Steel Shortage in South Africa

It is common knowledge that there is a shortage of steel supply in South Africa.

Many projects are running way behind schedule due to exactly this. One of the main causes of the shortage of steel supply is the impact that the COVID-19 pandemic has had on the industry.

Many companies are trying to fight the steel price and are attempting to manipulate the product by taking risks in utilizing inferior/cheaper products than what is specified for the projects. This is very risky, and it might cost the company even more in the long run.

It is extremely important when sourcing alternatives, to ensure that the standard of the material is in accordance with the design requirements. It is always advisable for the contractor to thoroughly investigate possible alternatives and to consider all possibilities.

The contractor should ensure open and timeous communication with the employer/engineer in relation to all aspects that might affect the time for completion and the price of the project.

The contract would most likely dictate how severe price increases and significant delays in relation to the supply of materials such as steel should be dealt with.

If the contract does not provide sufficient protection to the contractor for instances such as this, I would recommend requesting for an amendment to the contract. Most engineers/employers will realistically, not be very enthusiastic for a contract amendment.

There are various other avenues which the contractor could pursue such as referring the matter to dispute resolution. The contractor would then be required to proof that there are exceptional circumstances which justifies an amendment to the contract.

When considering the COVID-19 pandemic and the fact that no reasonable person could have foreseen the impact that it would have on the industry and more specifically the shortage of steel supply, the Contractor could argue that there exists exceptional circumstances for the amendment of the contract.

The Contractor should also explore other alternatives, but throughout its investigation and sourcing, I would advise the contractor to include the engineer and employer. This would allow the engineer and the employer to make possible recommendations and to ultimately approve of any possible alternatives, greatly limiting the contractors liability.

If you are still in the contract negotiation phase of your project, I would recommend that you seriously consider all the risks associated with material shortages and the volatile prices of materials to be used on your project.

If you are in the design phase of a project, there has never been a more opportune time to consider easily accessible eco-friendly alternatives as replacements to the traditional building materials.

We find ourselves in very unfamiliar times. We need to adapt and adjust to ensure the future and prosperity of our industry as well as of our country.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Corné Broodryk is an attorney at Cotney Construction Law, based in South Africa, and has over 13 years of experience in the construction industry. She focuses her practice on construction law, labour law, commercial law, and property law. Corné has worked on various major construction projects across South Africa and has extensive experience with Fidic and NEC contracts.