Tsingshan eyes major Zimbabwe steel expansion

China's Tsingshan Holding Group is considering nearly tripling production at its Zimbabwe steel plant, a move that could intensify competition for South African steelmakers as much of the Zimbabwean output is exported to the neighbouring country.

The company is considering increasing production at its Manhize steel plant, located about 205 kilometres southeast of Harare, from the current 600 000 tonnes a year to as much as two million tonnes.

Benson Xu, chief executive officer of Tsingshan's Zimbabwean operation, said the company planned to diversify its product range before significantly increasing production.

"First of all we want to diversify the steel products," Xu said in an interview at the plant.

"Then we will also put up the volume" in the near future, he added.

Xu said improved rail infrastructure would be required to support the expansion.

Tsingshan commissioned the Manhize steel plant in 2024 as part of its investment in Zimbabwe's iron and steel sector.

Currently, about 40% of the plant's production is sold on the Zimbabwean market, with the remainder exported, mainly to South Africa.

The company also exports steel to Malawi and Zambia.

The proposed expansion comes as South Africa's steel industry faces mounting pressure from cheaper imports, weak economic growth, unreliable rail infrastructure and rising electricity costs.

ArcelorMittal South Africa, the country's largest steel producer, shut down a plant producing long steel products last year, citing competition from imports and local competitors that use subsidised scrap metal rather than iron ore.

Tsingshan's expansion would further strengthen Zimbabwe's position as an emerging regional steel producer and could increase competition in South Africa, particularly in the construction-steel market.

However, the company will need additional infrastructure to support the proposed expansion.

Xu said Tsingshan would need to establish a plant to process metallurgical coal for use in the steel mill's furnace. The company already mines iron ore in Zimbabwe to supply the Manhize operation.

Describing the proposed expansion as "quite massive", Xu declined to disclose its potential cost.

Tsingshan is also reportedly in discussions with Zimbabwe's sovereign wealth fund, Mutapa Investment Fund, over the establishment of a joint venture focused on rail infrastructure.

The proposed rail partnership could help address one of the key logistical constraints facing the steel operation as production increases.

Zimbabwe has sought to revive its once-important iron and steel industry following the collapse of state-owned Ziscosteel, which stopped production in 2008.

The Manhize project has been viewed as a major step towards rebuilding the sector and reducing Zimbabwe's reliance on imported steel.

Tsingshan is one of the world's largest nickel producers and a major stainless-steel manufacturer. The group is controlled by its founder, Xiang Guangda.

If implemented, the Manhize expansion would make the Zimbabwe operation a substantially larger regional steel supplier and potentially increase pressure on South African producers already struggling with weak demand and growing import competition.