For the past month, the Department of Trade, Industry and Competition (DTIC) has gone to unprecedented lengths to try and salvage Saldanha Steel Works after it was confirmed that the steel manufacturing plant would shut its doors in early 2020 – with a leading labour law association dubbing the project a hopeless effort.
According to Gerhard Papenfus, CEO of the National Employers’ Association of South Africa (Neasa), the government’s latest drive to save the steel manufacturing hub will only delay the inevitable foreclosure of the plant.
“When will we learn that, unless an institution can sustain itself and prove its worth, it is doomed – not if, but when. The help government is offering just delays the inevitable – in the process draining the fiscus,” said Papenfus.
In November, ArcelorMittal South Africa (Amsa) confirmed that the Saldanha plant would be going through a restructuring process after declaring the steel plant as non profitable, with talks of a possible buyer now in the pipeline. However, according to Papenfus, the sudden arrival of a buyer has raised major concerns as possible protectionist duties and cheaper power and water rates in any deal could have a disastrous impact on the South African steel industry.
“If this is the case, South Africa would be locked in a deal that will have disastrous consequences for the steel industry and South Africans in general,” Papenfus continued.
“In the case of protectionist duties, the steel downstream is bearing the brunt. Cheaper electricity, water and transport, amounts to a ‘double-whammy’ for the steel downstream. For the taxpayer, a subsidy simply amounts to supporting another Eskom, SAA, and a multitude other failing institutions – just another attempt at keeping a deceased institution on life support.”
Papenfus concluded by saying that he expects a similar scenario to unfold unless a buyer comes in that wants to contribute South Africa, not exploit it. – Bjorn Vorster
