Parliament – Opposition MPs on Tuesday accused Trade and Industry Minister Rob Davies of turning a blind eye to repeated steel price increases and demanded that he be called to explain government’s inaction.
Democratic Alliance MP Dean McPherson said four steel price increases so far this year violated an agreement that the industry would, in exchange for tariff protection, refrain from price hikes to protect the local manufacturing industry.
“Four price increases in five months means AMSA (ArcelorMittalSA) is giving government the middle finger,” he said after a briefing by the department on the Industrial Policy Action Plan, and the steel industry in particular, to Parliament’s portfolio committee on trade and industry.
The briefing saw the department’s director general for industrial policy, Garth Strachan warn that the country needed a delicate balancing act to save its steel industry from collapse while imposing beneficial prices for local downstream manufacturers.
Strachan said South Africa, the world’s third largest producer of iron ore, lagged far behind other steel producing nations in efforts to protect their industries, while history had shown that once a national steel industry collapsed, it was seldom revived.
He added that countries, including those in the Organisation for Economic Development and Co-operation, had introduced significant protection measures “which make our ten tariffs look like a complete walk in the park”.
“Anti-dumping (measures) and a complete ban on imports from China have been imposed by OECD countries, so frankly speaking we are behind the curve in relation to protecting our steel industry.”
The chairwoman of the committee, Joan Fubbs, agreed that Davies should be called before the briefing. However, the department said he would only be available in August, after the municipal elections.
MacPherson said the price hikes were guaranteed to cause job losses in labour intensive downstream manufacturing and, in a letter sent to Fubbs after the meeting, demanded that Davis as well as ArcelorMittalSA be called to account before MPs during the parliamentary recess, which begins next week.
“I think it would be amiss of us to wait until 16 August 2016 to engage the Minister as the crisis can and will only deepen by that time, threatening the livelihood of thousands of workers,” he wrote.
Earlier, Strachan in response to questions from MPs said government’s proposed steel pricing committee would be established soon.
“Last I heard, which was yesterday, was that the ministers had signed off on the establishment of the steel committee and its constitution will happen very shortly.”
Strachan said the department’s efforts to safeguard manufacturing included meeting with companies to demand that cheaper iron ore prices translated into cheaper steel prices further along the value chain.
“Perhaps at the bottom of the commodity cycle might be the best time to get the private sector to understand that working with government to secure a collaborative relationship in the national interest is the best way to go.”
Strachan said the department was trying to secure commitments from ArcelorMittalSA on maintenance investment, employment retention to technology upgrades and production volumes.
At the same time, it was trying to persuade big users of steel, such as Transnet and mining companies, to increase demand.
“It is not a quick fix. We are engaging with the downstream industries literally on a daily basis to work out a situation where we save our primary steel production, we don’t pass higher steel costs on simply to the downstream manufacturers, and pass the pain onto them and make them less competitive, and at the same we have got to do this in keeping with our commitments at the WTO (World Trade Organisation),” he said.
African News Agency