DA welcomes agreement shielding downstream, job creating steel companies

20 May 2016

The Democratic Alliance welcomes the eventual agreement by the Portfolio Committee on Trade and Industry to table the issue of the current steel crisis facing the downstream steel industry that creates jobs for many South Africans.

In August 2015, an agreement was reached between the Department of Trade and Industry and the International Trade Administration Commission (ITAC) to grant steel manufacturers a 10% import tariff on certain steel items in return for not increasing local steel prices and holding off on retrenchments.

Between August and now, ArcerlorMittal (AMSA) has repeatedly violated this agreement by increasing their local prices fourfold in the last five months, severely affecting local steel fabricators. All the while, the Minister of Trade and Industry, Rob Davies, and ITAC have sat on their hands while AMSA shows them the middle figure.

The DA has previously written to Minister Davies, advising him that the price increases were in violation of the agreement and an immediate review of the tariff structure should be initiated as stipulated. 

Unfortunately, Minister Davies failed to act, choosing to side with AMSA while small and medium businesses suffer. The DA then wrote to ITAC on 24 March, advising them of the need to initiate the review as stipulated. However, to date we have had no response. 

During this period, AMSA has continued to increase their local prices with impunity with Minister Davies, making excuses for why they are allowed to do this. This is in contradiction with his statement on 5 February, which states that“It is of course extremely important that tariff protection measures for primary steel producers do not result in higher steel prices being ‘passed on’ to downstream, steel intensive manufacturing sectors. These sectors are labour intensive and any measures, which might erode the competitiveness of secondary steel intensive manufactures, must be avoided”. 

The Democratic Alliance has fought extensively to ensure that local industries are protected. In the latest labour force survey, 100 000 workers in the manufacturing industry lost their jobs, and unless government acts and acts quickly, a jobs blood bath in the downstream sector is looming. 

We therefore look forward to Minister Davies explaining his foot dragging on the issue and await the reasons why he has allowed a company like AMSA to threaten the existence of downstream companies.

Issued by Dean Macpherson, DA Shadow Deputy Minister of Trade and Industry, 20 May 2016