Steel making remains a key strategic industry for South Africa

C

Advertise Here

Advertise Here

In this opinion article, ArcelorMittal South Africa (AMSA) Stakeholder Management and Communications Group Manager Tami Didiza. He wrote about the state of the steel industry in South Africa, trade protection measures and AMSA’s investment in its own facilities, as well as its support for the lower tier steel sector.

Imported steel products continue to affect the efficiency of South Africa’s steel industry. Every ton of domestically produced steel adds to the national economy, creates employment and provides value through convenience. It is estimated that it will take more than a decade for an integrated steel industry to be re-established in South Africa if it disappears. It would be detrimental to the South African economy in all respects.

Advertise Here

Advertise Here

Contrary to some industry claims, the security measures implemented by the South African government are designed to protect not just one player, but the entire South African steel industry. These measures are important for the survival of the country’s steel industry and for ensuring that the steel sector remains the backbone of South Africa’s industrial production capacity and capability.

South Africa is not outside in terms of the security measures we have introduced. Steel production is an important strategic skill, and most steel-producing countries have taken significant steps to protect their steel sectors against imports in accordance with internationally agreed WTO rules. General tariffs on steel imports are found in more than 150 of the 200 countries worldwide and in almost all major steel producing countries. About 135 countries, including China, have an average tariff of 10% on South African exports, with a 5% tariff on South African imports.

Advertise Here

Advertise Here

The European Union, Russia, Turkey, the United States, Canada, Brazil, Mexico, Japan, Korea, Taiwan, Vietnam and China have provided at least some kind of protection for their local manufacturers, including anti-dumping tariffs, countervailing measures, protection tariffs. And / or security quota.

There must be adequate protection for the manufacturing industry against unfair importation of finished steel products which reduces the competitiveness of our country in terms of production and fabrication capacity. South Africa’s distance from the nearest steel-making countries increases the risk of supply and creates challenges for imports due to the long lead time and high transportation costs. We must prevent the country from becoming a steel importer, leaving upstream and downstream industries at the mercy of the global steel market.

AMSA has helped the downstream industry to compete against finished steel imports and has supported various efforts to protect the downstream industry. The notion that the downstream manufacturing sector would be on par with the rest of the world without tariffs on primary steel products is wrong. Many other factors affect the competitiveness of our local steel industry, including logistics and power availability, reliability and cost.

Thanks to strong sales volume and the advantage of strong cost-effectiveness, AMSA has achieved positive half-yearly earnings before interest, taxes, devaluation and repayment, and in June 2021, for the first time in a decade. Background to one of the most challenging operating environments in the company’s long history.

AMSA has made a very conscious, responsible and prudent decision to invest in certain fixed costs. It was expanded to include targeted capital investments made in 2021 and allocated for 2022. This additional fixed-cost and capital investment aims to improve reliability and quality, further enhance environmental compliance and increase opportunities.

As a result, despite the challenges, the company’s earnings statement shows a positive trend of continued investment growth in maintenance. In 2021, in addition to a significant restorative maintenance program, in November and December the company undertook significant renovation projects at both its Vanderbizlpark and Newcastle plants.

It is simply not true that the company is not investing in its production facilities for the benefit of its shareholders. After security, product reliability and stability are key focus areas to enable enhanced delivery in the company’s customer base. To meet these objectives, efforts continue to attract new process and maintenance-related skills and to develop existing skills through specialized training programs, supported by a fresher and more structured management system.

In terms of pricing, the price of AMSA’s flat steel products is determined by a fair-price basket process agreed with the South African government and which is closely monitored. The price of the company’s long steel products is consistent with local market conditions because AMSA is not the only long steel producer in South Africa. A sudden rise in global prices means higher steel prices, whether you buy or import into South Africa.

AMSA enjoys good relationships with most of its customers and has regular engagements at various levels in the business to discuss specific customer needs and industry challenges. Also, as a business expects the size and nature of AMSA, the company regularly meets with the government on ways to protect, develop and sustain a thriving steel industry in South Africa. Businesses should be assisted in financing projects that support South Africa’s economic growth and the government should be encouraged to bring them to market quickly and transparently.

In order for South Africa not to protect its steel production, steel-related production and industrial potential, as it emerges from the significant economic impact of a lockdown, would be catastrophic for industry and the economy and limit the sector’s ability to contribute. Plan for the reconstruction and recovery of the country. The goal of economic growth, employment growth, increased benefits and assurance of supply is commendable and for the sustainable benefit of South Africa.

Advertise Here

Advertise Here