State interventions to help salvage the steel industry have so far failed to improve its long-term viability and a new strategy is being prepared, which should be ready in the first half of 2025, trade, industry & competition minister Parks Tau has indicated.
The industry has suffered a number of plant closures and thousands of job losses over the past five years.
Also envisaged is that the first set of recommendations arising from a review of the tariff structure for certain steel products by the International Trade Administration Commission (Itac) on the basis of a ministerial directive will be ready by June 2025.
State intervention under the steel master plan — one of several industry specific master plans developed by the department of trade, industry & competition to assist struggling economic sectors — has not proved adequate and an industry-wide engagement was held in November to discuss a new form of partnership to address the binding constraints on the industry.
“In that engagement, we agreed on formulating a new strategy anchored on a few critical interventions with clear medium- to long-term targets and measurable outcomes. It is envisaged that a fully consulted and consolidated strategy will be ready in the first half of 2025,” Tau said in a written reply to a parliamentary question by EFF MP Sinawo Thambo.
Thambo asked about the number of job losses in the industry over the past five years due to the closure of steel plants and about the turnaround strategy to reopen steel factories and protect the local steel industry from excessive imports.
“In the past five years, due to the global steel overcapacity and the domestic pressures (inclusive of raising input costs, sluggish growth and subdued demand), SA has seen the closure- mothballing of the Vereeniging works, Saldanha works and SA Steel mini-mill which is now in business rescue,” Tau said.
“According to the SA Iron and Steel Institute, the total number of jobs lost at primary steel plants in SA over the past five years are 7,876. The total direct employment at steel mills in 2019 was 26,504; jobs declining to 18,628 in 2024.
“The decrease is due to closure of the ArcelorMittal SA’s Saldanha and Vereeniging plants and the Evraz Highveld Steel plant. In addition, rationalisation across the industry has also contributed to the decline in jobs with current plant capacity utilisation averaging at 55%.”
Protectionist measures
Tau said the global primary steel industry remained fragile due to global steel overcapacity and growing geopolitical tensions. Protectionist measures were continuously being deployed. A crucial aspect of the turnaround strategy had been the steel master plan which was approved in June 2021.
The plan aimed to improve the competitiveness of firms and included measures to support localisation and strengthen the resilience of the industry to face local and global pressures. The plan is being implemented through a social compact between the steel industry, labour and the government.
Tau outlined some of the measures implemented over the past few years included 25 trade support measures. The Industrial Development Corporation had approved investments in the steel value chain of R20bn and facilitated total investment of R45bn.
The Highveld Steel and Cisco steel mills had been salvaged from business rescue processes, with investments of R1.6bn and R290m, respectively.
The master plan included localisation interventions, support for black industrialists and deepening of SA manufacturing capabilities in the value chain. Areas where impact was visible, Tau noted, included transmission, distribution and rail infrastructure programmes.
The price preference system had been extended and an export tax on scrap metals introduced to ensure better availability of input material for the local market.
“These interventions have, however, not been adequate to improve the long-term viability and sustainability of the value chain and the primary production in particular,” Tau said.
“Owing to the issues of global overcapacity of steel, as well as most economies imposing protectionist measures in support of their industries, the trade measures implemented to-date have not effectively closed the gap in the surge of imports, especially from China.
“Therefore, a concerted effort among various organs of the state, comprising the department of trade, industry & competition, SA Revenue Service, Itac as well as the industry, is critical in addressing import leakage including illegal trade issues in the steel value chain,” the minister said.
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