AMSA vs the STEEL DOWNSTREAM
AMSA’s SELFISH STRUGGLE TO SURVIVE IS CONFIRMED BY STATISTICS
It was recently published that AMSA’s exports increased by 33 percent while domestic demand remained subdued. The importation of finished products (manufactured tube and pipe) also increased by 34 percent.
One of the contributors to AMSA’s export growth, is the two-tier pricing system that AMSA applies. Local prices for raw material from AMSA to South African companies are much higher than for their foreign counterparts, especially in sub-Saharan Africa. A South African company could pay up to 20 percent more for its input product than its competitor across the border, a few hundred kilometres away. Locally, Government protects AMSA and its foreign owner with customs – and safeguard duties totalling 22 percent. In our neighbouring countries, however, AMSA does not have this protection and consequently lowers their prices in order to be competitive. It is for this very reason that the local industry remains subdued. The South African Steel Downstream simply cannot be competitive when it is forced to buy high priced input material from AMSA.
WE TOLD YOU SO!
For years, the Steel Downstream consistently warned Government that by protecting the inefficient, antiquated primary steel producer AMSA, the inflow of finished products will increase. NEASA, on behalf of the Downstream, constantly argued that this will cause job losses on a large scale – many more than what AMSA’s departure from the local steel market would cause. Current tendencies with regard to job losses confirm this scenario.
The only way that Government can reverse this situation is to immediately scrap all duties on primary raw input material for the Steel Downstream – where the highest concentration of jobs is situated. Although the protectionist duties are not the only issue negatively affecting the Steel Downstream, scrapping duties will make a huge contribution in turning around the negative sentiment and to stimulate growth.
What is preventing Government from acknowledging this?