Catalytic converter industry in stress

Magneti Marelli South Africa is closing its doors.

The Gauteng-based catalytic converter manufacturer Magneti Marelli was due to halt production at the end of February, and shut down finally at the end of April, according to local reports. The company employed 92 people.

GM Claudio Di Martina told Engineering News Online that the company is “not competitive enough to receive any more export contracts from Europe”.

He says Magneti Marelli South Africa found itself unable to compete under government’s new Automotive Production and Development Programme (APDP), implemented in 2013. The APDP replaced the Motor Industry Development Programme (MIDP).

“The new rebate system had disadvantages for us, and for the rest of the catalytic converter industry too, I believe.”

Di Martina says it is largely vehicle manufacturers that benefit from the APDP, and not the component industry.

Ind-News-Cat

An example of a catalytic converter

“I couldn’t even cover my export transport costs.”

Di Martina adds that South Africa’s logistics and transport costs are “some of the highest in the world”.

He notes that last year’s seven-week strike in the automotive industry also made “Europeans nervous about the stability of the South African economy”.

“The exchange rate is favourable for exports,” he adds, “but not for material imports”.

The rand has weakened sharply against the major currencies over the last six months.

Catalytic converter industry “dying” – Naacam
Total catalytic converter exports from South Africa dropped from R19.6 billion in 2011 (almost 50% of all component exports) to R16.3 billion in 2012. Catalytic converters remained South Africa’s number one component export in 2012. In 2008, at its peak, the local industry earned R24.3 billion. It employs around 5 200 people.

A catalytic converter is a device incorporated into a vehicle’s exhaust system, containing a catalyst for converting pollutant gases into less harmful ones. It makes use of platinum-group metals (PGMs).

South Africa has about 75% of the world’s PGM reserves, and is the world’s largest producer of platinum, with Russia second.

Despite these riches, the local catalytic converter industry is dying, says National Association of Automotive Component and Allied Manufacturers (Naacam) executive director Robert Houdet.

“The APDP cannot ensure its sustainability. We need to take it out of the APDP and go to the Department of Mineral Resources (DMR) to try and set up a programme for catalytic converter manufacturers, where they can benefit from the fact that they beneficiate PGMs.”

Former Naacam executive director Roger Pitot said in 2012 that the benefits offered to local component manufacturers would be lower under the APDP than under the MIDP, noting that some global vehicle manufacturers had not renewed their contracts for the supply of catalytic converters from South Africa.