Daltron Forge (Pty) Ltd (“Daltron” or the “applicant”) applied for an increase in the general rate of customs duty on rock drilling or earth boring tools, including parts thereof, classifiable under tariff subheadings 8207.13 and 8207.19, from free of duty and 15% ad valorem to 20% ad valorem.
The International Trade Administration Commission (“ITAC” or the “Commission”) considered the application in light of all the information at its disposal. In particular, the Commission took the following factors into account:
• The subject products are rock drilling or earth boring tools such as cutter picks, bits and parts thereof, of a kind used in underground coal mining, surface mining, trenching and road construction;
• While the applicant currently manufactures the product in its semi-finished form (conical shaped picks without tungsten carbide tips inserts), supplying it to other companies who assemble the final product, it has since invested in equipment to also assemble the final product;
• Aggregate import volumes of the subject product increased significantly over the three-year period under investigation;
• Domestic demand for the subject product increased over the three-year period under investigation whilst the applicant’s production volumes and sales volumes for the subject product declined over the same period;
• The applicant faces an escalating cost structure with regards to the manufacturing of the subject products. The main driver of production costs is the cost of the main raw material, wire rod, which has rapidly increased over the three-year period under investigation; and
• The applicant is currently operating at unsustainably low capacity utilisation levels.
The Commission concluded that tariff support should enable the industry manufacturing rock drilling or earth boring tools, including parts thereof, to utilise its existing under-utilised production capacity, achieve economies of scale, resulting in increased volumes with a reduction in the marginal cost of production.
In the light of the foregoing, the Commission recommended that the rate of customs duty on certain rock drilling or earth boring tools be increased, as follows:
• An increase in the rate of customs duty on bits, classifiable under tariff subheading 8207.13.25, from 15% ad valorem to 20% ad valorem.
• An increase in the rate of customs duty on parts of bits, classifiable under tariff subheading 8207.19.10, from 15% ad valorem to 20% ad valorem.
• By way of creating an additional 8-digit tariff subheading for “Conical shaped cutter picks, with tungsten carbide tips inserts”, classifiable under tariff subheading 8207.13.90, from free of duty to 20% ad valorem; and
• By way of creating an additional 8-digit tariff subheading for “Conical shaped cutter picks, without tungsten carbide tips inserts”, classifiable under tariff subheading 8207.19.90, from free of duty to 20% ad valorem.
The Commission further recommended that the general rate of customs duty on “other” tools and “other” parts, classifiable under tariff subheadings 8207.13.90 and 8207.19.90, be maintained at the current level of free of duty due to the wide scope of products covered under these two tariff lines.
Finally, the Commission recommended that the duty be reviewed to monitor the performance of the industry after three years from the date of implementation, or such other period as decided by the Commission.
Please click on the link below to access the full report:
ISSUED BY THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA