Steel duties deal to boost competitiveness of local sector

Steel duties deal to boost competitiveness of local sector

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MACSTEEL, South Africa’s biggest steel merchant, said yesterday that it had reached an agreement with the Department of Trade, Industry and Competition (Dtic) that would boost the competitiveness of the domestic steel industry.

Macsteel, the 116 year-old steel supplier, said the settlement with Minister of Trade Industry and Competition Ebrahim Patel would see the removal of the future extension of the safeguard duty on hot-rolled steel for at least the next two years. During the two-year period no further safeguard duties could be imposed.

Macsteel chief executive, Mike Benfield, said the move would provide improved market choice and trading opportunity to local steel fabricators and the downstream sector.

“We see this as a significant victory for fabrication businesses and the downstream sector of South Africa which will stimulate ’enormous growth’ in the steel fabrication industry and small and medium companies in the downstream value chain,” Benfield said.

Benfield said the company would engage actively with Patel to address the approach to safeguard duties after the two-year period and would oppose any move to bring any action to invalidate this settlement agreement.

“The reprieve will go a long way in contributing to more choice in primary steel at competitive pricing not to mention quality. We believe in a market that is free and fair and ArcelorMittal South Africa (Amsa), a privately owned company, should not enjoy more protection than the downstream sector is afforded, especially if it has a negative effect on the economy,” said Benfield.

Benfield said without the safeguard duty, fabricators would now be open to compete on a level playing field and export steel products, boosting the prospects of the sector.

Macsteel said the matter was settled in the High Court in Pretoria on Tuesday.

Last year Macsteel took Patel to court, the office of the Minister of Finance, the International Trade Administration Commission (Itac) , and the Commissioner of the South African Revenue Services for extending safeguard duties saying it was driving up costs and threatening jobs.

Macsteel said Itac had imposed the safeguard duty three years ago to protect local steel production by Amsa in the face of rising imports from China.

Benfield said the safeguard duty was intended as a temporary duty of 12 percent initially, reduced to 8 percent and meant to reduce to zero at the end of the term in August 2020. This was over-and-above the normal import duty (10 percent) of these products.

“The minister’s decision to extend the duties after it expired and before it had received responses from the industry, contravened local and international legislation,” said Benfield.

In its application, Macsteel asked the High Court for a review in terms of section 46 of the International Trade Administration Act no. 71 of 2002 to set aside the unlawful extension of certain safeguard duties on specified steel products.

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