The International Trade Administration Commission (Itac) is investigating whether to apply antidumping customs duties on imported earth-boring tools and rock-drilling equipment after a local manufacturer cried foul.
Daltron Forge, which specialises in producing rock-drilling bits and tools, lodged an application for authorities to probe and declare an increase of between 15% and 20% on the general rate of customs duties on rock-drilling equipment — the maximum tariff allowed.
SA imports most of its earth-boring and rock-drilling equipment, totalling nearly R1bn annually.
Critics estimate that if an all-inclusive tariff surge is applied, increased duties are likely to substantially increase operating costs to the mining, drilling and boring industry sectors.
Daltron, which counts miners, rail operators and automotive makers as clients, said an increase in the duty would not only be essential to substantially improve the domestic industry’s price-competitive position in the face of fierce competition from abroad but would go a long way to maintaining employment.
"Increasing the duty will assist in resolving the duty anomaly wherein the imported finished product carries no import duty whereas the imported steel raw material carries a 10% import duty," Daltron said in the application.
Itac launched the investigation into the complaint in September. It said in a Government Gazette that affected parties had until October 21 to provide their inputs.
Donald MacKay, founder and head of XA Global Trade Advisors, said the range of products Daltron had requested a duty increase on was broader than the range of products that it manufactures, while it had given no indication that it would produce this extra range of product.
"If a duty increase is going to happen, and I’m not saying that it will or that it should, they should at the very least make it limited to the range of products that they manufacture," he said. "So, we don’t have this bleeding over into other products so we end up protecting a small portion, but there is an enormous price to be paid by everyone else."
Wide scope
Because of the wide scope of the four tariff subheadings covered in the investigation, the application and investigation outcomes have potential ramifications for the mining, roadworks and other drilling and boring industry sectors, which may see operating costs rise.
All import and export commercial transactions require commodities on customs declarations to be classified according to an appropriate tariff heading. The tariff classification code is directly linked to the rate of duty payable on that commodity.
MacKay warned that a blanket increase would be carried by companies that drill into rocks such as local miners. They would be hardest hit because "within the mining industry, costs like these can’t in any way really be recovered".
Itac now has the challenging task of analysing a wide range of equipment used in underground coal mining, surface mining, trenching and milling activities. It must ascertain which imports pose a risk to local industry and which equipment bits are not produced in SA and cannot be procured locally. That is crucial because some of the subheadings where an increase has been applied have no tariff at all, primarily because they cannot be sourced in the country. A minimum 15% increase would be a significant rise in operating costs for importers.
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