Breaking point for steel sector
Local industry on brink of collapse
Key roleplayers in the steel industry have sounded the warning bells over the impending demise of the embattled sector.
Local steel manufacturer Duferco Steel Processing has warned that its imminent collapse is one fateful step closer.
Ludovico Sanges,the managing director of Duferco, said the local industry is literally on the brink of catastrophe due to the shortage of steel in South Africa and the apparent unwillingness of the International Trade Administration Commission (ITAC) to act.
“ITAC recently sent out a survey on the shortages, based on a directive from the minister of trade, industry and competition but the truth is that we cannot hold out too much longer. ITAC has sent similar requests to the industry before, but this latest request serves only as a delay tactic, which does nothing to address Arcelormittal South Africa’s (AMSA) anti-competitive and monopolistic behaviour,” said Sanges.
“We need tariff relief now to be able to import the raw product that AMSA cannot supply reliably and competitively to feed the downstream steel industry with the product it needs.
The government has shown that it can play a hugely positive role in nurturing the automotive industry as it has done with the sugar sector. Why is it not taking the same proactive approach to the steel industry on which multiple industries rely?”
Duferco lodged an urgent application with ITAC in July last year to request a rebate on the customs and safeguard duties on imported hot-rolled coils to enable it to access this essential raw material at a competitive price.
The company was originally a joint venture by the Industrial Development Corporation and Switzerland-based Duferco International Trading Holdings to reroll the hotrolled coil steel produced by Saldanha Steel, at that stage not part of AMSA.
The closure of Saldanha Steel’s plant early last year meant that the local steel industry had to rely on AMSA’S Vanderbijlpark plant, which is a much older and less reliable facility for the flat-steel product. In addition, the closure of Saldanha Steel caused the loss of 1 000 direct and 1 800 to 2 200 indirect jobs.
The South African steel industry, once the cornerstone of manufacturing in the local economy, is moribund as costs skyrocket, global prices remain subdued and ambitious local infrastructure projects remain unimplemented.
Gerhard Papenfus, the CEO of the National Employers’ Association of South Africa, said: “For the industry to recover, it will have to start importing again. However, the lost market share will not be regained if they cannot supply competitively. The solution, therefore, lies in the abolishing of all duties and opening the door for competitive pricing at all levels of the steel downstream.”
He added that AMSA was behind the shortage of steel in the local economy.
“In opposition to ITAC’S investigation, AMSA clearly wants to convince the government that the serious shortages are not unique to South Africa. This, however, is not the case. World steel supply has normalised many months ago and any disruption caused by the lockdown had a minimal effect on world steel production.”
AMSA denied it was behind the struggles of the industry. Minister of Trade, Industry and Competition Ebrahim Patel said the Steel Master Plan was approved last week by the industry.