South Africa: Govt steps up measures to prevent the steel industry from collapsing

The South African government has expedited its efforts to work with the steel industry for preventing job losses or further collapse in the sector. This emerged when officials from the Department of Trade and Industry (the dti) briefed the Portfolio committee on Trade and Industry on the status of the steel industry and interventions that government is deploying to assist the industry stay afloat.

“Both demand and supply measures have been deployed to assist the entire value-chain to cope with the global steel glut,” said Ms Thandi Phele, Chief Director of Capital Equipment and Metals.

The Acting Chief Director of Primary Minerals Processing at the dti, Dr Umeesha Naidoo told Members of Parliament that since the onset of the crisis in 2015, government has established a task team which intervened to save the steel industry from threat of closure and loss of capacity. The task team comprises of officials from the dti, Department of Economic Development, National Treasury and the Industrial Development Corporation.

“Following the establishment of the task team, there are numerous short to medium term measures that have been put in place to support the steel industry. These include an increase in the general rate of customs duty on primary steel products to 10% and safeguard measures for a period of three years on hot rolled coil and plate products. Secondly, there are tariff increases on a range of downstream products and the deployment of rebates where primary steel products are not locally manufactured. Tariff increases are part of an integrated set of measures being deployed to respond to the challenges and support the industry as a whole,” said Naidoo.

She added that further work is currently being undertaken with South African Receiver of Revenue (SARS) and the International Trade and Administration Commission (ITAC) on circumvention and the development of a reference price model for steel products as imports continue to threaten the viability of the steel industry.

Naidoo also said that there was an agreement on a set of principles for flat steel pricing in SA that is priced appropriately to ensure that steel-dependent industries are competitive. This is also aimed at ensuring that the upstream steel mills remain sustainable.

Ms Phele discussed the demand side measures where a number of steel intensive downstream products have been designated for local content and production to take advantage of public procurement and expenditure.  Monitoring and evaluation of the designations needs to be improved to fully realise the impact of this policy tool.

“Government has also established a R1.5 billion Steel Development Fund to support key downstream steel sectors and sub sectors,” added Naidoo.

 “Downstream industry is encouraged to take advantaged of this Fund to upgrade, introduce innovative production methods and raise the overall competitiveness to ensure long-term sustainability,” explained by Phele.

The department also reflected on the United States of America’s Section 232 duties and the impact thereof on the affected industries. MPs heard that the dti will continue advocacy efforts with the US counterparts focussing on trade and investment relations.