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Government Intervenes to Save the Steel Sector with Measures to Support Both Upstream and Downstream Industry
Since the onset of the global steel crisis in 2015 characterised by massive oversupply, depressed prices and increased imports, the Departments of Trade and Industry and Economic Development have developed and implemented a package of measures to support and save the industry from the immediate threat of closure and subsequent loss of capacity.
The following measures are being implemented by government and its supporting institutions:
Increase in the general rate of customs duty on primary steel products to 10%
Downstream support measures including tariff review on a range of downstream products and the deployment of rebates
Agreement on a set of principles for flat steel pricing in SA that is priced appropriately to ensure that steel-dependent industries are competitive while at the same time ensuring that the upstream steel mills remain sustainable
Local procurement by government
undeeming of primary steel in designated products (requiring the use of locally manufactured primary steel)
designation of downstream steel intensive construction steel products and components
Settlement of the Competition Commission issues with AMSA
Investment support through
12i tax allowance programme for plant, equipment and building upgrades as well as training support
Participation in the G20 global forum to address global steel excess capacity
The reciprocal conditions attached to the above policy support measures for the primary steel industry include commitments to (1) investment, (2) a competitive pricing policy, (3) job retention and (4) industrial output which are important strides in achieving a viable, competitive and sustainable steel industry in SA. Compliance is independently monitored and evaluated by the International Trade and Administration Commission (ITAC) Steel Committee consisting of ITAC Commissioners, representatives of the downstream and upstream steel industry and invited government officials.
Government has finalised the flat steel pricing principles agreement with Arcelor Mittal South Africa (AMSA). This together with the pricing remedy in the Competition Commission settlement is an important achievement in the battle against excessive flat steel pricing in the domestic market reflecting governments’ commitment to protect downstream consumers of key industrial inputs.
The downstream, labour intensive sectors of our economy remain a priority with measures to support these industries being fast tracked through the collaborative efforts of government departments and its institutions including ITAC, SARS and the IDC.
Globally steel is by far the most important input into manufacturing and hence the above interventions and collaboration across government and industry to work towards the long term viability of the steel value chain is paramount to achieving the objectives set out in the Industrial Policy Action Plan and National Development Plan. A competitive steel industry that can support investment, increased jobs and exports remains a key priority for government.
Sidwell Medupe-Departmental Spokesperson
Tel: (012) 394 1650
Mobile: 079 492 1774
Issued by: The Department of Trade and Industry
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