"Having Ryan back is a massive bonus, he's our best bowler. He's bowled all week and come through with no niggles, Jimmy's little niggle from the day before Headingley has gone and Freddie looks fit, so we've got three strong seamers and Monty - if he gets conditions which suit, I believe he's quite close to a bag full.
"But the reason we lost the last Test was we didn't bat well enough.
"The key in this game is to try and get some runs in the first innings and put them under pressure."
BBC cricket correspondent Jonathan Agnew told Radio 5 Live: "I think most of us expected Harmison to miss out on the team - he's back in the fold but not back in the 11 just yet.
"Also, as anticipated, Broad is out, meaning England revert back to having six batsmen, with Collingwood at six, Andrew Flintoff at seven and Tim Ambrose likely to be back down at eight.
"It makes sense - for all the furore about the selection of Darren Pattinson at Headingley, it was the batting that lost England the match."
South Africa All-rounder Jacques Kallis is struggling with injury.
Harmison was hoping to be recalled after missing the last seven Tests
He suffered a knock to his finger in the Proteas's warm-up match against Bangladesh, forcing him to retire injured when batting - but a team spokesman said: "He is 100% fine and trained fully with the squad."
That means the only change to the South Africa side will be Nel replacing Steyn.
Paceman Steyn suffered his injury in the field during the second Test, which South Africa won to take a 1-0 series lead with two matches to play.
But coach Arthur feels fast bowler Nel is the perfect man to replace him on Wednesday, saying: "Any time Andre plays for South Africa he's fired up.
"I can't wait to see him bowl hard. I think he's going to do really well.
"We've backed Andre a huge amount over the last couple of months and I've got a feeling he is going to come through this one fantastically," he added.
"It just shows that when you plan there has to be a queue and some succession in place.
"We have the ability now to lose one guy and be able to bring back a guy who is a hardened Test-match campaigner. So we are fortunate to do that, but that's how we structured our team."
If we can play really good cricket the first couple of days, maybe we can open up some of those wounds
Graeme Smith on England's bickering
Much has been made of Nel's aggressive approach to the game, with the player himself talking about his alter-ego "Gunther" who takes over when his character changes as he bowls.
But Smith was keen to avoid any suggestion Nel may be a loose cannon, and stressed the contribution he could make to the team.
"We've made a bit of a joke of it - he knows sometimes he's overstepped the mark and we constantly work on our players to make them all round better people and players," he told BBC Sport.
"He's an aggressive-style cricketer, he wants to play that way so hopefully he'll manage himself well and we'll manage him well, but I'm more interested in his performance with the ball than other things at the moment."
England's collapse at Headingley, combined with some public differences of opinion in the papers - most notably over the selection of Darren Pattinson - would suggest South Africa go into the game with the upper hand.
And Smith, whilst insistent that he was not reading too much into it, said it was encouraging to see such a level of confusion and indecision in the opposition camp.
"What has surprised us more is the indecisiveness around the England leadership and that has surprised us a bit more than the actual selection," he said.
"Just the calling in, the discussions, and no-one taking responsibility for it. That surprised me a bit.
"There's been a lot going on and it's been interesting to read the papers. If we can play really good cricket the first couple of days, maybe we can open up some of those wounds," he added.
"At Headingley we showed good discipline, intelligence and skill - those are some of the things we want to show here.
"We're just focused on playing our brand of cricket and controlling our game. We know if we can do that we can keep England under pressure."
England: Michael Vaughan (captain), Andrew Strauss, Alastair Cook, Kevin Pietersen, Ian Bell, Paul Collingwood, Andrew Flintoff, Tim Ambrose, James Anderson, Ryan Sidebottom, Monty Panesar.
South Africa (probable): Graeme Smith (captain), Neil McKenzie, Hashim Amla, Jacques Kallis, Ashwell Prince, AB de Villiers, Mark Boucher, Morne Morkel, Paul Harris, Andre Nel, Makhaya Ntini.
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