, but much of Southeast Asia’s sugar industry. 

Behind a set of unassuming gates and factory sheds lies John Thompson, a 90-year-old manufacturer that has been welding steel into the backbone of South Africa’s industrial story.

“For decades, boilers have powered cities, industries and homes,” the company’s leadership reminded guests at its 90th anniversary. “Without us, the lights would not shine, factories would not run and communities would not thrive.”

Boilers don’t often make headlines, but they are the invisible engines of power stations, factories, hospitals and food processors. In fact, one of the company’s first boilers, built 70 years ago, was decommissioned only two years ago, “not because it stopped working, but because it had to compete with modern-day technology”, an executive said. “We build stuff to last.”

The Eskom contract that keeps the lights on

That longevity is not just about nostalgia. The company is actively engaged in South Africa’s most pressing crisis: electricity. It has a contract with Eskom to supply “low burner” units to Tutuka Power Station in Mpumalanga.

These are not just spare parts. Each burner weighs eight tons. There are 24 burners in one boiler, six boilers per power station, and Eskom operates around 15 such power stations. Do the maths, and you get a sense of the sheer industrial muscle required to keep the grid alive.

The new burners are designed to reduce nitrogen oxide emissions, a major health and environmental concern in Mpumalanga. “We are producing burners that match the quality out of Germany,” the company said. “The goal is to keep the lights on in an environmentally friendly way.”

Training the next generation of artisans

Factories like these depend on more than steel. They need skills. And John Thompson has been training artisans for generations. Its apprenticeship programme dates back to 1984, covering every major welding discipline: submerged arc, flux core, manual metal arc, MIG and TIG.

“You’re building bombs,” one veteran trainer tells the media contingent as he leads the party through the halls of welders and moulded metal. “The only difference between a bomb and a boiler is the quality you build into it.”

Actom group (John Thompson’s parent company) CEO Mervyn Naidoo tells his own story: “I was a student 32 years ago when I was first exposed to our factories. I joined the group 24 years ago and ultimately became loyal.”

Today, the boilermaker’s attrition rate sits at just 1.3% over the past five years. About 180 people are currently in training programmes, a third of them women. Many graduates stay on, some now running the training centre or managing production lines.

The company even starts its pipeline in high schools, funding maths and science programmes from Grade 8. “For those who can’t go to university, we bring them into our training centres,” Naidoo explained. “We train for ourselves, but also for the industry and South Africa at large.”

Balancing patriotism with pragmatism on steel

All of this depends on steel, and that’s where South Africa’s industrial chain starts to rattle.

ArcelorMittal South Africa (Amsa), the country’s largest steel producer, is in crisis. It reported a headline loss of more than R1-billion for the first half of 2025.

Read more: ArcelorMittal responds, says the mini-mill dream could melt down

The causes are familiar: Transnet’s rail service collapse forced 62% of raw materials on to trucks at huge cost; Eskom’s power tariffs are globally uncompetitive; cheap imports from China and elsewhere swamp the local market; and misguided government policies have distorted pricing.

Source: Amsa interim results to the end of June 2025

Amsa CEO Kobus Verster estimates that the scrap metal price preference system transferred “more than R60-billion over a decade from informal workers and recyclers to a handful of capital-intensive scrap-based mills.”

Read more: After the Bell: The sad end of the road for ArcelorMittal SA

For manufacturers like John Thompson, the crisis is felt daily. “Our first prize is to support local industry by buying local,” Naidoo said in an interview with Daily Maverick. “At times, we even pay a slight premium. But we cannot constrain our business to the point where we cannot manufacture to meet client requirements, especially in contracts with penalties. Where local industry cannot meet quality or lead times, we apply for an exemption.”

That means sourcing some boiler plates from German or Chinese suppliers. It’s a choice between supporting South African jobs and keeping Eskom’s lights on.

A spoonful of sugar

The paradox of John Thompson is that while many South Africans have never heard of it, mill owners in Southeast Asia know the brand well.

The company is building three boilers for what it calls “the largest sugar mill built on a greenfield site in the world,” in Papua New Guinea. There may be four more to follow. It already has more than 700 fire-tube boilers installed across Indonesia and the Philippines.

Exports mean competing against Indian and Chinese manufacturers. “To export, you’ve got to remain current and competitive,” said Naidoo. “We invest in automation and the latest technologies to optimise production and compete on cost. Where we can’t compete on cost, we compete on technology.”

The strategy is rooted in Africa. 

“Africa is projected to have the world’s largest economically active population by 2050,” Naidoo said. “Right now, we generate less than 10% of China’s power. That demand will trigger opportunities. We’re positioning ourselves with regional supply chains and industrial hubs across the continent, with South Africa as the base.”

Steel’s moment of reckoning

Meanwhile, Amsa is fighting for survival. Domestic sales volumes are down 10%. Imports account for 35% of demand – and global overcapacity, particularly from China, keeps prices depressed.

And the doors have just shut on the company’s long steel business. 

The state has, to its credit, finally begun to act. The International Trade Administration Commission (Itac) recently imposed a 52.34% safeguard duty on corrosion-resistant steel coils for 200 days and launched a review of 609 tariff codes covering R67-billion worth of imports.

Amsa wants more. Verster has called for blanket 25% tariffs, pointing out that Europe limits flat steel imports to 15% of demand to keep its industry viable. Without protection, South Africa risks losing its capacity to produce advanced high-strength steels for the automotive and defence sectors.

But tariffs alone are no cure. As Itac itself noted, these are “bridge measures” that give temporary breathing space while deeper reforms in energy, logistics and operational efficiency are tackled. Without them, tariffs risk entrenching inefficiency and becoming a permanent burden on the wider manufacturing economy.

Ninety years and counting

John Thompson’s 90th anniversary is a reminder that South Africa still has industrial champions. The Bellville South plant is not just a relic of the past, but an active engine of the present, training artisans, building boilers and exporting technology.

It is also a reminder that industrial policy is not abstract. When steel mills shut down, factories like this one struggle to find raw materials. When Transnet’s rail service collapses, the costs ripple down to every welded seam. DM