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STEEL INDUSTRY

TRADE WARS and IMPORT DUTIES

the USA vs CHINA

AMSA vs the STEEL DOWNSTREAM

by Gerhard Papenfus

Trade wars are aimed at either securing or preserving market dominance. Although there is nothing new about it, its always been the result of self-serving interests and fear. Although there are always short-term illusions of success, it is always bound to fail in the long run. The desire to trade will always prevail – eventually:

  • the trade war between the USA and China contains all these elements and is probably destined for the same outcome; and
  • it also applies to the duties which were introduced in 2015 to protect Accelor Mittal South Africa’s (AMSA’s) antiquated 70-year-old steel mill, to the detriment of South Africa’s thousands of downstream steel manufacturers.
  • The whole scheme is designed to fail eventually, unfortunately only after it has caused irreparable harm to the steel downstream.

    IS THERE A LIGHT AT THE END OF THE TUNNEL?

    There is a compulsory review of the ad valorum duties which has to take place soon. NEASA will do everything in its power to promote the cause of the downstream throughout this process.

    IN THE MEANTIME, AMSA has applied to broaden the net of duties, even in respect of products not produced by them or any producer in South Africa. How this approach can in any way be justified, is simply beyond comprehension.

    AMSA CARBON PRICE INCREASE

    The dominant and monopolistic nature of AMSA is often mirrored in their actions.

    In a recent letter (to view, click here) AMSA increased their prices as a result of the new Carbon Tax which Government introduced with effect from 1 June 2019. In doing so AMSA is simply passing the carbon tax burden onto the steel downstream.

    NO NEED FOR AMSA TO MODERNISE

    AMSA’ s 70-year-old steel mill is a millstone around the neck of the steel downstream; and as long as the downstream carries the costs of its inefficiencies by virtue of:

    • duties, denying the downstream better quality and cheaper imports; and
    • the cost of high levels of pollution,

      there is no incentive to modernise.

      IT’S ALL MADE EASY FOR THE AMSA MONOPOLY – WHILE THE DOWNSTREAM IS THROTTLED

      Privileged and challenged to be South African.
      We are all in this together.