Creation of a temporary rebate for tall oil fatty acids

04 Mar 2024

The Commission considered an application by Trade Solutions (Pty) Ltd submitted on behalf of Ferro Coating Resins (Pty) Ltd (hereinafter referred to as “FCR” or the “Applicant"), for the creation of a temporary rebate facility on TOFA, classifiable under tariff subheading 3823.13.

In arriving at its recommendation, the Commission considered information at its disposal, including comments received during the investigation period.

Based on information at the Commission’s disposal, the following was found:

• There are currently no local manufacturers of TOFA in the Southern African Customs Union (“SACU”). Industrial Oleochemical Products (“IOP” or “Speciality Chemicals”), the last local manufacturer, closed its tall oil fractionation plant in eThekwini in 2020.

• The Applicant’s production volumes have decreased over the period 2017 to 2020.

• The Applicant’s domestic sales of alkyd resins decreased over the four-year period.

• The Applicant’s total production cost increased, on average, between 2018 and 2020. The production costs are mainly driven by the cost of raw materials.

• TOFA was sourced locally by the Applicant until the closure of IOP’s tall oil fractionating plant in 2020.

• FCR’s domestic input costs decreased from 2018 to 2020 while imported input cost increased over the same period.

• The Applicant made reciprocal commitments for the proposed tariff amendment, in particular with respect to investment and employment creation.

The Commission decided to recommend that a full duty temporary rebate facility be created for the importation of Tall Oil Fatty Acids, classifiable under tariff subheading 3823.13 at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the products are not available in the SACU market.

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Report 689