The demise of the Steel Industry accelerated

By Gerhard Papenfus


Fresh on the heels of the implementation of 10% import duties on certain types of galvanised coil in December 2023, as well as 53.8% anti-dumping duties implemented in February 2024 (now totalling up to 63.8%), AMSA has now applied for the re-introduction of safeguard duties. 

In 2017, AMSA was awarded safeguard duties (on hot-rolled coil) totalling 22%, which, in line with World Trade Organisation (WTO) rules, reduced to 16% over a three-year period. In contravention of these rules, in 2020, Ebrahim Patel attempted to extend the application of the safeguard duties. Following a court challenge by Macsteel, which was settled out of court, the safeguard duties were dropped.

It baffles the mind how Minister Patel endorses this sudden barrage of duties to protect AMSA at the cost of the steel industry and ordinary South Africans. In 2015, when the first duties, aimed at protecting AMSA, were implemented, it was predicted that duties would cause the price of steel to increase, impede competitiveness, and ultimately accelerate the decline of the steel industry. 

Since then, that prediction has come to fruition and the steel industry declined by 20%. AMSA’s 60-year-old mill simply cannot compete with modern technology mills that developed over time within the global steel industry. 

Over the last few years, the steel industry lost more than a third of its workforce. The uncompetitive price of steel played a key role in this decline. Minister Patel’s sudden eagerness to introduce more duties will only aggravate this situation.

In 2015, in justifying the need for duties to protect AMSA, Paul O’Flaherty, its CEO at the time, stated that if Government decides not to assist AMSA, then AMSA would still be around, but probably with a diminished footprint. 

It turns out that would have been the better outcome. If no protection had been granted, South Africans would have been in a much better position. The growing pains from reducing our dependency on an ineffective primary steel mill would have been long gone, and access to raw material produced by cost-effective modern technology mills, globally, would have put the South African steel industry at a competitive advantage. Businesses, especially on the export side, which since the introduction of these duties have declined, would instead have grown.

The challenges of our failing ability to import more raw materials will eventually have to be overcome since we cannot continue to sacrifice the industry as we are currently doing.

If Government is serious about protecting South Africans against living expenses skyrocketing, they should realise that duties protecting AMSA will achieve exactly the opposite. Steel forms part of everyday life, whether it is a taxi that brings one to work, the factory that one works in, or the house one returns to, all these contain a portion of steel.

All that the duties have achieved thus far was to sustain an ever-dwindling AMSA, sacrificing the economic growth of the steel downstream and literally hundreds of thousands of jobs.

What more will it take for Government to understand that their protectionist intervention in the steel industry, aimed at protecting one entity, is not only contra-productive but devastatingly destructive? 

Gerhard Papenfus is the Chief Executive of the National Employers' Association of South Africa.