Johannesburg - The government has backed the embattled steel industry by urging local companies to buy their commodities amid the crisis sweeping through the sector.
Trade and Industry Minister Rob Davies told Parliament during his department’s budget vote yesterday that he would continue to provide the necessary support to primary steel producers in the country until the sector was back on its feet.
Read: Steel crisis needs 'urgent action'
He said tariffs imposed on imports and localisation were important measures to stave off the collapse of the industry.
The crisis facing steel companies was not unique to South Africa, but a global problem, Davies added.
Davis told a media briefing that the sector was facing a number of challenges, including a global steel glut and that the government had to protect local producers.
He said the crisis threatened to shut the industry down, which would result in job losses if local producers closed shop. He said they would have a meeting with the industry to discuss how to save jobs and keep the sector competitive.
“The prime minister of the UK has had to cut short his holiday to attempt to find a solution to the UK’s steel crisis,” Davies said. “The UK’s steel sector is battling to remain afloat amid a global steel glut, and a few weeks ago David Cameron called on the UK industry to support British steel through buying local.”
He added that the government wanted to retain a competitive steel industry and protect it against cheap imports.
Earlier this year, Davies imposed a 10 percent tariff on steel imports. He said it was not an easy matter to handle.
Import tariff
However, the government was determined to support the local steel industry.
“Why does steel matter in South Africa? It is because we are facing the vagaries of the international market,” he said.
The short- to long-term goal of the government was to keep primary steel producers in the country, Davies said.
Steel was important for South Africa because the commodity was a major player in the local economy, he said. “South Africa is an iron ore producing country and it would kill the local industry if the country imported steel from overseas.”
He said the government wanted to ensure that the steel sector remained competitive so that it could deal with the vagaries of the world economy.
Local steel producers are battling. ArcelorMittal SA said this month that it would raise steel prices for a second month in a row as the industry struggled to compete against cheap Chinese imports.
Bloomberg reported that the steelmaker would increase prices for some flat and long products by an average of 10 percent from May 1.
International prices rose an average of 20 percent over the past month, ArcelorMittal said.
Steel producer Evraz Highveld Steel and Vanadium is in business rescue with the business rescue practitioners aiming for either the sale of the business or parts of it and alternatively the sale of Evraz Highveld’s assets rather than liquidation.
BUSINESS REPORT