Duty to protect SA steel industry
Trade and Industry Minister Rob Davies said on Monday he has signed off on a safeguard duty for hot rolled coil steel, but said the measure was subject to informing the World Trade Organisation (WTO).
Through so-called safeguard measures, WTO members such as South Africa are allowed temporarily to restrict imports of a product if increased imports of that product pose a threat a local industry.
The move is intended to shield the local steel industry from cheaper imports in the face of a global overcapacity.
At the launch of the ninth annual iteration of the Industrial Policy Action Plan (IPAP) in Johannesburg, Davies said the government wanted to retain primary steel-making capacity in South Africa.
“This is for a number of reasons, but the obvious one is that we are an iron-ore producer. If we lose primary steel-making and we continue to be an iron-ore producer, we will be moving further down the value chain,” he said.
Davies said the government was aware of the problems facing local manufacturers.
“The global conditions impacting on manufacturers include the over-production of steel products, which is due to structural changes in other economies. This has meant that steel industries and steel production across the globe have been threatened by the entry of low-priced steel products from over-producing countries.
“Although we are not completely out of the woods with regard to that, we believe that there [is a] greater level of stability in steel manufacturing in South Africa. “We have deployed a number of trade-policy instruments, and we recently signed off on a safeguard proposal, which has now gone to the WTO,” he said.
He said the government wanted to safeguard the South African steel industry, including downstream steel-making operations, which created job opportunities. Davies said the government would not protect the upstream steel sector and leave the downstream sector vulnerable to the products that had benefited from low inputs of imported steel.
He said there would be support for downstream value-added steel-product users, but said his Economic Development counterpart, Ebrahim Patel, would announce the details of the scheme.
“Just to say that there is a substantial programme of financial support run by the (Industrial Development Corporation) that will support downstream steel manufacturers. This is an indication that we are working for the benefit of the steel industry as a whole, not for any part of it. There is an amount which is available to support the directly downstream steel makers,” he said.
He said the downstream steel industry has the potential to create jobs and presented opportunities for black industrialists. “We are supporting the value chain as a whole,” he said.
Meanwhile, Davies said the government’s black industrialist programme was one measure to ensure inclusive growth. He said the government wanted to support 100 black industrialists by the end of the current financial year.
“It is our current intention to support 100 black industrialists by April next year. We have supported 40 at this point in time,” he said.
He said the IPAP was intended to contribute to radical economic transformation. At its simplest, he said, the IPAP should contribute to a radical change in the structure of the economy, “that reduces the economy’s dependence on industries and sectors that we were consigned under colonialism as a producer and exporter of primary commodities.
“I think that we know that this is the least lucrative of any value chain and, in fact, if you look at developments taking place in the global economy and in global value chains now, you will see that the value of finished product that is constituted by the raw material that is included in it is the minor part of the final product and is a diminishing percent of the value the final product,” he said.
He said to create “productive” employment, with higher incomes and development, the economy should move into value-adding activities and industrialisation. He said the economy should promote inclusivity. “We have to promote more involvement of more South Africans, and particularly South Africans that were excluded in the past, in roles of ownership, leadership and participation in the productive economy... If we do not deliberately work in this regard, we will reproduce the existing patterns in which people were historically excluded,” he said.