Amsa group manager for stakeholder management and communications, Tami Didiza, said the country is inundated with imported steel. Picture: Supplied
Nicola Mawson
ArcelorMittal South Africa (Amsa), the largest steel producer in Africa, has once again disagreed with calls to remove trade protectionism measures in the steel industry to boost economic growth, arguing that import duties were vital to protect the local sector.
This comes after Donald MacKay, founder and CEO of XA Global Trade Advisors, last month said the current industrial policy of imposing tariffs to protect the local sector was outdated and negatively affected economic activity.
On Tuesday this week, MacKay said the government’s protectionism measures in the scrap metal industry were costing the economy some R8.5 billion a year without any tangible benefits in terms of job creation.
In response to this, Amsa group manager for stakeholder management and communications, Tami Didiza, told Business Report yesterday that South Africa must prioritise localisation and domestic supply.
“It is a strategic moment for the South African economy and its industrial footprint. The country can choose to save it local capacity and capability or cede to Asian imports. The choice offers a path to recovery and hope for future generations,” he said.
Didiza said there has been a surge in imports, particularly from countries like China, which have been exporting steel at reduced prices due to their local overcapacity and economic downturn.
“This influx has led to serious concerns about job losses, declining production, and financial instability among local producers, notably ArcelorMittal South Africa and other members of the Southern African Customs Union,” he said.
Amsa has also called for improved customs duty and VAT recovery.
Didiza added that the government must address the issue of underdeclared and missing imports. He said the country also must encourage a fair and level playing field for decarbonisation by implementing CO2 tax on imports immediately.
Didiza said the world has transitioned from a low-tariff era, which lasted from 2000 to 2020, to a new era of protectionism and localisation.
“South Africa, in particular, has been impacted by this shift, as its customs duty agreements, signed up as a developed country under the General Agreement on Tariffs and Trade 1993, limited tariffs, ultimately detrimental to local manufacturing for last 20 years,” he said.
The General Agreement on Tariffs and Trade is a legal contract under the auspices of the World Trade Organization (WTO).
Didiza noted that localization and domestic supply have been gaining traction over the past seven to eight years, and their importance has been extensively recognised following the supply chain disruptions during the COVID-19 pandemic.
Yet, he said, the country is inundated with imported steel.
“30% of its steel consumption [is] being imported, equivalent to around 1.3 million tons. More than 50% of these imports can be produced locally, presenting a significant opportunity for the South African economy,” he said.
Didiza added that the unfair trade practices have reached disproportionate levels.
In September last year, the South African Revenue Service increased the customs duty on stainless steel flat products from 5% to 10%.
However, ArcelorMittal concurs with Centre for Development and Enterprise executive director, Ann Bernstein, who said last month that there was a need to re-industrialise South Africa.
Didiza said South Africa needed to promote industrialisation through supporting industries that rely heavily on locally supplied steel, such as fabrication, automotive, agriculture, and mining.
“Such an approach will support national goals of industrial growth, job creation and retention, and take South Africa forward,” he said.
BUSINESS REPORT