The Industrial Development Corporation (IDC) pressed on hard with its recently discovered aggression despite tough market condition. The state owned development finance institution (DFI) reported funding approvals valued at R13.1bn (R13.5bn) during the year ended March 2013 and doubled its disburstment to R16bn.
Reporting these results IDC CEO Geoffrey Qhena said the DFI was unshaken in its pursuit of the mandate to invest for sustainable and inclusive industrial development. The challenging economic environment was reflected in the R1bn fall in IDC operating profit from R3.4bn in 2012 to R2.4bn. This decline in growth levels is explained by a mix of factors including sharp decline in the value of commodity driven investments in operations like Mozal, ArcelorMittal, Kumba, BHP Billiton, Sappi and Foskor.
Qhena said these results were achieved against a backdrop of a challenging economic environment, mainly due to a prolonged sovereign debt crisis in the Eurozone as well as a moderation in the growth momentum in a number of emerging and developing economies. He said despite these challenges IDC has continued to play a proactive role in the economy by supporting the development of key industries. Depressed global demand for commodities saw a significant depreciation of commodities and subsequently values of operations where IDC is invested. But there were also impairments and non recurrence of extraordinary profit recorded in 2012.
But the IDC kept pace of its strategy around commodities and mainly the push for beneficiation. Highlight for the year under review include a push to improve the competitive landscape and achieve the development potential of local industries such as steel manufacturing. In line with this strategy the IDC acquired steel operation Scaw from Anglo American. It also acquired a stake in Palabora Mining Corporation.
Qhena said “Scaw is a significant player in the local steel industry and the company’s ability to ramp up steel production could, in the long run, help to build a more competitive industry”.
He noted that in partnership with the private sector and government, IDC has made similar strategic interventions in various sectors, including the green economy, supporting government’s renewable energy drive and associated localisation opportunities. The IDC is also focusing on expanding the fabricated metals, capital and transport equipment industries, on the back of infrastructure build programmes of state-owned companies, in particular Transnet, Prasa and Eskom.
The IDC said through its activities in the year under review, it expects to facilitate the creation of 18 922 direct jobs and the saving of 3 950 existing jobs. Qhena attributed the drop in direct jobs facilitated, compared to the previous year, to capital-intensive investments and strategic acquisitions. These investments are, however, expected to significantly enhance employment creation potential in the longer term.
Qhena said despite harsh market condition IDC won’t be scaling back on its risk appetite.