FEDGROUP-funded renewable energy infrastructure is helping Coega Steels produce steel with reported carbon dioxide emissions of about 800 kg per tonne, roughly 73% below the 3 000 kg/t associated with conventional iron ore-based production. The combination of scrap metal recycling and investment in renewable energy is central to the company’s goal of becoming one of South Africa’s cleanest steel producers. This approach also underpins its R500-million expansion, which includes a newly opened rolling mill in Nelson Mandela Bay.
Fedgroup chief commercial officer Rob Timmis explains, “We have enabled the business to focus on its core recycling operations, while we take care of the energy assets to reduce carbon emissions as much as possible and still provide a return to our investors. By funding renewable energy alongside steel recycling, we can help Coega Steels work towards its ambition of producing cleaner steel as the business grows.”
Strengthening regional competitiveness
The R360-million rolling mill has an annual production capacity of 150,000 t and is expected to create about 300 jobs. It enables Coega Steels to turn billets made from recycled scrap into reinforcing bar, angles and flat bars on site, completing the production chain at its Coega Special Economic Zone operations. This removes the need to transport billets elsewhere for processing, reducing logistics costs and strengthening the company’s ability to supply the Eastern Cape and coastal markets directly.
While on-site processing reduces logistics costs, it also increases the operation’s electricity demand, making energy costs a critical factor in translating new capacity into competitive finished products.
“Energy is one of the highest input costs in steel production. If we can lower that cost reliably and sustainably, we directly enable the businesses we fund to sustain their operations and grow. That growth can create more jobs and provide for more households in South Africa,” says Timmis.
Further solar expansion planned
To support the operation’s energy needs, Fedgroup has financed a 7 MWp solar photovoltaic plant that has already generated nearly 6 million kWh of electricity that would otherwise have been drawn from the grid, while a 50 MWh battery energy storage system is nearing commissioning. The solar plant is projected to generate around 9 million kWh annually – enough for 1,500 homes. Together with the battery system, it will help manage the rolling mill’s additional electricity requirements while limiting reliance on grid power.
Building on this infrastructure, Coega Steels plans to add a further 19.8 MWp of solar capacity by the end of 2027, and Fedgroup hopes to support this phase by directly funding additional income-generating energy infrastructure. The planned investment would extend renewable energy supply as steel production grows, supporting the company’s efforts to reduce emissions per tonne and its exposure to rising electricity prices.
Funding South Africa’s ‘real economy’
For Coega Steels, the model brings dedicated energy funding alongside its investment in manufacturing capacity, with the proposed solar expansion extending that relationship by supporting the company’s ability to supply more locally finished steel while managing the energy costs associated with higher output.
Looking ahead, Timmis comments, “South Africa’s industrial transition needs funders who understand both the assets and the businesses they serve. At Fedgroup, we combine that operational knowledge with funding structured around how those assets generate value. “Coega Steels demonstrates what this approach can deliver, namely investment in energy infrastructure that supports cleaner production and industrial growth, with a commercial foundation for investor returns. This is where we see private capital playing a much greater role, and where Fedgroup is helping to lead the way,” he concludes.
