Government intervenes to save steel sector

17 Feb 2017

Business Report, 17 February 2017
By Staff Reporter

Johannesburg - The Department of Trade and Industry (DTI) says it is implementing measures to protect the steel industry.

The local steel sector has recently been decimated, with thousands of workers retrenched as companies stopped running furnaces.

This was due to cheap steel being brought into the country, notably from China.

Last week, ArcelorMittal South Africa said, despite a 10 percent tariff on imported steel products implemented during the year, 1.2 million tonnes came into SA, which it says “reflects the need for safeguard measures for primary steel manufacturers to address the surge in imports”.

Apparent steel consumption decreased by 3.4 percent as a result of subdued economic growth.

“Encouragingly, post year-end the authorities approved the designation of South African steel for use in state infrastructural projects.”

Read also: ArcelorMittal SA cuts headline loss by R2.78bn

On Friday, the DTI said, since the onset of the global steel crisis in 2015 characterised by massive oversupply, depressed prices and increased imports, the Departments of Trade and Industry and Economic Development have developed and implemented a package of measures to support and save the industry from the immediate threat of closure and subsequent loss of capacity.

It says the following measures, among others, are being implemented by government and its supporting institutions:

  1. Increase in the general rate of customs duty on primary steel products to 10 percent,
  2. Downstream support measures including tariff review on a range of downstream products and the deployment of rebates,
  3. Agreement on a set of principles for flat steel pricing in SA that is priced appropriately to ensure that steel-dependent industries are competitive, while at the same time ensuring that the upstream steel mills remain sustainable
  4. Local procurement by government, and,
  5. Participation in the G20 global forum to address global steel excess capacity

However, in turn, industry must commit to investments, competitive pricing policies, job retention and industrial output.

The DTI says these are important to achieve “a viable, competitive and sustainable steel industry in SA”.

It adds compliance is independently monitored and evaluated by the International Trade and Administration Commission (ITAC) Steel Committee consisting of ITAC Commissioners, representatives of the downstream and upstream steel industry and invited government officials.

DTI notes, globally steel is by far the most important input into manufacturing and, as a result, its interventions are paramount to achieving the objectives set out in the Industrial Policy Action Plan and National Development Plan.

“A competitive steel industry that can support investment, increased jobs and exports remains a key priority for government.”