The South African government’s continuous attempts to protect the country’s primary steel producer, ArcelorMittal South Africa (Amsa), will have dire consequences for other manufacturing as well as the steel sector as a whole, according to a statement from Gerhard Papenfus, chief executive of the National Employers’ Association of South Africa (Neasa).
“South Africa can no longer afford to protect Amsa. The current attempt to do so will prove futile in the face of modern steel mills worldwide, against which Amsa will never be able to compete,” the statement read.
Papenfus argues that safeguarding Amsa will dishearten other local steel producers, while encouraging the importation of finished goods, with neither being a viable option for preserving South Africa’s steel industry.
“Protecting Amsa, South Africa’s only primary steel producer, discourages downstream manufacturing and encourages the imports of finished products, which, in most cases, attracts no import duties,” according to Papenfus.
In 2015, the government introduced new import duties of 10 percent ad valorem and 12 percent safeguard duty on hot rolled steel. However, according to Papenfus the import duties are not practical and should be abandoned.
“It is Neasa’s view that since the notion of protection against the importation of finished goods is not practical, duties therefore need to be scrapped in their entirety.”
These protection duties are having a huge impact on both business and labour, none more so than Robor, which closed its doors earlier this month after 90 years in the tubing industry – with many more companies suffering under these rigid regulations.
“The death knell in the case of Robor was the 58 percent increase in imports of finished products. Robor is not the only victim; many companies are severely negatively affected by the duties protecting Amsa,” the statement concluded.
