Evraz steel factory inspected as sector chases 10% tariff

18 Aug 2015

Business Day, 18 August 2015
By Penelope Mashego

International Trade Administration Commission officials on Monday conducted an on-site inspection at Evraz Highveld Steel’s Witbank operation in one of the first administrative hurdles the company has to fulfil to get a 10% import tariff it has asked for. If the application were successful, Evraz Highveld Steel CE Johan Burger said on Monday that it could help the company, which is in business rescue, avert disaster.

Evraz Highveld Steel, the country’s second-biggest steel manufacturer, has already issued retrenchment notices to all its workers — which could affect upwards of 1,000 employees. In the rest of the sector, nearly 4,000 other workers could lose their jobs. During the officials’ factory visit, they worked through the firm’s income statements and production costs, among others, said the CE.

"We made the application and the process is … going according to plan so far," said Mr Burger. The commission which conducts custom tariff investigations, provides trade remedies, and oversees import and export control has the power to impose duties where it deems necessary.

Monday’s site visit forms part of its process of determining whether the 10% duty is warranted. The outcome will only affect the company, as it is the only one in the country that supplies heavy structural sections. Commission spokesman Foster Mohale said Monday the commission would only be able to provide a response on the site visit on Tuesday.

Evraz Highveld Steel is one of several firms in the sector that have called on the state to impose a 10% across-the-board import duty. The industry is facing near collapse and has been left reeling by weak domestic demand, rising input costs, a global supply glut and the influx of cheaper imports.

Steel and Engineering Industries Federation of SA CE Kaizer Nyatsumba said although he could not comment on Evraz Highveld Steel’s application, the industry body supported the call for an imposition of import duties. He also said the state needed to act with urgency.

Mr Nyatsumba was part of crisis talks encompassing producers and organised labour in Johannesburg last week, at which the stakeholders sought solutions to the troubles besetting the sector. One of the resolutions that came out of the gathering was to formally ask the state to impose import tariffs, he said.

The National Union of Metalworkers of SA, Solidarity, the United Association of SA, as well as the CEs of ArcelorMittal, Evraz Highveld Steel, Scaw Metals Group and Macsteel were part of the talks. Mr Nyatsumba bemoaned the fact that in SA there were no prevailing controls on imports, which led to some countries "dumping" their steel here.

China subsidised its steel industry while its manufacturers often dumped the product in other markets, where they sold it below domestic rates, he said. This undercut local producers