ArcelorMittal South Africa Welcomes Steel Tariff Review Process

ArcelorMittal South Africa (AMSA), the largest steel producer in sub-Saharan Africa, has expressed support for the International Trade Administration Commission (ITAC) review of steel tariffs. This review, which comes at a critical time for AMSA, could provide much-needed relief and help protect local jobs and production capabilities.

Financial Struggles and Government Support

AMSA has been grappling with severe financial challenges, prompting the company to consider closing its long-steel business in Newcastle and Vereeniging, risking approximately 3,000 jobs. The South African government stepped in with a R1.8 billion bailout on the condition that AMSA participates in the Productivity SA turnaround program. Despite the financial difficulties, AMSA remains committed to localisation and domestic supply.

ITAC Review and Potential Impact on Steel Tariffs

The ITAC’s review, announced on March 19, is focused on import tariffs and other trade measures in light of global steel overcapacity, slow economic growth, and trade protectionist measures. The review could result in additional tariffs on imported steel, providing relief to local producers like AMSA.

According to AMSA’s Tami Didiza, the local steel industry has been struggling with low-cost imports, particularly from Asia and China. These imports have put significant pressure on domestic producers, as other countries have imposed higher tariffs to protect their industries. Didiza hopes that the review will lead to bold and timely action in the coming months.

Potential Effects of Additional Tariffs

However, there are concerns about the impact of higher tariffs on the broader steel industry. Donald MacKay, founder and CEO of XA Global Trade Advisors, highlighted that adding import duties could lead to an R1.76 billion increase in tariffs, raising the cost of production and reducing exports. MacKay also warned that downstream industries could be severely affected, with some fabricators potentially going out of business due to rising costs.

Despite these concerns, MacKay noted that there is political pressure for a swift resolution, with Minister Parks Tau aiming to have feedback by July. However, MacKay expressed doubts about the review being completed by then.

As AMSA continues to navigate its financial challenges, the ITAC review represents a critical opportunity for the company to secure its future and help strengthen the local steel industry. If successful, the review could lead to stronger protection for South Africa’s steel producers, boosting the country’s industrialisation efforts and safeguarding thousands of jobs.

{Source IOL}

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