Numsa warns of a jobs bloodbath unless government intervenes to rescue ArcelorMittal’s Newcastle plant. From Moneyweb.
Both Amsa and Numsa pointed to several structural issues threatening the future of SA’s steel industry that the government needs to address urgently.
One of these is the price preference system (PPS), which awards a 40% price discount to competitors such as mini-mills, which account for roughly 20% of steel produced in SA. These mini-mills consume about 95% of the 3 million tons of scrap steel sold yearly in SA, much of this coming from Transnet. The Department of Trade, Industry and Competition (dtic) has imposed a 20% tax on scrap steel exports to encourage local consumption. All this works to the benefit of mini-mills, which remain heavily dependent on state support through the Industrial Development Corporation and dtic intervention in the scrap steel market.
Since joining Brics in 2010, SA has avoided challenging fellow Brics member China on anti-dumping grounds for subsidising its steel exports.
Steel Radar reports that SA’s decline in manufacturing and construction activity means less scrap is available to the local market, while mini-mills are kept stocked with cheap scrap steel through the PPS.
“Ideally, PPS needs to be scaled back to something more sensible, or export duties must remain, and PPS must be removed.”
The PPS arrangement imposes unfair competition in the industry. Amsa uses primarily iron ore as raw material in its blast furnaces, while competitors benefit from discounted scrap steel.
Read: Activists sue SA’s environment authorities over Arcelor pollution
Numsa says government must engage with Amsa to level the playing field in the industry. The company has called for a review of the PPS and a removal of the export tax. This would increase scrap steel prices to something closer to international prices, allowing Amsa a greater margin in selling its products.
Amsa has also made submission to government over the impact of electricity, port and rail tariffs on its business. Numsa “is interested in knowing how far government is in expediting what can be a solution to these stark challenges that are affecting ArcelorMittal South Africa negatively, in ways that are now threatening the job security of workers,” says the trade union in a joint statement with Amsa.
“Numsa and ArcelorMittal South Africa jointly stress the importance of swift and decisive action to protect the sustainability of the steel sector.”
In its 2023 annual report, Amsa said delays at SA’s ports made imports of long steel products unviable, impacting 3 500 jobs directly and a further 100 000 indirectly. It reported a loss of R1.8 billion in headline earnings for the year to December 2023, followed by an additional R1.1 billion loss at the June 2024 halfway mark.
Read: ArcelorMittal sees rosier steel outlook
Amsa previously announced plans to close its Newcastle plant but decided to postpone this decision.
