Johannesburg - Final determinations on a whole range of tariff interventions sought in the beleaguered steel industry should be made by the International Trade Administration Commission of South Africa (Itac) before the end of the year, Itac chief commissioner Siyabulela Tsengiwe said on Friday.
In a statement on Friday, the Department of Trade and Industry (dti) said it had approved, with conditions, the Itac recommendation, for an increase from free of duty to a 10 percent ad valorem duty on zinc-coated or galvanised steel, aluminium-zinc coated steel and colour coated steel products.
The dti’s approval is to be followed by the publication of the tariff in the Government Gazette by the National Treasury, which would put the tariff into effect.
Part of the approval conditions included that ArcelorMittal South Africa (Amsa) would invest R250 million in its colour line and Safal Steel would spend R300m on its metal coating line in 2017.
Other conditions included that Itac would conduct a review of the duty structure to determine its impact on the industry value chain, three years from the date of implementation.
A further condition included that both Amsa and Safal commit to no retrenchments in these production lines over the next three years.
Interventions
Tsengiwe clarified that the approval by Trade and Industry Minister Rob Davies was for an earlier application that was separate from the raft of interventions sought by industry giants Amsa as well as Evraz Highveld Steel and Vanadium, which is under judicial management.
“We will deal with the last batch, which touches on a wide range of products in the steel industry, in an integrated manner,” he said confirming that preliminary investigations were already complete in some of the applications.
The investigation was initiated after an application from the South African Coil Coaters Association (Sacca) on behalf of Amsa and Safal Steel.
The dti said on Friday that the Itac recommendations included mention of the fact that the dti and the Economic Development Department were engaging with the steel industry, including Amsa and the downstream users to secure agreement on a pricing model that ensured the viability of the sector.
Safal chief executive Raghu Ram, who is also the Sacca chairman, said that implementing the tariff would give the industry a little breathing room “so that costs can be met. Nobody is making money anymore. It’s a question of survival.”
Steel and Engineering Industry Federation of South Africa chief economist Henk Langenhoven said “protection, in this scenario, is a choice between losing the entire sector, as we have seen happening in Australia, or trying to ‘ride the short-term storm’ and adjust for the future.”
BUSINESS REPORT