Government is intervening to save the steel sector with various measures to support both upstream and downstream industry, the Department of Trade and Industry (the dti) said on Friday.
The dti said the downstream, labour intensive sectors of the economy remained a priority for South Africa, the largest steel producer in Africa with almost 60% of Africa’s total production.
Since the onset of the global steel crisis in 2015 characterised by massive oversupply, depressed prices and increased imports, the dti and the Department of Economic Development have developed a package of measures to save the industry from the immediate threat of closure and subsequent loss of capacity.
“Globally steel is by far the most important input into manufacturing and hence the interventions and collaboration across government and industry to work towards the long term viability of the steel value chain is paramount to achieving the objectives set out in the Industrial Policy Action Plan and National Development Plan,” the dti said in a statement.
The dti said measures being implemented by government and its supporting institutions included the increase in the general rate of customs duty on primary steel products to 10%, a tariff review on a range of downstream products and the deployment of rebates.
Among the measures is also an agreement on a set of principles for flat steel pricing in South Africa that is priced appropriately to ensure that steel-dependent industries are competitive while at the same time ensuring that the upstream steel mills remain sustainable.
President of the National union of Metalworkers of South Africa (Numsa), Andrew Chirwa said the industry’s main concern was a global oversupply of steel which made South African companies unable to compete with China’s low cost exports.
“Low tariffs on steel imports have made it difficult for South African companies to compete. Insufficient monitoring of imports which often flood our markets is also a problem. There has also been a decline in the demand for steel for major construction projects,” Chirwa said.
“Government has slowed down substantially on its infrastructure projects. The inability of government to ban the exportation of scrap metals is another contributing factor as steel producers are not able to source sufficient volumes of scrap metal locally, and have source alternative inputs at high prices.”
Chirwa said the interventions that had been implemented by government were as a result of a joint initiative between organised labour and business in the sector to save the industry.
“Government must move with speed to make sure that both primary steel and downstream steel products are designated for local procurement purposes. But the damage caused to the industry has been extensive, and thousands of jobs have been lost,” Chirwa said.
“Ultimately we believe the only long term sustainable solution is the nationalisation of the steel industry, together with all other industries in South Africa.”
– African News Agency