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CityPress - - Business and Tenders - DEWALD VAN RENS­BURG dewald.vrens­burg@city­press.co.za

outh Africa’s steel in­dus­try is on the ropes, forc­ing what looks like a des­per­ate re­ver­sal of the frosty re­la­tion­ship be­tween gov­ern­ment and ArcelorMit­tal SA.

It is not alone as the world’s pri­mary steel sec­tor reels from a global over­sup­ply of steel­mak­ing ca­pac­ity.

ArcelorMit­tal this week con­firmed it was con­sid­er­ing clos­ing its cen­tury-old Vereenig­ing steel works, while Evraz Highveld Steel, which is al­ready in busi­ness res­cue, in­tends to re­trench half its work­force.

At ArcelorMit­tal, 1 200 jobs are on the line, and about 1 200 more are due to get cut at Evraz while the com­pany seeks bid­ders for its as­sets af­ter run­ning out of cash.

Ac­cord­ing to me­tal work­ers’ union Numsa, the blood­bath is ra­di­at­ing out be­yond the main steel mills with trader Mac­steel also propos­ing 600 re­trench­ments. Tri­dent Steel re­cently let 700 work­ers go. ArcelorMit­tal CEO Paul O’Fla­herty, gave a som­bre media brief­ing on Thurs­day about the po­ten­tial restruc­tur­ing of the Vereenig­ing steel works.

As had pre­vi­ously been leaked to the Sun­day Times, he an­nounced that ArcelorMit­tal was talk­ing to the gov­ern­ment for wide-rang­ing pro­tec­tion against Chi­nese com­pe­ti­tion.

ArcelorMit­tal wants South Africa to set im­port tar­iffs on steel at the max­i­mum bound rate of 10%-15% for var­i­ous sub­cat­e­gories of prod­ucts. The bound rate is the max­i­mum a coun­try is al­lowed un­der its com­mit­ments to the World Trade Or­gan­i­sa­tion.

If the process of re­view­ing the tar­iffs can be ac­cel­er­ated, that would also be great, said O’Fla­herty.

The com­pany is also look­ing for more strin­gent an­tidump­ing du­ties on par­tic­u­lar steel prod­ucts, which re­quires in­ves­ti­ga­tions and takes months to put in place.

ArcelorMit­tal also wants the state to boost de­mand by fi­nally mak­ing steel a des­ig­nated in­put – mean­ing there would be a min­i­mum lo­cal con­tent re­quire­ment on in­fra­struc­ture projects.

The fact that steel has not yet made it on to the des­ig­na­tions list has been seen as an in­di­ca­tion of the gov­ern­ment’s an­i­mos­ity to­wards ArcelorMit­tal.

The plea for pro­tec­tion might mark a be­lated cross­roads in the tra­di­tion­ally ac­ri­mo­nious re­la­tion­ship be­tween the for­mer state-owned steel mo­nop­oly and the state.

The com­pany is “re­ally poor at trans­for­ma­tion” and is ready to talk about so-called de­vel­op­men­tal steel prices, O’Fla­herty told jour­nal­ists, adding that it was still not clear ex­actly what a de­vel­op­men­tal price en­tailed.

De­mands that ArcelorMit­tal lower its do­mes­tic prices have dom­i­nated state plan­ning around steel for more than a decade.

The Vereenig­ing steel works are al­ready on bor­rowed time, while ArcelorMit­tal will make a call on its fu­ture at the end of next month – depend­ing to some ex­tent on what the state is able to do to help, said O’Fla­herty.

Lak­shmi Mit­tal, CEO of ArcelorMit­tal SA’s Lux­em­bourg­based par­ent com­pany, has been in South Africa and is meet­ing Cab­i­net mem­bers, he said.

O’Fla­herty de­nied that ArcelorMit­tal was try­ing to force con­ces­sions with the threat of eco­nom­i­cally dev­as­tat­ing Vereenig­ing.

“We’re not putting a gun to their head. We are

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