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Steel Industry: Conducting your business with the DUTIES-SWORD hanging over your head (yet another testimony)

Steel Industry: Conducting your business with the DUTIES-SWORD hanging over your head (yet another testimony)

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Below is another testimony from one of our members

Dear Gerhard

We have been warning of this for over 5 years now and with Minister Patel allowing the continued protection of the monopoly (AMSA) the chickens have come home to roost

Now we have the only other two competitors in terms of flat products, namely SAFAL and Duferco Steel Processing (DSP), both cutting production and in the case of DSP, which ironically is partially owned by Government, notifying the market that they will not be able to compete any longer in the local market due to the lack of competition in the South African primary steel market. 

It stands to reason that Minister Patel, being a trade unionist and communist, would support such decisions to protect this monopoly. We shouldn’t be surprised by the steel prices increase because that is what happens when one has the communist approach to monopolies. That is exactly why communism fails. It only ever became a viable political system with a capitalist free-market approach to economics; China, Vietnam, Russia serves as a few examples.

We cannot compete in South Africa, or even SADEC, with finished product imports because all finished products are already at the bound rate, and not only is steel duties now also at the bound rate in terms of WTO rules, but there are illegal extensions granted to the safeguard duties which have expired. 

If this was not the case, then DSP would probably have continued to supply the local market. Never-the- less, until Minister Patel starts removing barriers of entry to the market (industrialisation or should I say reindustrialisation of South Africa through free market principles), we will continue down with this death spiral until we become another Zimbabwe.