Embattled steel major ArcelorMittal SA (Amsa) has accused freight and logistics group Transnet of abusing its market dominance and charging excessive prices to the detriment of customers.
To this end, Sub-Saharan Africa’s only primary steel producer has dragged Transnet to the Competition Tribunal for recourse.
However, the company faces a tall order in convincing the tribunal of the merits of its complaint against the state-owned freight and rail group after the Competition Commission threw cold water on the complaint. The decision by the commission forced the steel producer to resort to self-referral of its complaint to the tribunal.
Should the tribunal agree with Amsa’s stance, some of the penalties open to it include ordering the logistics group to cease its market dominance activities and an administrative penalty up to 10% of the firm’s annual turnover.
The tribunal confirmed to Business Day on Friday that it had received a complaint referral from the lawyers representing Amsa at the end of April.
“Transnet has filed an exception application in which it seeks the dismissal of the complaint referral on grounds that there is no cause of action (meaning there is no case to answer), or that the cause of action is vague and embarrassing,” the tribunal told Business Day.
“ArcelorMittal is yet to file an answer to the exception application. The exception application must first be heard and determined before the tribunal can consider the merits of the main matter. As such, dates for hearing the main matter are yet to be determined.”
Amsa did not respond to requests for comment. Transnet said it was confident it had no case to answer. “The allegations were found to lack merit and substance by the Competition Commission, hence the commission’s decision to dismiss the complaint and not to refer it to the tribunal,” Transnet said.
Amsa’s complaint against Transnet comes at a time when the steel producer is going through the most difficult period in its history.
The group reported a headline loss of R5bn. In its 2024 annual report it said poor performance by Transnet Freight Rail (TFR) resulted in considerable lost production and sales. It said over the past three years, rail tariff increases had outstripped inflation. “We continued to pay SOEs what we maintain are excessively high tariffs for rail and electricity,” it said.
Amsa CEO Kobus Verster has described the 2024 financial year as having presented the “greatest challenges since the financial crisis in 2008” for both the company and the steel industry in SA.
Amsa’s steel is manufactured primarily at large, capital-intensive facilities in Vanderbijlpark, eMalahleni and Newcastle.
SA’s apparent steel consumption has fallen by 33%, or 2-million tonnes per annum, since 2000.
The government has pulled out all the stops to keep Amsa’s long steel business afloat, with the state-owned Industrial Development Corporation (IDC) coming to the rescue with a nearly R1.7bn cash injection. The cash injection deferred the closure of the company’s long steel plants in Newcastle, Vereeniging and Mpumalanga, a move that would have led to 3,500 job losses.
Before the IDC came to the party, the government said it would over the next year pick up the wage bill of the embattled long steel unit.
This was after the Temporary Employer/Employee Relief Scheme (Ters) “approved funding of nearly R417m to sustain 2,982 employees over the next 12 months”, the department of trade, industry & competition said in March.
One of the conditions of the government’s support is that Amsa participate in the Productivity SA turnaround and recovery programme.
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