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The Minister of Trade, Industry and Competition, a couple of days ago, published a draft Steel Master Plan. The Steel Industry is afforded the opportunity to comment on the draft plan.
Minister Patel, just before lockdown, initiated consultation with the Steel Industry for the purposes of drafting the plan. NEASA supported this initiative and committed itself to consultation leading up to the draft plan. Thus far, however, no consultation has taken place, at least not that we are aware of.
On page 11 of the draft document it is stated: “In the past, the government has focused mainly on the primary steel industry. The new policy in government seeks to give attention to the full value-chain.” This statement on its own sounds very encouraging, but the facts paint a different picture.
Recently, Government unlawfully extended safeguard duties to protect AMSA, in breach of WTO rules. Although, in the Master Plan this indiscretion is described as an interim measure, it is aligned with the DTIC’s previous modus operandi and the persistent protection of the monopolistic AMSA.
On page 18, it is stated that “South Africa needs a primary steel industry”, and then also adds that it should be competitive. AMSA is not a ‘competitive player’ and therefore it cannot be expected of the steel downstream to pay for measures (duties) aimed at its protection.
According to the report, the Minister will appoint a Steel Industry Council which will be funded by a levy of R5-R10/ton, payable on all primary steel that is purchased locally or imported. This Council will, in turn, appoint a Compliance Investigation Unit to police/enforce local steel/steel product-procurement and standards that it will set for the local industry. The draft document even suggests a carbon tax on imported material, which is simply another ‘duty’.
NEASA finds it totally unacceptable that the Steel Industry must pay for a Steel Council whose aim will be to force the Industry to buy expensive steel manufactured by AMSA.
‘Localisation’ can never be sustainable within an uncompetitive environment. Sound economic forces must always govern supply and demand. The steel downstream, which even includes the re-rollers, must have access to cost-effective, high-quality, duty-free input material for its production processes. It is all about competitiveness, a word mentioned numerous times in the new draft Steel Master Plan.
If locally manufactured products are competitive, the products will be used by all functionaries. When products are of acceptable quality and priced competitively, localisation does not have to be policed.
The hand of AMSA is clearly visible in the drafting of this document when among others, galvanised steel of certain thicknesses is described as “dangerous”. These products can be produced by modern mills and are popular worldwide, but cannot be produced by AMSA’s antiquated manufacturing processes.