The reality is that fiddling with steel tariff policy has not arrested SA’s deindustrialisation. Picture: iStock Last month, ArcelorMittal SA (Amsa) applied for a 51% duty on certain flat-rolled steel products imported from China. This comes on top of the 10% duty already in place, meaning importers may soon pay a 61% premium for products from China.
Should government grant this increase, the costs will be borne across the economy – from mining to construction and downstream beneficiation. Amsa’s troubles are not entirely of its own making. Its electricity costs have spiralled more than 835% over the past decade, sucking the oxygen out of its lungs as Chinese producers flooded the local market with cheap product.
Chinese competitors have the benefit of government subsidies and state-regulated tariffs, meaning their electricity costs have virtually flatlined for the last five years. Given odds like this, it’s a wonder Amsa has survived so long. In November it ceased long steel production at its Newcastle plant, having exhausted a R1.683 billion from the Industrial Development Corporation (IDC) that was intended to delay the announced wind-down of long steel production at its Newcastle and Vereeniging plants due to unsustainable energy and logistics costs, cheap imports from China, and inadequate policy support.
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Newcastle is now under care and maintenance. Government seems determined to keep Amsa afloat through whatever means at its disposal: financial assistance, trade policy, import tariffs and soothing words.
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