Mines dispute another point in charter
Chinese steel is preferred
THE NATIONAL Employers’ Association of South Africa (Neasa) plans to submit reasons why steel import tariffs should be scrapped at a hearing before the Industrial Trade Commission of South Africa (Itac) scheduled for today.
The public hearings are aimed at investigating whether import tariffs on flat hot-rolled steel products would be in the public interest.
This as major steel producers were granted import tariffs of up to 10 percent on steel on primary steel products, after being rocked by the influx of cheap Chinese steel and low prices, with steel producer Evraz Highveld Steel and Vanadium having gone out of business.
However industry body, Neasa, which represents 2 500 small businesses in the sector, is opposed to the duty.
It also wants Itac to turn down the application by South Africa’s biggest and sole steel producer, ArcelorMittal South Africa (Amsa), for an additional 30 percent safeguard duty on imports.
Neasa chief executive, Gerhard Papenfus, blamed Amsa for failing to upgrade their outdated plants and instead convinced government to introduce the tariffs when Chinese steel was preferred by the steel industry.
“The 10 percent customs duty which was introduced last year already serves as a slow poison, killing the downstream industry.
“It prevents the downstream industry from being able to defend its market share against cheaper imports of finished products,” said Papenfus.
He said Neasa wanted all tariffs to be scrapped and the industry to adapt to a new reality of China as the new steel reality. “Protectionist measures are, at most, a temporary solution, delaying the inevitable.”
“If Amsa succeeds in convincing government (or Itac, which is tasked to make a decision in this regard) to introduce the further safeguard duties which they have asked for, they (Amsa) will to a large extent succeed in using the downstream industry as a buffer to protect their old ineffective steel mills against good quality, more affordable Chinese steel.
“Since the downstream will not be able to import, there won’t be any pressure on Amsa to upgrade their steel plants in order to become more effective”. Devastating effect SOUTH Africa’s biggest mining companies are opposed to a government proposal that 1 percent of their annual revenue be spent on developing communities associated with their operations and have countered with suggestions that they instead pay out a share of profit.
The Chamber of Mines, which represents companies including Glencore, Anglo American and AngloGold Ashanti, is in discussions with the Department of Mineral Resources and labour unions over a review of the so-called mining charter, which mandates measures designed to boost black participation in the economy, ranging from ownership of assets, management diversity and procurement procedures.
“This is a regressive imposition, particularly on marginal mines,” the chamber’s chief executive Roger Baxter said last week. “Our preference is that the commitment should be as a percentage of net profit as it is based on the affordability of the companies.”
The economy was built on mining companies, which for more than a century, profited from cheap black labour and lax environmental laws that had left communities contending with contaminated water and toxic mine dumps.
Companies already pay royalties to the government that differ by commodity. Gold producers pay about 3 percent of revenue. Sibanye Gold, which is the biggest producer of gold mined in the country, earned net income of $56.2 million (about R805.6m) in 2015 from revenue of $1.782 billion, it said in February.
Discussions around community development contributions had centred on the definition of profit, said Martin Madlala, a spokesman for the Department of Mineral Resources. “We have had to engage with the National Treasury,” he said. “There may be tax implications.”
The proposal, if enacted, will require that the money be spent on communities near the mines, as well as those from where they draw their labour.
While mining companies already had to submit social and labour plans detailing their initiatives for community development to keep their operating licenses, legislation governing those was flawed and didn’t make them accountable to the intended beneficiaries, the Centre for Applied Legal Studies said in a draft report in February.
“If they miss this opportunity to start to be fair with communities, they’re going to face a revolt,” said John Capel, the executive director of the Bench Marks Foundation, a corporate social responsibility monitoring organisation. “I just see angry, angry, angry communities whether it’s across coal, platinum, diamonds, iron ore, whatever.”
A draft of the document, published for comment on April 15, includes other measures, including requiring companies to ensure their assets are at least 26 percent black-owned, even if the initial buyers sell their stake. That’s another point of contention with the chamber and the Department of Mineral Resources involved in a High Court case. – Bloomberg