ArcelorMittal stands by extension of steel duties despite court challenge
Says SA’s primary steel industry may not survive without measures to equalise trading conditions
ARCELORMITTAL South Africa (Amsa), Africa’s biggest steel producer, has stood by the extension of steel duty safeguards on imports amid a court challenge by a major steel merchant to have the duties overturned.
Speaking to journalists on the state of the steel industry, Amsa’s chief executive, Kobus Verster, said that the safeguards were implemented to equalise trading conditions.
“We are not in the favourable position like other countries in the world, either China or Eastern bloc countries. We do not have subsidised electricity. We do not have competitive rail. We do not have competitive anything,” Verster said.
Amsa was granted an 8 percent import duty on hot-rolled coil that expired last December, but it was extended following the company’s application to the International Trade and Administration Commission of South Africa.
Amsa is South Africa’s sole hotrolled coil producer. It had argued that if the government failed to act, there was a threat that the primary steel industry might not survive, given the desperate situation of the steel industry.
However, Macsteel approached the court to challenge the safeguard extension to Amsa, with the court hearing scheduled for this month, according to reports.
The National Employers Association of South Africa (Neasa) also complained last week that Amsa had introduced massive price hikes for flat steel products totalling 23 percent in the past two months.
Neasa chief executive Gerhard Papenfus said in a statement that locally manufactured steel products had
become uncompetitive because manufacturers were forced to buy expensive Amsa steel as their raw material.
“As long as the duties are imposed, ‘delocalisation’ will continue in South Africa as the importation of finished product escalates,” said Papenfus.
In terms of operations, Verster said Amsa’s flat steel products capacity utilisation stood at 80 percent.
Verster said in the past four months it was unlikely that Amsa could produce
substantially more flat steel products because of supply constraints.
“We have constraints on our supply side as well, and one of the big constraints is Transnet. Transnet is unable to supply us with a constant flow of raw material in terms of coal and iron ore. They have substantial cable theft and those types of things,” said Verster.
Verster said there was no apparent demand for steel in South Africa as
elsewhere in the world.
“There is little evidence of large substantial infrastructure projects that are being commissioned,” he said.
Asked whether the group would consider restarting the Saldanha Works, which was closed in 2019, Verster said the company would consider supplying the scrap market in the long term in a competitive price environment for rail and electricity.
Inherent competitive issues
included iron ore costs at Saldanha, Verster said, saying that, for example, the iron ore parity price for Saldanha was $200 (about R2 745) a ton, it operated imported coke, which was north of $500 a ton, and paid a lump premium of $60 a ton.
“You will need a reasonable electricity and rail tariff for the scrap market,” said Verster.
Amsa shares closed 6.3 percent higher at R5.23 on the JSE yesterday.